4.8.2 Bond Proceeds

For tax purposes, different arbitrage rules apply to different categories of bond proceeds. In general, the investment of proceeds must be tracked until the proceeds are spent for tax purposes, which may include a proper allocation to reimburse prior expenditures, as described in Section 4.4.5, Reimbursement of Prior Expenditures. In addition, under certain circumstances, unspent proceeds may be reallocated from one bond issue to another (for example, through a refunding), or may be deallocated from a bond issue under specific tax rules based on the amount of bonds outstanding.