Source: https://www.federalregister.gov/documents/2015/10/27/2015-27328/general-allocation-and-accounting-regulations-under-section-141-remedial-actions-for-tax-exempt
Timestamp: 2018-05-22 04:40:19
Document Index: 102221407

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Federal Register :: General Allocation and Accounting Regulations Under Section 141; Remedial Actions for Tax-Exempt Bonds
A Rule by the Internal Revenue Service on 10/27/2015
65637-65646 (10 pages)
1545-BH48
https://www.federalregister.gov/d/2015-27328 https://www.federalregister.gov/d/2015-27328
This PDF is the current document as it appeared on Public Inspection on 10/26/2015 at 08:45 am.
End Further Info End Preamble Start Supplemental Information Start Printed Page 65638
The collection of information contained in these regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-1451. The collection of information in these final regulations is in § 1.141-12(d)(3), which requires an issuer to make a declaration of official intent to remediate bonds. This collection of information is necessary for an issuer's redemption or defeasance of bonds to be treated as a remedial action under § 1.141-12 to preserve the tax-exempt status of the bonds. This collection of information is an increase in the total annual burden under control number 1545-1451. The respondents are State and local government issuers of tax-exempt bonds.
Final regulations (TD 8712) under section 141 were published in the Federal Register on January 16, 1997 (62 FR 2275) (the 1997 Final Regulations), to provide comprehensive guidance on most aspects of the private activity bond restrictions. The 1997 Final Regulations, however, reserved most of the general allocation and accounting rules for purposes of section 141. An advance notice of proposed rulemaking (REG-142599-02) was published in the Federal Register on September 23, 2002 (67 FR 59767), regarding allocation and accounting rules for tax-exempt bond proceeds used to finance mixed-use output facilities. A notice of proposed rulemaking and notice of public hearing (REG-140379-02; REG-142599-02) was published in the Federal Register on September 26, 2006 (71 FR 56072), regarding allocation and accounting rules for tax-exempt bond proceeds, including special rules for mixed-use projects, and rules regarding the treatment of partnerships for purposes of section 141 (the Proposed Allocation Regulations). The Proposed Allocation Regulations also included amendments to regulations under section 145 on related matters that apply to qualified 501(c)(3) bonds. A public hearing was held on January 11, 2007. This document amends the Income Tax Regulations under sections 141 and 145 by adopting final rules on these topics. Certain provisions of the Proposed Allocation Regulations are not being finalized and are withdrawn. A partial withdrawal of notice of proposed rulemaking is published elsewhere in this edition of the Federal Register.
A notice of proposed rulemaking and notice of public hearing (REG-132483-03) was published in the Federal Register on July 21, 2003 (68 FR 43059), regarding the amount and allocation of nonqualified bonds for purposes of certain remedial actions under sections 141 and 142 (the Proposed Remedial Action Regulations). The public hearing was cancelled because no requests to speak were received. Final regulations (TD 9150) were published in the Federal Register on August 13, 2004 (69 FR 50065), adopting the portions of the Proposed Remedial Action Regulations relating to section 142. Because of the interrelationship between the remedial action provisions under section 141 and the allocation and accounting rules, the portions relating to section 141 were not finalized at that time. This document adopts final rules regarding the amount and allocation of nonqualified bonds for purposes of the remedial action provisions under section 141. We refer to the Proposed Remedial Action Regulations and the Proposed Allocation Regulations collectively as the Proposed Regulations.
The Proposed Regulations provided several allocation rules. Among these were rules regarding the allocation of proceeds of an issue of bonds that are obligations of a state or political subdivision under section 103(c)(1) (see § 1.150-1(b)) (proceeds) and all other sources of funds (other funds) to expenditures, to the project, and to the uses of the project (that is, governmental use or private business use). The Proposed Regulations provided that proceeds and other funds generally may be allocated to expenditures using any reasonable, consistently applied accounting method, and that the allocation of proceeds and other funds to expenditures must be consistent with the allocation of proceeds and other funds for purposes of the arbitrage investment restrictions under section 148.
Commenters expressed concern that the consistency requirement was in conflict with the allowance of more than one method for allocating proceeds and other funds to projects. Commenters further questioned whether allocations of proceeds to expenditures were necessary other than for purposes of the arbitrage investment restrictions. The Final Regulations clarify that the issuer's allocation of proceeds to expenditures for purposes of the arbitrage investment restrictions also apply to expenditures for purposes of the private activity bond tests.
