SECTION 4. — Internal Revenue Bulletin

.01 Conditions to making special yield reduction payments. For purposes of § 148(a), an issuer of State or local bonds may reduce the amount of receipts from an investment (an ‘‘alternative investment’’) purchased with proceeds of the bonds by the amount of a payment made to the United States if the following requirements are satisfied:

(1) The alternative investment is purchased on a date when the issuer is unable to purchase SLGS in lieu of the alternative investment because the Department of the Treasury has suspended sales of SLGS.

(2) The issuer reasonably expected on the issue date of the bonds that it would use bond proceeds to purchase SLGS on a date described in section 4.01(1) of this revenue procedure. (3) The maturity date of the alternative investment is not more than 90 days from the date of purchase of the alternative investment.

(4) The issuer exercises reasonable diligence to use the proceeds of the maturing alternative investment to purchase SLGS, if available, for the remainder of the term that was reasonably expected on the issue date.

(5) The payment to the United States is made not later than 180 days after the date of purchase of the alternative investment.

(6) The purchase price of the alternative investment does not exceed the fair market value of the alternative

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investment, and the issuer maintains books and records relating to the establishment of the purchase price.

(7) The payment to the United States is equal to the difference between the purchase price of the alternative investment on the date of purchase and the amount of all receipts from the alternative investment.

.02 Manner of making special yield reduction payments. Except as otherwise provided in section 4.01 of this revenue procedure, payments made under this revenue procedure must be made in the same manner as yield reduction payments under § 1.148–5T(c)(2)(i). The following statement should be noted in the top margin of Form 8038–T: ‘‘Special Yield Reduction Payment Made Pursuant to Revenue Procedure 95–47.’’