### Question
How does the law define qualified borrower?


### Answer
Under *26 U.S.C. § 265*, **qualified borrower** is defined as:

> a borrower which is a State or political subdivision thereof or an organization described in section 501(c)(3) and exempt from taxation under section 501(a)

#### Citation:
  - *26 U.S.C. § 265*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter B-Computation of Taxable Income > PART IX-ITEMS NOT DEDUCTIBLE**

