4.2.1 General

Generally, interest on obligations issued by a state (including the District of Columbia and any possession or territory of the United States) or political subdivision thereof (also referred to as a “state or local governmental unit”) is excluded from gross income for federal income tax purposes subject to the satisfaction of certain requirements under the Tax Code and Regulations. In addition, tax exempt obligations may be issued by certain other entities and will be treated as tax exempt obligations issued “on behalf of” a state or local governmental unit.