SECTION 6. CLOSING AGREEMENT

AMOUNT

.01 The closing agreement amount is equal to:

(1) The excess of the amount paid by the issuer for the nonpurpose investments deposited in the advance refunding escrow over the spot price (as described in section 6.02 of this revenue procedure) of those nonpurpose investments (this excess is referred to as the ‘‘differential amount’’); plus

(2) Interest on the differential amount from the issue date of the bonds to the date of payment at an interest rate equal to the yield on the issue of bonds.

.02 The spot price is the noncontingent price on the trade date of a nonpurpose investment for delivery on the next business day after the trade date.

.03 In the case of an agreement to purchase Treasury securities described in section 2.15 of this revenue procedure, the differential amount must include the

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value of a call option on an equivalent portfolio of Treasury securities for the period from the sale date to the issue date of the advance refunding bonds at a strike price for the portfolio equal to the price established in the agreement.

.04 Use of the spot price as the basis for the settlement amount under this revenue procedure is for the administrative convenience of state and local government issuers and the Service and does not reflect a view by the Service that the spot price closely reflects the fair market value in all cases of a contingent forward price for the portfolio. For example, in many cases, use of the noncontingent forward price for Treasury securities may be a more accurate basis for determining the fair market value of the contingent forward price.

.05 Use of the spot price of the nonpurpose investments is not permitted if the period between the sale date and the issue date of the issue of bonds was greater than 1 month.