### Question
What does qualified tax-exempt obligation mean?


### Answer
**Qualified tax-exempt obligation** has the following meaning in *26 U.S.C. § 265*:

> a tax-exempt obligation—


(I) which is issued after August 7, 1986, by a qualified small issuer,


(II) which is not a private activity bond (as defined in section 141), and


(III) which is designated by the issuer for purposes of this paragraph

#### 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**