The Proposed Regulations defined a project to include functionally related or Start Printed Page 65639integrated facilities located on the same site, or on geographically proximate sites, that are reasonably expected to be placed in service within the same 12-month period. The Proposed Regulations provided certain special rules for the treatment of subsequent improvements to, and replacements of, a project. These proposed special rules treated subsequent improvements and replacements made more than 12 months after the original project was placed in service as part of the same project if the improvements and replacements were within the size, function, and usable space or the original design of the project.
The Final Regulations simplify the definition of project to cover all facilities or capital projects financed in whole or in part with proceeds of a single issue of bonds. This definition permits an issuer in its bond documents to identify as a single project all of the properties to be financed by proceeds of a single bond issue. Under this rule, issuers may identify specific properties or portions of properties regardless of the properties' locations or placed-in-service dates. This approach to the definition of project comports with the application of the private activity bond tests generally, which apply at the issue level. The Final Regulations also clarify through the examples that improvements financed with a later issue are a separate project.
Commenters also recommended extending the separate facility treatment for output facilities under the Proposed Regulations to other types of facilities. The Final Regulations do not adopt this recommendation because the use of output facilities is measured differently from the use of other facilities. The use of an output facility generally is measured in the amount of output purchased as a percentage of the facility's total available output. The amount of use by each user reflects the proportionate benefit of the available output to such user. Uses of other types of facilities are measured in various ways depending on how that use occurs (for example, in different discrete portions, at different times, or simultaneously) and may reflect simultaneous use by more than one user on a different, rather than proportionate, basis. Even without separate facility treatment, however, issuers may use proceeds to finance the governmental use portion of an eligible mixed-use project.
The Proposed Regulations provided special elective allocation rules for mixed-use projects. In general, these special rules gave effect to congressional intent to permit funding of mixed-use projects in part with tax-exempt bonds and in part with other funds using reasonable, proportionate allocation methods that reflect proportionate benefits to the various users. See H.R. Rep. No. 99-426, at 538 (1985). The Proposed Regulations defined a mixed-use project as a project that is reasonably expected to be used for more than the de minimis amount (generally 10 percent) of private business use permitted under the private activity bond tests (de minimis permitted private business use). The Proposed Regulations provided two alternative elective allocation methods for a mixed-use project, the discrete physical portion allocation method (discrete portion method) and the undivided portion allocation method. The Proposed Regulations required the issuer to make a timely, written election, including preliminary and final allocations of proceeds and other funds, to use one of these alternative methods.
Commenters criticized the complexity of the Proposed Regulations' two special allocation methods and the administrative burdens associated with the election requirement for mixed-use allocations. Commenters also criticized the discrete portion method's overly rigid treatment of reallocations or “floating” allocations. To simplify these rules, commenters recommended expanding the availability of the undivided portion allocation method to include all measureable use, adopting the undivided portion allocation method as the general rule for allocating proceeds and other sources to the uses of a mixed-use project, and eliminating the discrete portion method.
The Final Regulations adopt the recommendation to expand the availability of the undivided portion allocation method to include all Start Printed Page 65640measureable use and to make the undivided portion allocation method the exclusive allocation method for eligible mixed-use projects. Consistent with this change, the Final Regulations eliminate the discrete portion method and the election requirement. The Treasury Department and the IRS believe that the expanded version of the undivided portion allocation method in the Final Regulations generally will be simpler and more administrable than the two proposed allocation methods and will cover all circumstances otherwise covered by the discrete portion method under the Proposed Regulations. For example, unlike the proposed discrete portion method, which had significant constraints on “floating” allocations for administrability reasons, the undivided portion allocation method in the Final Regulations inherently allows floating allocations without further action or special tracking in that it involves allocations for an entire mixed-use project. Section III.B. in this preamble further discusses the undivided portion allocation method under the Final Regulations.
The definition of “project” in the Proposed Regulations required spending the proceeds and other sources on the properties pursuant to the same plan of financing. Commenters requested clarification of the meaning of the same plan of financing. The Final Regulations clarify that “same plan of financing” has the same meaning as in § 1.150-1(c)(1)(ii) and that qualified equity is spent under the same plan of financing as proceeds of the applicable bonds if the qualified equity is spent on capital expenditures of the project no earlier than the earliest date on which the expenditure would be eligible for reimbursement were the bonds from which the proceeds are derived issued as reimbursement bonds and no later than the date that is the beginning of the measurement period for the project (other than amounts retained for reasonable purposes relating to the project as defined under the arbitrage investment restrictions).
