Beginning in 1998, state or local governments can issue qualified
zone academy bonds to raise funds for the use of a "qualified zone
academy." However, these bonds require a private business
contribution. Certain banks, insurance companies, and corporations
actively engaged in the business of lending money can receive a tax
credit as an incentive to hold these bonds. For more information about
claiming the credit, see Form 8860.
Contact the appropriate state or local government agency to find
out if qualified zone academy bonds are available in your area.
Qualified zone academy.
A qualified zone academy is a public school (or academic program
within a public school) at the secondary level or below that meets
certain requirements. It must be located in either an empowerment zone
or an enterprise community, or there must be a reasonable expectation
when the bonds are issued that at least 35% of the school's students
(or program's participants) will be eligible for free or reduced-cost
lunches under the school lunch program established under the National
School Lunch Act. A qualified zone academy must also meet other
requirements.
Private business contribution requirement.
Before qualified zone academy bonds can be issued, the local
educational agency (as defined in section 14101 of the Elementary and
Secondary Education Act of 1965) must obtain written commitments from
private entities for qualified contributions with a present value (as
of the bond issue date) of not less than 10% of the proceeds of the
bond issue.
A qualified contribution is a contribution made with the approval
of the local educational agency of any property or service from the
following list.
- Equipment for use in the qualified zone academy.
- Technical assistance in developing curriculum or in training
teachers to promote appropriate market driven technology in the
classroom.
- Services of employees as volunteer mentors.
- Internships, field trips, or other educational opportunities
outside the academy for students.
- Any other property or service specified by the local
educational agency.
More information.
For more information about qualified zone academy bonds, see
section 1397E of the Internal Revenue Code and the regulations under
that section.
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