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Municipal Bond Fund Changes Related To Tax Reform
Old 01-22-2018, 04:30 PM   #1
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Municipal Bond Fund Changes Related To Tax Reform

I hold a substantial amount of Columbia Minnesota Tax-Exempt Fund (IMNTX)

Today I received an email which included a link to an article from December 7th 2017

Here's the part that made me take notice.

This is where tax reform comes in. Specifically, itís the debate about private activity bonds (PABs) thatís weighing on munis now.

PABs are a special form of municipal bond in which a municipality issues a bond, then lets a private company use those funds to build something that benefits the public, like a hospital or new power lines.

Right now, PABs have tax-free status, but that status may disappear as soon as New Yearís. Thatís because the tax plan passed by the House of Representatives cuts it, while the Senate plan keeps it. The two sides are battling it out right now.

I'm far from a Muni expert, so I'm hoping someone here might know more.

FYI: I just called Columbia, & the rep I talked would only say that they haven't heard anything yet.

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Old 01-22-2018, 05:13 PM   #2
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This should be known already. Your Dec 7 article is out of date as the two different bills were reconciled and passed.

OK - indications are that private activity bonds remain protected under the new tax law.
Participants in the municipal bond market are breathing easier after Congress passed sweeping changes to the American tax code without provisions under an earlier House bill that would have eliminated approximately 25% of the tax-exempt bond market by taxing interest earned on all private activity bonds (including 501(c)(3) bonds, exempt facility bonds, student loan bonds and mortgage bonds).
Although it looks like there are some restrictions for bonds issued after 2017.

I’ve been avoiding private activity bonds as much as possible because I am subject to AMT.

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Old 01-22-2018, 05:27 PM   #3
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Thank You Audrey
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