Exercise
Match the definitions with the correct percentages.
(some percentages may be used twice)
A.2%
B.3.5%
C.5%
D.10%
E.95%
1.Private business use test: greater than _____ of bond proceeds used to fund a non-governmental entity
2.Private security or payment test: greater than _____ of debt service for the bond is paid for or secured by a property used by a private business
3.Private loan financing test: more than of $5 million or _____ of bond proceeds is used to provide a loan to a private business
4.Qualified private activity bonds: at least _____ of net proceeds are used for designated public purposes
5.Costs of issuance: up to _____ of proceeds may be used to cover costs of issuance
6.Qualified mortgage revenue bonds: _____ of proceeds may be used to cover costs of issuance
Answer the following questions.
7.Cloud Valley has a debt limit of $50,000,000. The city currently has $20,000,000 in outstanding debt and would like to issue $25,000,000 in private activity bonds. They plan to use $750,000 of the proceeds for non-public purposes. What is the maximum amount of bond proceeds the city could spend on costs of issuance if it wanted the bonds to be qualified private activity bonds?
A.$250,000
B.$500,000
C.$750,000
D.There is no way the bonds could be qualified private activity bonds.
8.Which of the following are not true of the alternative minimum tax:
I.Eliminates many tax deductions provided under the standard tax law
II.Eliminates many tax credits provided under the standard tax law
III.Potentia