Glossary of Municipal Securities Terms


Municipal securities theĀ interest on which is included in gross income for federal income tax purposes. In some cases, municipal securities are initially issued on a tax-exempt basis but subsequent events (e.g., failure to comply with arbitrage requirements or change in use of proceeds to a non-qualifying purpose) may cause the Internal Revenue Service to declare the issue taxable. See: ALTERNATIVE MINIMUM TAX; ARBITRAGE BONDS; BUILD AMERICA BONDS; PRIVATE ACTIVITY BOND; QUALIFIED BOND; VOLUME CAP. Compare: AMT BOND; TAXABLE SECURITY; TAX-EXEMPT BOND.

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