26 U.S. Code § 1397E - Credit to holders of qualified zone academy bonds
In the case of an eligible taxpayer who holds a qualified zone academy bond on the credit allowance date of such bond which occurs during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year the amount determined under subsection (b).
During each calendar month, the Secretary shall determine a credit rate which shall apply to bonds issued during the following calendar month. The credit rate for any month is the percentage which the Secretary estimates will permit the issuance of qualified zone academy bonds without discount and without interest cost to the issuer.
For purposes of paragraph (1), the private business contribution requirement of this paragraph is met with respect to any issue if the eligible local education agency that established the qualified zone academy has written commitments from private entities to make qualified contributions having a present value (as of the date of issuance of the issue) of not less than 10 percent of the proceeds of the issue.
During each calendar month, the Secretary shall determine the maximum term permitted under this paragraph for bonds issued during the following calendar month. Such maximum term shall be the term which the Secretary estimates will result in the present value of the obligation to repay the principal on the bond being equal to 50 percent of the face amount of the bond. Such present value shall be determined using as a discount rate the average annual interest rate of tax-exempt obligations having a term of 10 years or more which are issued during the month. If the term as so determined is not a multiple of a whole year, such term shall be rounded to the next highest whole year.
There is a national zone academy bond limitation for each calendar year. Such limitation is $400,000,000 for 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, and 2007, and, except as provided in paragraph (4), zero thereafter.
The national zone academy bond limitation for a calendar year shall be allocated by the Secretary among the States on the basis of their respective populations of individuals below the poverty line (as defined by the Office of Management and Budget). The limitation amount allocated to a State under the preceding sentence shall be allocated by the State education agency to qualified zone academies within such State.
The maximum aggregate face amount of bonds issued during any calendar year which may be designated under subsection (d)(1) with respect to any qualified zone academy shall not exceed the limitation amount allocated to such academy under paragraph (2) for such calendar year.
Upon submission of a request prior to the expiration of the period described in paragraph (1)(A), the Secretary may extend such period if the issuer establishes that the failure to satisfy the 5-year requirement is due to reasonable cause and the related purposes will continue to proceed with due diligence.
To the extent that less than 95 percent of the proceeds of such issue are expended by the close of the 5-year period beginning on the date of issuance (or if an extension has been obtained under paragraph (2), by the close of the extended period), the issuer shall redeem all of the nonqualified bonds within 90 days after the end of such period. For purposes of this paragraph, the amount of the nonqualified bonds required to be redeemed shall be determined in the same manner as under section 142.
An issue shall be treated as meeting the requirements of this subsection if the issuer satisfies the arbitrage requirements of section 148 with respect to proceeds of the issue.
Issuers of qualified academy zone bonds shall submit reports similar to the reports required under section 149(e).
The term “credit allowance date” means, with respect to any issue, the last day of the 1-year period beginning on the date of issuance of such issue and the last day of each successive 1-year period thereafter.
Gross income includes the amount of the credit allowed to the taxpayer under this section (determined without regard to subsection (c)).
For purposes of this title, the credit allowed by this section shall be treated as a credit allowable under subpart H of part IV of subchapter A of this chapter.
This section shall not apply to any obligation issued after the date of the enactment of the Tax Extenders and Alternative Minimum Tax Relief Act of 2008.
The date of the enactment of this section, referred to in subsec. (d)(4)(A)(iv)(I), is the date of enactment of Pub. L. 105–34, which was approved Aug. 5, 1997.
The Richard B. Russell National School Lunch Act, referred to in subsec. (d)(4)(A)(iv)(II), is act June 4, 1946, ch. 281, 60 Stat. 230, as amended, which is classified generally to chapter 13 (§ 1751 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 1751 of Title 42 and Tables.
Section 9101 of the Elementary and Secondary Education Act of 1965, referred to in subsec. (d)(4)(B), is classified to section 7801 of Title 20, Education.
The date of the enactment of the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, referred to in subsec. (m), is the date of enactment of div. C of Pub. L. 110–343, which was approved Oct. 3, 2008.
2009—Subsec. (c)(2). Pub. L. 111–5 substituted “, I, and J” for “and I”.
2008—Subsec. (c)(2). Pub. L. 110–246, § 15316(c)(2), substituted “subparts H and I” for “subpart H”.
Subsec. (m). Pub. L. 110–343 added subsec. (m).
2006—Subsec. (d)(1)(E). Pub. L. 109–432, § 107(b)(1)(A), added subpar. (E).
Subsec. (e)(1). Pub. L. 109–432, § 107(a), substituted “2005, 2006, and 2007” for “and 2005”.
Subsecs. (f) to (l). Pub. L. 109–432, § 107(b)(1)(B), added subsecs. (f) to (h) and redesignated former subsecs. (f) to (i) as (i) to (l), respectively.
2005—Subsec. (c)(2). Pub. L. 109–58, § 1303(c)(2), inserted “, and subpart H thereof” after “refundable credits”.
Subsec. (h). Pub. L. 109–58, § 1303(c)(3), amended heading and text of subsec. (h) generally. Prior to amendment, text read as follows: “For purposes of subtitle F, the credit allowed by this section shall be treated as a credit allowable under part IV of subchapter A of this chapter.”
2004—Subsec. (e)(1). Pub. L. 108–311, § 304(a), substituted “2003, 2004, and 2005” for “and 2003”.
Subsec. (i). Pub. L. 108–311, § 406(c), added subsec. (i).
2002—Subsec. (d)(4)(B). Pub. L. 107–110 substituted “9101” for “14101”.
Subsec. (e)(1). Pub. L. 107–147 substituted “2000, 2001, 2002, and 2003” for “2000, and 2001”.
1999—Subsec. (d)(4)(A)(iv)(II). Pub. L. 106–78 substituted “Richard B. Russell National School Lunch Act” for “National School Lunch Act”.
Subsec. (e)(1). Pub. L. 106–170, § 509(a), substituted “, 1999, 2000, and 2001” for “and 1999”.
Subsec. (e)(4). Pub. L. 106–170, § 509(b), inserted at end “Any carryforward of a limitation amount may be carried only to the first 2 years (3 years for carryforwards from 1998 or 1999) following the unused limitation year. For purposes of the preceding sentence, a limitation amount shall be treated as used on a first-in first-out basis.”
1998—Subsec. (d)(4)(B). Pub. L. 105–206, § 6004(g)(2), substituted “local educational agency as defined” for “local education agency as defined”.
Subsec. (g). Pub. L. 105–206, § 6004(g)(4), inserted “(determined without regard to subsection (c))” after “section”.
Subsec. (h). Pub. L. 105–206, § 6004(g)(3), added subsec. (h).
Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, except as otherwise provided, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture.
Amendment by Pub. L. 109–58 applicable to taxable years beginning after Dec. 31, 2005, see section 1303(e) of Pub. L. 109–58, as amended, set out as an Effective Date note under section 54 of this title.
Amendment by section 406(c) of Pub. L. 108–311 effective as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 406(h) of Pub. L. 108–311, set out as a note under section 55 of this title.
Amendment by Pub. L. 107–110 effective Jan. 8, 2002, except with respect to certain noncompetitive programs and competitive programs, see section 5 of Pub. L. 107–110, set out as an Effective Date note under section 6301 of Title 20, Education.
Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.
Written determinations for this section
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- Qualified Zone Academy Bonds : 2001-07-06