### Question
How is the "qualified bond" defined?


### Answer
The term **qualified bond** is defined in *26 U.S.C. § 54AA* as follows -

> any build America bond issued as part of an issue if—


(A) 100 percent of the excess of—


(i) the available project proceeds (as defined in section 54A) of such issue, over


(ii) the amounts in a reasonably required reserve (within the meaning of section 150(a)(3)) with respect to such issue,


  

are to be used for capital expenditures, and


(B) the issuer makes an irrevocable election to have this subsection apply

#### Citation:
  - *26 U.S.C. § 54AA*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter A-Determination of Tax Liability > PART IV-CREDITS AGAINST TAX > Subpart J-Build America Bonds**