The Proposed Regulations provided that if proceeds of more than one issue are allocated to capital expenditures of a mixed-use project to which the issuer elects to apply the discrete physical portion or undivided portion allocation method, then proceeds of those issues Start Printed Page 65641are allocated ratably to a discrete portion or undivided portion to which any proceeds are allocated in proportion to their relative shares of the total proceeds of such issues used for the project (the multiple issue rule). Commenters suggested eliminating this rule to permit issuers to allocate proceeds of the different issues financing a project to take maximum advantage of the overall private business use permitted, such as disproportionately allocating proceeds of a larger issue or a general obligation issue (that is, one paid from generally applicable taxes, for which private business use may be 100 percent because the private security or payment test will not be met) to private business use.
In recognition of the development of various financing and management structures for government (or 501(c)(3) organization) facilities that involve the participation of private businesses, to provide flexibility to accommodate public-private partnerships, and to remove barriers to tax-exempt financing of the government's (or 501(c)(3) organization's) portion of the benefit of property used in joint ventures, the Final Regulations provide aggregate treatment for all partnerships. The Final Regulations further provide a rule for measuring the private business use of financed property resulting from the use of the property by a partnership that includes a partner that is a nongovernmental person. The amount of such use is the nongovernmental partner's share of the amount of the use of the property by the partnership, with such share defined as the nongovernmental partner's greatest percentage share of any of the specified partnership items attributable to the time during the measurement period that the partnership uses the property. The Final Regulations also provide that an issuer may determine the nongovernmental partner's share under guidance published in the Internal Revenue Bulletin.
The Proposed Allocation Regulations permitted proceeds of taxable bonds and funds not derived from borrowing that are used to retire tax-exempt governmental bonds to be treated as qualified equity under certain circumstances. This allows targeting of funds other than tax-exempt bond proceeds to finance portions of projects that are expected to be used for private business use in the future. The intent of this proposed rule is to encourage retirement of tax-exempt bonds before the occurrence of nonqualified use. The Proposed Allocation Regulations addressed when the bond must be retired, the issuer's reasonable expectations regarding use of the project, actual use of the project prior to the redemption, and the length of the term of the issue of which the bond to be retired is a part. Specifically, the bond to be redeemed was required to be retired at least five years before its otherwise-scheduled maturity date and within a period that starts one year before the deliberate act and ends 91 days before the deliberate act. Further, the issuer must not have expected that the project would be a mixed-use project. Thus, under the Proposed Allocation Regulations, an issuer could not use this anticipatory redemption for a project for which it had elected the special mixed-use allocation rules.
Most commenters stated that the proposed provision would be of limited use and that the eligibility requirements are contrary to the policy of encouraging redemption of tax-exempt bonds earlier rather than later. Commenters recommended that the conditions for anticipatory redemption not be stricter than those under the existing remedial action regime for private business use, which permits a curative redemption or defeasance of nonqualified bonds within 90 days of the deliberate action causing the private activity bonds tests to be met. Commenters further suggested adding a provision to the remedial action rules permitting an issuer to redeem or defease bonds at any Start Printed Page 65642time in advance of a deliberate action that would cause the private business tests to be met. The suggested provision would require the issuer to declare its intent to redeem or defease the bonds that potentially could become the nonqualified bonds and identify the financed property. To encourage early redemption of tax-exempt bonds without imposing another set of rules for projects with unanticipated private business use, the Final Regulations adopt this recommendation to expand the remedial action rules to address this point.
Par. 2. Section 1.141-0 is amended by adding an entry for § 1.141-1(e), revising entries for § 1.141-6 and § 1.141-12(d)(3) through (5), adding an entry for § 1.141-12(d)(6), revising the heading for § 1.141-15, and adding entries for § 1.141-15(b)(4), (e)(1), (e)(2), (l) and (m) to read as follows:
§ 1.141-0 Table of contents.
§ 1.141-1 Definitions and rules of general application.
§ 1.141-6 Allocation and accounting rules.
(d) Allocations of proceeds to common costs of an issue.Start Printed Page 65643
§ 1.141-12 Remedial actions.
§ 1.141-15 Effective/applicability dates.
