# Prop. Treas. Reg. § 1.150-1: Definitions.

Proposed regulation, not in force. REG-117298-21, 91 FR 12118, published 2026-03-12 <https://www.federalregister.gov/documents/2026/03/12/2026-04798/guidance-on-tax-exempt-refunding-bonds>. Interprets 26 U.S.C. § 150.

Par. 9. Section 1.150-1 is amended by: 1. Adding paragraph (a)(5). 2. In paragraph (b), revising the definition of Tax-exempt bond. 3. Revising paragraphs (d)(1) and (d)(2)(iii)(A). 4. Redesignating paragraph (d)(2)(iii)(C) as paragraph (d)(2)(iii)(D). 5. Adding new paragraph (d)(2)(iii)(C) and paragraph (d)(6). The additions and revisions read as follows:

(a) * * *

(5) Applicability date for special rules for purpose investments and definition of proceeds. The definition of tax-exempt bond in paragraph (b) of this section and paragraphs (d)(1), (d)(2)(iii)(A) and (C), and (d)(6) of this section apply to bonds sold on or after [the date 90 days after the date of publication of final regulations in the Federal Register ].

(b) * * *

Tax-exempt bond means any bond the interest on which is excludable from gross income under section 103(a). For purposes of section 148, tax-exempt bond includes:

(1) An interest in a regulated investment company to the extent that at least 95 percent of the income to the holder of the interest is interest that is excludable from gross income under section 103; and

(2) A certificate of indebtedness, including a special 90-day certificate of indebtedness, issued by the United States Treasury pursuant to the Demand Deposit State and Local Government  Series program described in 31 CFR part 344.

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(d) * * *

(1) General definition of refunding issue. Refunding issue means an issue of obligations the proceeds (as defined in paragraph (d)(6) of this section) of which are used to pay principal, interest, or redemption price on another issue (a prior issue, as more particularly defined in paragraph (d)(5) of this section), including the issuance costs, accrued interest, capitalized interest on the refunding issue, a reserve or replacement fund, or similar costs, if any, properly allocable to that refunding issue.

(2) * * *

(iii) * * *

(A) Refunding of a conduit financing issue by a conduit loan refunding issue. Except as provided in paragraphs (d)(2)(iii)(B) and (C) of this section, the use of the proceeds of an issue that is used to refund an obligation that is a purpose investment (a conduit refunding issue ) by the actual issuer of the conduit financing issue determines whether the conduit refunding issue is a refunding of the conduit financing issue (in addition to a refunding of the obligation that is the purpose investment).

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(C) Issue used to refinance qualified student loans. An issue is not a refunding issue to the extent that the actual issuer reasonably expects as of the issue date of the issue to use net proceeds of the issue within two years of the issue date to refinance one or more obligations that are qualified student loans (as defined in paragraph (b) of this section).

* * * * *

(6) Definition of proceeds. For purposes of this paragraph (d), proceeds means any sale proceeds, investment proceeds, or transferred proceeds (all as defined in § 1.148-1(b)), except that proceeds does not include investment proceeds (or transferred proceeds allocable to investment proceeds) received from investing in a qualified mortgage loan or a qualified student loan.

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