under paragraph (2)(A) whether the 1st use of prop-
erty is pursuant to tax-exempt financing—
‘‘(A) IN GENERAL.—If—
‘‘(i) the 1st use of property is pursu-
ant to taxable financing,
‘‘(ii) there was a reasonable expecta-
tion (at the time such taxable financing
was provided) that such financing would be
replaced by tax-exempt financing, and
‘‘(iii) the taxable financing is in fact
so replaced within a reasonable period
after the taxable financing was provided,
then the 1st use of such property shall be treat-
ed as being pursuant to the tax-exempt financ-
ing.
‘‘(B) SPECIAL RULE WHERE NO OPERAT-
ING STATE OR LOCAL PROGRAM FOR TAX-EX-
EMPT FINANCING.—If, at the time of the 1st
use of property, there was no operating State or
local program for tax-exempt financing of the
property, the 1st use of the property shall be
treated as pursuant to the 1st tax-exempt fi-
nancing of the property.
‘‘(C) DEFINITIONS.—For purposes of this
paragraph—
‘‘(i) TAX-EXEMPT
FINANCING.—The
term ‘tax-exempt financing’ means financ-
ing provided by tax-exempt bonds.
‘‘(ii) 
TAXABLE
FINANCING.—The
term ‘taxable financing’ means financing
which is not tax-exempt financing.’’
(7) Section 141(f) of such Code, as redesig-
nated by paragraph (6), is amended—
(A) by adding ‘‘or’’ at the end of subpara-
graph (E),
(B) by striking ‘‘, or’’ at the end of sub-
paragraph (F), and inserting in lieu thereof a
period, and
(C) by striking subparagraph (G).
(8) The last sentence of section 144(b)(1) of
such Code is amended by striking ‘‘(determined’’
and all that follows to the period.
(9) Clause (ii) of section 144(c)(2)(C) of such
Code is amended by striking ‘‘governmental unit’’
and inserting ‘‘exempt person’’.
(10) Section 146(g) of such Code is amended—
(A) by striking paragraph (2), and
(B) by redesignating the remaining para-
graphs after paragraph (1) as paragraphs (2)
and (3), respectively.
(11) The heading of section 146(k)(3) of such
Code is amended by striking ‘‘GOVERNMENTAL’’ and
inserting ‘‘EXEMPT PERSON’’.
(12) The heading of section 146(m) of such
Code is amended by striking ‘‘GOVERNMENT’’ and
inserting ‘‘EXEMPT PERSON’’.
(13) Subsection (h) of section 147 of such Code
is amended to read as follows:
‘‘(h) CERTAIN RULES NOT TO APPLY TO MORTGAGE
REVENUE
BONDS
AND
QUALIFIED
STUDENT
LOAN
BONDS.—Subsections (a), (b), (c), and (d) shall not apply
to any qualified mortgage bond, qualified veterans’ mort-
gage bond, or qualified student loan bond.’’
(14) Section 147 of such Code is amended by
striking paragraph (4) of subsection (b) and redesig-
nating paragraph (5) of such subsection as para-
graph (4).
(15) Subparagraph (F) of section 148(d)(3) of
such Code is amended—
(A) by striking ‘‘or which is a qualified
501(c)(3) bond’’, and
(B) by striking ‘‘GOVERNMENTAL
USE
BONDS AND QUALIFIED 501(c)(3)’’ in the heading
thereof and inserting ‘‘EXEMPT PERSON’’.
(16) Subclause (II) of section 148(f)(4)(B)(ii)
of such Code is amended by striking ‘‘(other than a
qualified 501(c)(3) bond)’’.
(17) Clause (iv) of section 148(f)(4)(C) of such
Code is amended—
(A) by striking ‘‘a governmental unit or a
501(c)(3) organization’’ each place it appears
and inserting ‘‘an exempt person’’, and
(B) 
by 
striking 
‘‘qualified 
501(c)(3)
bonds,’’.
(18) Subparagraph (A) of section 148(f)(7) of
such Code is amended by striking ‘‘(other than a
qualified 501(c)(3) bond)’’.
(19) Paragraph (2) of section 149(d) of such
Code is amended—
(A) by striking ‘‘(other than a qualified
501(c)(3) bond)’’, and
(B) by striking ‘‘CERTAIN PRIVATE’’ in the
heading thereof and inserting in lieu thereof
‘‘PRIVATE’’.
(20) Section 149(e)(2) of such Code is amend-
ed—
(A) by striking ‘‘which is not a private ac-
tivity bond’’ in the second sentence and insert-