I.R.C. Section 148 Arbitrage Rules: Restrictions and Restriction Relief

Summary

This practice note examines arbitrage bonds, one of three exceptions to the federal income tax exemption for interest on obligations issued by governmental entities. Arbitrage bonds are obligations that are reasonably expected to be used to acquire obligations that yield "materially higher" returns than the original obligation during the original obligation's term of issue. This practice note outlines relevant details.