IRS Publishes Maximum Face Amounts For Qualified Zone Academy Bonds.

Rev. Proc. 2001-14

SECTION 1. PURPOSE

This revenue procedure sets forth the maximum face amount of Qualified Zone Academy Bonds ("Bond" or "Bonds") that may be issued for each State during 2001. 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 section 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 section 1397E(d)(5), with respect to a qualified zone academy, as defined by section 1397E(d)(4).

.02 Section 1397E(e)(1), as amended by section 509 of the Tax Relief Extension Act of 1999, Pub. L. 106-170, 113 Stat. 1860 (1999) provides that the aggregate amount of Bonds that may be issued for the States is limited to $400 million for each of the years, 1998, 1999, 2000, and 2001 (the "national limitation"). 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 or possession.

.03 Section 1397E(e)(4), as amended, by section 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 first-in first-out basis.

.04 Rev. Proc. 98-9, 1998-3 I.R.B. 56, Rev. Proc. 98-57, 1998-48 I.R.B. 5, and Rev. Proc. 2000-10, 2000-2 I.R.B. 287, respectively, allocated the national limitation for 1998, 1999, and 2000 among the States and possessions.

SECTION 3. SCOPE

This revenue procedure applies to Bonds issued under section 1397E during 2001.

SECTION 4. NATIONAL QUALIFIED ZONE ACADEMY BOND LIMITATION FOR 2001

The total face amount of bonds that may be issued in 2001 is $400 million. This amount is allocated among the States as follows:

                                         MAXIMUM FACE AMOUNT OF

This revenue procedure applies to Bonds issued after December 31, 2000.

DRAFTING INFORMATION

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