Yield Restriction

06-Oct-2009 Watching For Yield Restriction
Yield Restriction is an important part of any tax-exempt compliance that is oftentimes overlooked.  The Yield Restriction rules have been in effect long before the Tax Reform Act of 1986.  Yield Restriction rules typically give issuers a specific period of time to expend the bond proceeds before having to conform to the rules.  If issuers cannot expend the required bond proceeds in the allocated time period, issuers must perform a Yield Restriction calculation in addition to an Arbitrage Rebate calculation.  Sometimes this can be missed, so make sure you are watching out for Yield Restriction.  Typically, issuers will need to determine if an Arbitrage Rebate Payment or a Yield Reduction Payment should be submitted to the United States Treasury.  If you think you may have overlooked any potential Yield Restriction requirements, please send inquiries to mshugart@cdafinance.com.