Glossary of Municipal Securities Terms

TAXABLE MUNICIPAL SECURITY

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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