October 22, 1993
TO: TAX COMMITTEE NO. 37-93
RE: TAX-EXEMPT FUND RULING DISCUSSED AT OCTOBER MEETING
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Last week, the Tax Committee addressed several issues arising from the
recent tax law change that treats as ordinary income the market discount
realized upon the disposition of tax-exempt obligations purchased after April
30, 1993. During the discussion, reference was made to the attached private
letter ruling, which permits designations of taxable and tax-exempt income in
a tax-exempt fund to be made in a non-pro rata manner. At the Committee’s
request, the Institute is distributing the ruling because of its potential
application to the market discount issue relating to pro rata allocations of
expenses under Code Section 265(a)(3).
We will keep you informed of developments.
Keith D. Lawson
Associate Counsel - Tax
Attachment