### Question
How is the term qualified 501(c)(3) bond defined?


### Answer
The term **qualified 501(c)(3) bond** is defined in *26 U.S.C. § 145* as the following:

> any private activity bond issued as part of an issue if—


(1) all property which is to be provided by the net proceeds of the issue is to be owned by a 501(c)(3) organization or a governmental unit, and


(2) such bond would not be a private activity bond if—


(A) 501(c)(3) organizations were treated as governmental units with respect to their activities which do not constitute unrelated trades or businesses, determined by applying section 513(a), and


(B) paragraphs (1) and (2) of section 141(b) were applied by substituting “5 percent” for “10 percent” each place it appears and by substituting “net proceeds” for “proceeds” each place it appears

#### Citation:
  - *26 U.S.C. § 145*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter B-Computation of Taxable Income > PART IV-TAX EXEMPTION REQUIRE- > Subpart A-Private Activity Bonds**