Par. 3. Section 1.141-1 is amended by adding paragraph (e) to read as follows:
Par. 4. Section 1.141-3 is amended by redesignating paragraph (g)(2)(v) as paragraph (g)(2)(vi) and adding new paragraph (g)(2)(v) to read as follows:
(v) Special rule for partners that are nongovernmental persons—(A) The amount of private business use by a nongovernmental person resulting from the use of property by a partnership in which that nongovernmental person is a partner is that nongovernmental partner's share of the amount of use of the property by the partnership. For this purpose, except as otherwise provided in paragraph (g)(2)(v)(B) of this section, a nongovernmental partner's share of the partnership's use of the property is the nongovernmental partner's greatest percentage share under section 704(b) of any partnership item of income, gain, loss, deduction, or credit attributable to the period that the partnership uses the property during the measurement period. For example, if a partnership has a nongovernmental partner and that partner's share of partnership items varies, with the greatest share being 25 percent, then that nongovernmental partner's share of the partnership's use of property is 25 percent.
(B) An issuer may determine a nongovernmental partner's share of the partnership's use of the property under guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter).
(a) Allocations of proceeds to expenditures, projects, and uses in general—(1) Allocations to expenditures. The allocations of proceeds and other sources of funds to expenditures under § 1.148-6(d) apply for purposes of §§ 1.141-1 through 1.141-15.
(2) Allocations of sources to a project and its uses. Except as provided in paragraph (b) of this section (regarding an eligible mixed-use project), if two or more sources of funding (including two or more tax-exempt issues) are allocated to capital expenditures (as defined in § 1.150-1(b)) for a project (as defined in paragraph (a)(3) of this section), those sources are allocated throughout that project to the governmental use and private business use of the project in proportion to the relative amounts of those sources of funding spent on the project.
(ii) Output facilities. If an output facility has multiple undivided ownership interests (respectively owned by governmental persons or by both governmental and nongovernmental persons), each owner's interest in the facility is treated as a separate facility for purposes of this section, provided that all owners of the undivided ownership interests share the ownership and output in proportion to their contributions to the capital costs of the output facility.
(b) Special allocation rules for eligible mixed-use projects—(1) In general. The sources of funding allocated to capital expenditures for an eligible mixed-use project (as defined in paragraph (b)(2) of this section) are allocated to undivided portions of the eligible mixed-use project and the governmental use and private business use of the eligible mixed-use project in accordance with this paragraph (b). Qualified equity (as defined in paragraph (b)(3) of this section) is allocated first to the private business use of the eligible mixed-use project and then to governmental use, and proceeds are allocated first to the governmental use and then to private business use, using the percentages of the eligible mixed-use project financed with the respective sources and the percentages of the respective uses. Thus, if the percentage of the eligible mixed-use project financed with qualified equity is less than the percentage of private business use of the project, all of the qualified equity is allocated to the private business use. Proceeds are allocated to the balance of the private business use of the project. Similarly, if the percentage of the eligible mixed-use project financed with proceeds is less than the percentage of governmental use of the project, all of the proceeds are allocated to the governmental use, and qualified equity is allocated to the balance of the governmental use of the project. Further, if proceeds of more than one issue finance the eligible mixed-use project, proceeds of each issue are allocated ratably to the uses to which proceeds are allocated in proportion to the relative amounts of the proceeds of such issues allocated to the eligible mixed-use project. For private business use measured under § 1.141-3(g), qualified equity and proceeds are allocated to the uses of the eligible mixed-use project in each one-year period under § 1.141-3(g)(4). See Example 1 of paragraph (f) of this section.
(2) Definition of eligible mixed-use project. Eligible mixed-use project means a project (as defined in paragraph (a)(3) of this section) that is financed with proceeds of bonds that, when issued, purported to be governmental bonds (as defined in § 1.150-1(b)) (the applicable bonds) and with qualified equity pursuant to the same plan of financing (within the meaning of § 1.150-1(c)(1)(ii)). An eligible mixed-use project must be wholly owned by one or more governmental persons or by a partnership in which at least one governmental person is a partner.
(3) Definition of qualified equity. For purposes of this section, qualified equity means proceeds of bonds that are not tax-advantaged bonds and funds that are not derived from proceeds of a borrowing that are spent on the same eligible mixed-use project as the proceeds of the applicable bonds. Qualified equity does not include equity interests in real property or tangible personal property. Further, qualified equity does not include funds used to Start Printed Page 65644redeem or repay governmental bonds. See §§ 1.141-2(d)(2)(ii) and 1.141-12(i) (regarding the effects of certain redemptions as remedial actions).
