### Question
What is the definition of qualified tax-exempt obligation?


### Answer
The definition of **qualified tax-exempt obligation** is as follows 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**

