687 



amount of such assessment paid or Incurred by 

 the taxpayer during the taxable year (determined 

 without the application of this paragraph) Is In 

 excess of an amount equal to 10 percent of the 

 aggregate amounts which have been and will be as- 

 sessed as the taxpayer's share of the expenditures 

 by the district for such property, and If such ex- 

 cess Is more than S500, the entire excess shall be 

 treated as paid or Incurred ratably over each of 

 the 9 succeeding taxable years. 



(2) Disposition of land during 9-year period. 



If paragraph ill applies to an assessment and 

 the land with respect to which such assessment 

 was made Is sold or otherwise disposed of by the 

 taxpayer (other than by the reason of his death) 

 during the 9 succeeding taxable years, any amount 

 of the excess described In paragraph d) which 

 has not been treated as paid or Incurred for a tax- 

 able year ending on or before the sale or other 



disposition shall be kdded to the adjusted basis 



of such land Immediately prior to Its sale or other 

 disposition and shall not thereafter be treated as 

 paid or incurred ratably under paragraph d). 



(3) Disposition by reason of death. 



If paragraph (1) applies to an assessment and 

 the taxpayer dies during the 9 succeeding taxable 

 years, any amount of the excess described In para- 

 graph ill which has not been treated as paid or 

 Incurred for a taxable year ending before his death 

 shall be treated as paid or Incurred In the taxable 

 year In which he dies. 



(Aug, 16, 1954, ch. 736. 68A Stat. 67: Oct. 22. 1968. 



Pub. L. 90-630. $ 5(a), (bi, 82 Stat. 1329.' 



Amendments 



1968— Subsec, (C)(ll, Pub. L. 90-630. §5(a), In the 

 material following subpar. iBl. designated as cl. (I) exist- 

 ing provisions covering amounts which. If paid or Incurred 

 by the taxpayer, would wthout regard to the exception 

 constitute deductible expenditures, and added cl (ID. 



Subsec. (f). Pub, L, 90-630. jSibl, added subsec. (f), 



8. Interest in Certain Governmental Obligations 



26 US.C. 103 



§ 103. Interest on certain governmental obligations, 

 (a) General rule. 



Gross Income does not Include Interest on — 



(1) the obligations of a State, a Territory, or a 

 possession of the United States, or any political 

 subdivision of any of the foregoing, or of the 

 District of Columbia; and 



(2) qualified scholarship funding bonds. 



(b) Industrial development bonds. 

 (1) Subsection (a)(1) or (2) not to apply. 



Except as otherwise provided in this subsection, 

 any industrial development bond shall be treated 

 as an obligation not described in subsection (a) ( I) . 



(2) Industrial development bond. 



For purposes of this subsection, the term "indus- 

 trial development bond" means any obligation — 



(A) which is issued as part of an issue all or a 

 major pwrtion of the proceeds of which are to 

 be used directly or indirectly in any trade or 

 business carried on by any person who is not 

 an exempt person (within the meaning of para- 

 graph (3)1, and 



(B) the payment of the principal or interest 

 on which (under the terms of such obligation or 

 any Underlying arrangement) is, in whole or in 

 major part — 



(i) secured by any interest in property used 

 or to be used in a trade or business or in 

 payments in respect of such property, or 



Cii) to be derived from payments in respect 

 of property, or borrowed money, used or to 

 be used in a trade or business. 



(3) Exempt person. 



For purposes of paragraph (2) (A), the term 



"exempt person" means — 



(A) a governmental unit, or 



(B) an organization described in section 501 

 (c) (3) and exempt from tax under section 501 

 (a) (but only with respect to a trade or busi- 

 ness carried on by such organization which 

 is not an unrelated trade or business, deter- 

 mined by applying section 513(a) to such or- 

 ganization ) . 



(4) Certain exempt activities. 



Paragraph ( 1 1 shall not apply to any obligation 

 which is issued as part of an issue substantially all 

 of the proceeds of which are to be used to pro- 

 vide — 



(A) residential real property for family units, 

 (Bi sports facilities, 



(C) convention or trade show facilities, 

 (Di airports, docks, wharves, mass commut- 

 ing facilities, parking facilities, or storage or 

 training facilities directly related to any of the 

 foregoing. 



(E) sewage or solid waste disposal facilities or 

 facilities for the local furnishing of electric 

 energy or gas, 



(F) air or water pollution control facilities, or 



(G) facilities for the furnishing of water. If 

 available on reasonable demand to members of 

 the general public. 



(5) Industrial parks. 



Paragraph 1 1 ) shall not apply to any obligation 

 Issued as part of an issue substantially all of the 

 proceeds of which are to be used for the acquisi- 

 tion or development of land as the site for an In- 

 dustrial park. For purposes of the preceding sen- 

 tence, the term 'development of land" includes 

 the provision of water, sewage, drainage, or slml- 