(4) Same plan of financing. Qualified equity finances a project under the same plan of financing that includes the applicable bonds if the qualified equity pays for capital expenditures of the project on a date that is no earlier than a date on which such expenditures would be eligible for reimbursement by proceeds of the applicable bonds under § 1.150-2(d)(2) (regardless of whether the applicable bonds are reimbursement bonds) and, except for a reasonable retainage (within the meaning of § 1.148-7(h)), no later than the date on which the measurement period begins.
(c) Allocations of private payments. Except as provided in this paragraph (c), private payments for a project are allocated in accordance with § 1.141-4. Payments under an output contract that result in private business use of an eligible mixed-use project are allocated to the same source of funding (notwithstanding § 1.141-4(c)(3)(v) (regarding certain allocations of private payments to equity)) allocated to the private business use from such contract under paragraph (b) of this section.
(d) Allocations of proceeds to common costs of an issue. Proceeds used for expenditures for common costs (for example, issuance costs, qualified guarantee fees, or reasonably required reserve or replacement funds) are allocated in accordance with § 1.141-3(g)(6). Proceeds, as allocated under § 1.141-3(g)(6) to an eligible mixed-use project, are allocated to the uses of the project in the same proportions as the proceeds allocated to the uses under paragraph (b) of this section.
(e) Allocations of proceeds to bonds. In general, proceeds are allocated to bonds in accordance with the rules for allocations of proceeds to bonds for separate purposes of multipurpose issues in § 1.141-13(d). For an issue that is not a multipurpose issue (or is a multipurpose issue for which the issuer has not made a multipurpose allocation), proceeds are allocated to bonds ratably in a manner similar to the allocation of proceeds to projects under paragraph (a)(2) of this section.
Mixed-use output facility. Authority A is a governmental person that owns and operates an electric transmission facility. Several years ago, Authority A used its equity to pay capital expenditures of $1000x for the facility. Authority A wants to make capital improvements to the facility in the amount of $100x (the Project). Authority A reasonably expects that, after completion of the Project, it will sell 46 percent of the available output of the facility, as determined under § 1.141-7, under output contracts that result in private business use and it will sell 54 percent of the available output of the facility for governmental use. On January 1, 2017, Authority A issues $60x of bonds (the Bonds) and uses the proceeds of the Bonds and $40x of qualified equity (the Qualified Equity) to finance the Project. The Qualified Equity is allocated to 40 of the 46 percent private business use resulting from the output contracts. Proceeds of the Bonds are allocated to the 54 percent governmental use and thereafter to the remaining 6 percent private business use.
(3) Anticipatory remedial action. The requirements of paragraphs (d)(1) and (2) of this section for redemption or defeasance of the nonqualified bonds within 90 days of the deliberate action are met if the issuer declares its official intent to redeem or defease all of the bonds that would become nonqualified bonds in the event of a subsequent deliberate action that would cause the private business tests or the private loan financing test to be met and redeems or defeases such bonds prior to that deliberate action. The issuer must declare its official intent on or before the date on which it redeems or defeases such bonds, and the declaration of intent must identify the financed property or loan with respect to which the anticipatory remedial action is being taken and describe the deliberate action that potentially may result in the private business tests being met (for example, sale of financed property that the buyer may then lease to a nongovernmental person). Rules similar to those in § 1.150-2(e) (regarding official intent for reimbursement bonds) apply to declarations of intent under this paragraph (d)(3), including deviations in the descriptions of the project or loan and deliberate action and the reasonableness of the official intent.
(2) If a remedial action is taken under paragraph (e) or (f) of this section, the amount of private business use or private loans resulting from the deliberate action is not taken into account for purposes of determining Start Printed Page 65645whether the bonds are private activity bonds; and
Par 7. Section 1.141-13 is amended by revising paragraph (d)(1) and paragraph (g), Example 5, to read as follows:
(d) Multipurpose issue allocations—(1) In general. For purposes of section 141, unless the context clearly requires otherwise, § 1.148-9(h) applies to allocations of multipurpose issues (as defined in § 1.148-1(b)), including allocations involving the refunding purposes of the issue. An allocation under this paragraph (d) may be made at any time, but once made, may not be changed. An allocation is not reasonable under this paragraph (d) if it achieves more favorable results under section 141 than could be achieved with actual separate issues. Each of the separate issues under the allocation must consist of one or more tax-exempt bonds. Allocations made under this paragraph (d) and § 1.148-9(h) must be consistent for purposes of sections 141 and 148.
