[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.148-5A]
[Page 734-735]
TITLE 26--INTERNAL REVENUE
CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
(CONTINUED)
PART 1--INCOME TAXES--Table of Contents
Sec. 1.148-5A Yield and valuation of investments.
(a) through (b)(2)(ii) [Reserved]. For guidance see Sec. 1.148-5.
(b)(2)(iii) Permissive application of single investment rules to
certain yield restricted investments for all purposes of section 148.
For all purposes of section 148, an issuer may treat all of the yield
restricted nonpurpose investments in a refunding escrow and a sinking
fund that is reasonably expected as of the issue date to be maintained
to reduce the yield on the investments in the refunding escrow as a
single investment
[[Page 735]]
having a single yield, determined under Sec. 1.148(b)(2).
(b) (2)(iv) through (c)(1) [Reserved]. For guidance see Sec. 1.148-
5.
(c)(2) Manner of payment--(i) In general. Except as otherwise
provided in Sec. 1.148-5(c)(2)(ii), an amount is paid under Sec. 1.148-
5(c) if it is paid to the United States at the same time and in the same
manner as rebate amounts are required to be paid or at such other time
or in such manner as the Commissioner may prescribe. For example, yield
reduction payments must be made on or before the date of required rebate
installment payments as described in Sec. 1.148-3(f). The date a payment
is required to be paid is determined without regard to Sec. 1.148-3(h).
An amount that is paid untimely is not taken into account under this
paragraph (c) unless the Commissioner determines that the failure to pay
timely is not due to willful neglect. The provisions of Sec. 1.148-3(i)
apply to payments made under Sec. 1.148-5(c).
(c)(2)(ii) through (c)(3)(i) [Reserved] For guidance see Sec. 1.148-
5.
(c)(3)(ii) Exception to yield reduction payments rule for advance
refunding issues. Section 1.148-5(c)(1) does not apply to investments
allocable to gross proceeds of an advance refunding issue, other than--
(A) Transferred proceeds to which Sec. 1.148-5(c)(3)(i)(C) applies;
(B) Replacement proceeds to which Sec. 1.148-5(c)(3)(i)(F) applies;
and
(C) Transferred proceeds to which Sec. 1.148-5(c)(3)(i)(E) applies,
but only to the extent necessary to satisfy yield restriction under
section 148(a) on those proceeds treating all investments allocable to
those proceeds as a separate class.
(d)(1) through (d)(3)(i) [Reserved]. For guidance see Sec. 1.148-5.
(d)(3)(ii) Exception to fair market value requirement for
transferred proceeds allocations, universal cap allocations, and
commingled funds. Section 1.148-5(d)(3)(i) does not apply if the
investment is allocated from one issue to another issue as a result of
the transferred proceeds allocation rule under Sec. 1.148-9(b) or the
universal cap rule under Sec. 1.148-6(b)(2), provided that both issues
consist exclusively of tax-exempt bonds. In addition, Sec. 1.148-
5(d)(3)(i) does not apply to investments in a commingled fund (other
than a bona fide debt service fund) unless it is an investment being
initially deposited in or withdrawn from a commingled fund described in
Sec. 1.148-6(e)(5)(iii).
(e)(1) through (e)(2)(ii)(A) [Reserved]. For guidance see
Sec. 1.148-5.
(e)(2)(ii)(B) External commingled funds. For any semiannual period,
a commingled fund satisfies the 10 percent requirement of Sec. 1.148-
5(e)(2)(ii)(B) if--
(1) Based on average amounts on deposit, this requirement was
satisfied for the prior semiannual period; and
(2) The fund does not accept deposits that would cause it to fail to
meet this requirement.
(iii) Special rule for guaranteed investment contracts. For a
guaranteed investment contract, a broker's commission or similar fee
paid on behalf of either an issuer or the provider is treated as an
administrative cost and, except in the case of an issue that satisfies
section 148(f)(4)(D)(i), is not a qualified administrative cost to the
extent that the present value of the commission, as of the date the
contract is allocated to the issue, exceeds the present value of annual
payments equal to .05 percent of the weighted average amount reasonably
expected to be invested each year of the term of the contract. For this
purpose, present value is computed using the taxable discount rate used
by the parties to compute the commission or, if not readily
ascertainable, a reasonable taxable discount rate.
[T.D. 8538, 59 FR 24045, May 10, 1994. Redesignated by T.D. 8718, 62 FR
25507, May 9, 1997]