A school district would not be able to issue tax-exempt notes to finance temporary cash-flow shortfalls because of an endowment-like fund it set up with money it received from the settlement of litigation against the state, the Internal Revenue Service concluded in a private-letter ruling.

The ruling, which was dated Aug. 6 but not published until Monday, did not identify the school district and did not surprise bond lawyers.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.