Multipurpose issue. (i) In 2017, State D issues bonds to finance the construction of two office buildings, Building 1 and Building 2. D expends an equal amount of the proceeds on each building. D enters into arrangements that result in private business use of 8 percent of Building 1 and 12 percent of Building 2 during the measurement period under § 1.141-3(g) and private payments of 4 percent of the 2017 bonds in respect of Building 1 and 6 percent of the 2017 bonds in respect of Building 2. These arrangements result in a total of 10 percent of the proceeds of the 2017 bonds being used for a private business use and total private payments of 10 percent. In 2022, D purports to make a multipurpose issue allocation under paragraph (d) of this section of the outstanding 2017 bonds, allocating the issue into two separate issues of equal amounts with one issue allocable to Building 1 and the second allocable to Building 2. An allocation is unreasonable under paragraph (d) of this section if it achieves more favorable results under section 141 than could be achieved with actual separate issues. D's allocation is unreasonable because, if permitted, it would allow more favorable results under section 141 for the 2017 bonds (that is, private business use and private payments that exceed 10 percent for the 2017 bonds allocable to Building 2) than could be achieved with actual separate issues. In addition, if D's purported allocation was intended to result in two separate issues of tax-exempt governmental bonds (versus tax-exempt private activity bonds), the allocation would violate paragraph (d) of this section in the first instance because the allocation to the separate issue for Building 2 would fail to qualify separately as an issue of tax-exempt governmental bonds as a result of its 12 percent of private business use and private payments.
(iii) The facts are the same as in paragraph (ii) of this Example 5, except that as part of the same issue, D issues bonds for a privately used airport. The airport bonds, if issued as a separate issue, would be qualified private activity bonds. The remaining bonds, if issued separately from the airport bonds, would be governmental bonds. Treated as one issue, however, the bonds are taxable private activity bonds. Therefore, D makes its allocation of the bonds under paragraph (d) of this section and § 1.150-1(c)(3) into 3 separate issues on or before the issue date. Assuming all other applicable requirements are met, the bonds of the respective issues will be tax-exempt qualified private activity bonds or governmental bonds.
(a) Scope. The effective dates of this section apply for purposes of §§ 1.141-1 through 1.141-14, 1.145-1 through Start Printed Page 656461.145-2, and 1.150-1(a)(3) and the definition of bond documents contained in § 1.150-1(b).
(4) Certain remedial actions—(i) General rule. For bonds subject to § 1.141-12, the provisions of § 1.141-12(d)(3), (i), (j), and (k), Example 8, apply to deliberate actions that occur on or after January 25, 2016.
(ii) Special rule for allocations of nonqualified bonds. For purposes of § 1.141-12(j)(2), in addition to the allocation methods permitted in § 1.141-12(j)(2), an issuer may treat bonds with the longest maturities (determined on a bond-by-bond basis) as the nonqualified bonds, but only for bonds sold before January 25, 2016.
(2) Transition rule for pre-effective date bonds. For purposes of paragraphs (e)(1) and (h) of this section, issuers may apply § 1.141-12 to bonds issued before May 16, 1997, without regard to paragraph (d)(5) thereof with respect to deliberate actions that occur on or after April 21, 2003.
(l) Applicability date for certain regulations relating to allocation and accounting—(1) In general. Except as otherwise provided in this section, §§ 1.141-1(e), 1.141-3(g)(2)(v), 1.141-6, 1.141-13(d), and 1.145-2(b)(4), (b)(5), and (c)(2) apply to bonds that are sold on or after January 25, 2016 and to which the 1997 regulations (as defined in paragraph (b)(1) of this section) apply.
(2) Permissive application. Issuers may apply §§ 1.141-1(e), 1.141-3(g)(2)(v), 1.141-6, and 1.145-2(b)(4), (b)(5), and (c)(2), in whole but not in part, to bonds to which the 1997 regulations apply.
(m) Permissive retroactive application of certain regulations. Issuers may apply § 1.141-13(d) to bonds to which § 1.141-13 applies.
Par. 9. Section 1.145-2 is amended by adding paragraphs (b)(4) and (b)(5) and revising the first sentence of paragraph (c)(2) to read as follows:
(2) Costs of issuance. Sections 1.141-3(g)(6) and 1.141-6(d) do not apply to the extent costs of issuance are allocated among the other purposes for which the proceeds are used or to portions of a project. * * *
Par. 10. Section 1.150-5 is amended by revising paragraph (a)(1) to read as follows: