WASHINGTON - The Internal Revenue Service has concluded audits of two 1992 bond transactions involving forward-float agreements that the agency claimed were purchased below fair market value, making the bonds taxable arbitrage bonds.

In a closing agreement, Minnesota agreed to pay the IRS $20,000 to settle tax law charges surrounding the forward-float agreement in connection with $243.1 million of general obligation refunding bonds it sold. In the other, however, the IRS reversed an earlier preliminary determination that $422.7 million of revenue refunding bonds issued by the New Jersey Highway Authority were taxable, and closed the audit with no change to the bonds' tax-exempt status. The highway authority has since merged with the New Jersey Turnpike Authority.

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.