IRS Amends Definition of Private Business Use

The IRS has amended the regulations under section 141 defining private business use to accommodate arrangements with terms of use based on months of more than 30 days.

The IRS has received requests for the change to allow additional flexibility in structuring short-term arrangements with nongovernmental persons without running afoul of the private business use test. T.D. 8967 changes reg. section 1.141-3 to provide that specified arrangements do not result in private business use if the term of use does not exceed 50 (rather than 30), 100 (rather than 90), or 200 (rather than 180) days.

The provisions of revised reg. section 141-3 apply to any bond sold after November 19, 2001. The new provisions also may be applied to any bond outstanding on November 20, 2001.

Full Text Citations: Doc 2001-29038 (2 original pages); 2001 TNT 226-23