One-year step transaction rule
(2) One-year step transaction rule(i) Creation of replacement proceeds. A purported reimbursement allocation is invalid and thus is not an expenditure of proceeds of an issue if, within 1 year after the allocation, funds corresponding to the proceeds of a reimbursement bond for which a reimbursement allocation was made are used in a manner that results in the creation of replacement proceeds (as defined in 1.148-1) of that issue or another issue. The preceding sentence does not apply to amounts deposited in a bona fide debt service fund (as defined in 1.148-1). (ii) Example. The provisions of paragraph (h)(2)(i) of this section are illustrated by the following example. (i) Authority of the Commissioner to prescribe rules. The Commissioner may by revenue ruling or revenue procedure (see 601.601(d)(2)(ii)(b) of this chapter) prescribe rules for the expenditure of proceeds of reimbursement bonds in circumstances that do not otherwise satisfy this section.