rr-03-116.pdf

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing.

This collection currently includes the publisher’s available advance-release directory. Historical bulletin renditions are discovered separately; an advance-release record alone does not certify the collection archive complete.

Part I
Section 147(e).—No Portion of Bonds May Be Issued for Skyboxes, Airplanes,
Gambling Establishments, Etc.

Rul. 2003-116

Whether a helicopter is an “airplane” within the meaning of § 147(e) of the
Inte
r § 501(a) as an
(3). Entity owns and operates certain hospital
facilities that include a trauma center. Entity provides emergency medical care and
trea center to add
ds to purchase a
helicopter to provide helicopter ambulance service to the trauma center for accident
victims and other medical emergencies.
Issuer will issue bonds (Bonds) as qualified 501(c)(3) bonds under § 145 and
r and the

LAW
, gross income does
in part, that
§ 103 (a) shall not apply to any private activity bond that is not a qualified bond (within
the meaning of § 141).

Section 141 provides, in part, that a bond is a private activity bond if the bond is
issued as part of an issue that meets the private business use test of § 141(b)(1) and
the private security or payment test of § 141(b)(2). The private business use test is met
if more than 10 percent of the proceeds of an issue are to be used for any private
business use. The private security or payment test is met if the payment of the principal

Rev.
ISSUE
rnal Revenue Code of 1986.

FACTS

Entity is an organization exempt from Federal income tax unde
organization described in § 501(c)
tment in its trauma center. Entity proposes to expand the trauma
additional emergency rooms. As part of the expansion, Entity inten

loan the proceeds to Entity to finance the expansion of the trauma cente
purchase of the helicopter.

AND ANALYSIS

Section 103(a) provides that, except as provided in § 103(b)
not include interest on any State or local bond. Section 103(b) provides,

of, or the interest on, more than 10 percent of the proceeds of an issue is
indirectly (1) secured by an interest in property used or to be used fo
use, (2) secured by an interest in payments in respect of such property,
directly or
r a private business
or (3) to be
derived from payments, whether or not to the issuer, in respect of property, or borrowed
mo
te activity bond that (1) is a qualified 501(c)(3) bond; (2) meets the applicable
reqf each subsection of
(c)(3) bond”
operty which is to
(3) organization
bond if
nizations were treated as governmental units with respect to their
activities which do not constitute unrelated trades or businesses, determined by
ing “5 percent”
for “proceeds”
Section 147(e) provides that a private activity bond shall not be a qualified bond if
issued as part of an issue and any portion of the proceeds of such issue is to be used to
ility, facility
the sale of

a word is not defined
ing. See
er’s Collegiate
avier-than-air
ty will use a portion of the proceeds of the Bonds to finance the
purchase of a helicopter. Webster’s Collegiate Dictionary defines the term “helicopter”
as “an aircraft whose lift is derived from the aerodynamic forces acting on one or more
powered rotors turning about substantially vertical axes.” It defines the term “aircraft” as
“a vehicle (as an airplane or balloon) for traveling through the air.” Thus, airplanes and
helicopters are types of aircraft, but a helicopter is not an airplane. Accordingly, the
helicopter to be purchased by Entity with proceeds of the Bonds is not an “airplane” for
purposes of § 147(e).

ney, used or to be used for a private business use.

Section 141(e) provides, in part, that the term “qualified bond” includes any
priva
uirements of § 146; and (3) meets the applicable requirements o
§ 147.

Section 145(a) provides, in general, that the term “qualified 501
means any private activity bond issued as part of an issue if (1) all pr
be provided by the net proceeds of the issue is to be owned by a 501(c)
or a governmental unit, and (2) such bond would not be a private activity
(A) 501(c)(3) orga
applying § 513(a), and (B) §§ 141(b)(1) and (2) were applied by substitut
for “10 percent” each place it appears and by substituting “net proceeds”
each place it appears.

provide any airplane, skybox, or other private luxury box, health club fac
primarily used for gambling, or store the principal business of which is
alcoholic beverages for consumption off premises.
Section 147(e) does not define the term “airplane.” When
by statute, it is construed in accord with its ordinary and common mean
Carlson v. Commissioner, 116 T.C. 87, 93 (2001). In this regard, Webst
Dictionary (11
th
Ed. 2003), defines the term “airplane” as a “powered he
aircraft that has fixed wings from which it derives most of its lift.”

Here, Enti

2

3

HO

ot an “airplane” within the meaning of § 147(e).

DR
Vicky Tsilas and Johanna
Som de Cerff of the Office of the Division Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities). For further information regarding this revenue
ruling, contact Vicky Tsilas at (202) 622-3980 (not a toll-free call).

LDING
A helicopter is n
AFTING INFORMATION

The principal authors of this revenue ruling are