IRS Publishes Maximum Face Amounts For Qualified Zone Academy Bonds.

Rev. Proc. 2002-25

SECTION 1. PURPOSE

Pursuant to § 1397E(e)(2) of the Internal Revenue Code, this revenue procedure allocates among the States the 2002 national limitation amount of Qualified Zone Academy Bonds ("Bond" or "Bonds") that may be issued for the calendar year 2002. For this purpose "State" includes the District of Columbia and the possessions of the United States. SECTION 2. BACKGROUND

.01 Section 226 of the Taxpayer Relief Act of 1997, Pub. L. 105- 34, 111 Stat. 821 (1997), added § 1397E to the Internal Revenue Code to provide a credit to holders of Bonds under certain circumstances so that the Bonds generally can be issued without discount or interest. Ninety-five percent of Bond proceeds are to be used for qualified purposes, as defined by § 1397E(d)(5), with respect to a qualified zone academy, as defined by § 1397E(d)(4).

.02 Section 1397E(e)(1), as amended by § 608 of the Job Creation and Worker Assistance Act of 2002, Pub. L. 107-147, 116 Stat. 21(2002), provides that the national limitation amount of Bonds that may be issued is $400 million for each of the years 1998, 1999, 2000, 2001, 2002, and 2003. This amount is to be allocated among the States by the Secretary on the basis of their respective populations below the poverty level (as defined by the Office of Management and Budget) and is to be further allocated by each State to qualified zone academies within the State.

.03 Section 1397E(e)(4), as amended, by § 509 of the Tax Relief Extension Act of 1999, Pub. L. 106-170, 113 Stat. 1860(1999) provides that any carryforward of a limitation amount may be carried only to the first 2 years (3 years for carryforwards from 1998 or 1999) following the unused limitation year. For this purpose a limitation amount shall be treated as used on a firstin firstout basis.

.04 Rev. Proc. 98-9, 1998-1 C.B. 341, Rev. Proc. 98-57, 1998-2 C.B. 682, Rev. Proc. 2000-10, 2000-2 I.R.B. 287, and Rev. Proc. 2001-14, 2001-3 I.R.B. 343, respectively, allocated the national limitation for 1998, 1999, 2000, and 2001 among the States.

SECTION 3. NATIONAL QUALIFIED ZONE ACADEMY BOND LIMITATION FOR 2002

The 2002 national limitation amount for Bonds is $400 million. This amount is allocated among the States as follows:

      STATE                              MAXIMUM FACE AMOUNT OF

This revenue procedure is effective April 29, 2002, and applies to Bonds issued after March 9, 2002. DRAFTING INFORMATION

The principal author of this revenue procedure is Zoran Stojanovic of the Office of Assistant Chief Counsel (Tax Exempt/Employment Tax/Government Entities). For further information regarding this revenue procedure contact Mr. Stojanovic on (202) 622- 3980 (not a toll-free call).