N-23-39, proposed amendments to section 148 regs.

 Notice 2023-39 describes proposed amendments to the Income Tax Regulations (26 CFR part 1) under § 148 of the Internal Revenue Code (Code) that the Department of the Treasury and the Internal Revenue Service intend to issue (forthcoming proposed regulations) regarding an exception to the arbitrage investment restrictions under § 148 applicable to bonds the interest on which is excludable from gross income under § 103(a) (tax-exempt bonds). Specifically, the forthcoming proposed regulations will amend § 1.148-11(d)(1)(i)(F) regarding whether certain perpetual trust funds created and controlled by States that are pledged as credit enhancement to guarantee tax-exempt bonds will be treated as replacement proceeds of the guaranteed bonds for purposes of the arbitrage investment restrictions on tax-exempt bonds under § 148.