IRS Chief Counsel Advice - Use of Build America Bond proceeds 

October 31: The IRS this week posted an IRS Chief Counsel Advice memorandum* that addresses when an expenditure of proceeds from an issue of Build America Bonds (with respect to which the issuer irrevocably elected to have section 54AA(g) apply) incurred for bond insurance premium for the issue, is a capital expenditure within the meaning of section 54AA(g)(2)(A). AM2012-005 (dated May 29, 2012, release date of June 22, 2012, and posted October 29, 2012)

The Chief Counsel Advice AM2012-005 [PDF 23 KB] provides that an expenditure of proceeds of an issue of Build America Bonds (with respect to which the issuer irrevocably elected to have section 54AA(g) apply), incurred for bond insurance premium for the issue, is a capital expenditure within the meaning of section 54AA(g)(2)(A).


*Chief Counsel Advice documents are legal advice, signed by executives in the National Office of the IRS Office of Chief Counsel and issued to IRS personnel who are national program executives and managers. The documents are issued to assist IRS personnel in administering their programs by providing authoritative legal opinions on certain matters, such as industry-wide issues. However, they are not to be used or cited as precedent.




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©2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

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