Qualified Scholarship Funding Bond Interest Exclusion

§ 150. Definitions and special rules(a) General ruleFor purposes of this part—(1) BondThe term “bond” includes any obligation. (2) Governmental unit not to include Federal GovernmentThe term “governmental unit” does not include the United States or any agency or instrumentality thereof. (3) Net proceedsThe term “net proceeds” means, with respect to any issue, the proceeds of such issue reduced by amounts in a reasonably required reserve or replacement fund. (4) 501(c)(3) organizationThe term “501(c)(3) organization” means any organization described in section 501(c)(3) and exempt from tax under section 501(a). (5) Ownership of propertyProperty shall be treated as owned by a governmental unit if it is owned on behalf of such unit. (6) Tax-exempt bondThe term “tax-exempt” means, with respect to any bond (or issue), that the interest on such bond (or on the bonds issued as part of such issue) is excluded from gross income. (b) Change in use of facilities financed with tax-exempt private activity bonds(1) Mortgage revenue bonds(A) In generalIn the case of any residence with respect to which financing is provided from the proceeds of a tax-exempt qualified mortgage bond or qualified veterans’ mortgage bond, if there is a continuous period of at least 1 year during which such residence is not the principal residence of at least 1 of the mortgagors who received such financing, then no deduction shall be allowed under this chapter for interest on such financing which accrues on or after the date such period began and before the date such residence is again the principal residence of at least 1 of the mortgagors who received such financing. (B) ExceptionSubparagraph (A) shall not apply to the extent the Secretary determines that its application would result in undue hardship and that the failure to meet the requirements of subparagraph (A) resulted from circumstances beyond the mortgagor’s control. (2) Qualified residential rental projectsIn the case of any project for residential rental property—(A) with respect to which financing is provided from the proceeds of any private activity bond which, when issued, purported to be a tax-exempt bond described in paragraph (7) of section 142(a), and (B) which does not meet the requirements of section 142(d), no deduction shall be allowed under this chapter for interest on such financing which accrues during the period beginning on the 1st day of the taxable year in which such project fails to meet such requirements and ending on the date such project meets such requirements. If the provisions of prior law corresponding to section 142(d) apply to a refunded bond, such provisions shall apply (in lieu of section 142(d)) to the refunding bond.