Colorado Real Estate Journal - IRS Issues Memorandum On Public Infrastructure Financing

Published Article 07/03/2013

On May 9, the national office of the Internal Revenue Service issued a Technical Advice Memorandum finding that a certain community development district in Florida was not a “political subdivision” within the meaning of Section 1.103-1(b) of the Income Tax Regulations. The TAM was generally made available to the public on June 4. Whether a community development district, which is facially similar to a Title 32 special district in Colorado, is a political subdivision under the IRS’s new interpretation of Section 1.103-1(b) has significant ramifications, because interest on bonds sold by an issuer that is a “political subdivision” may qualify under Section 103(a) of the Income Tax Regulations for an exemption from tax liability for federal income tax purposes.

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