(i) In general.
In determining payments and receipts on purpose investments, qualified administrative costs described in this paragraph (e)(3) paid by the conduit borrower are taken into account. Thus, these costs increase the payments for, or decrease the receipts from, the purpose investments. This rule applies even if those payments merely reimburse the issuer. Although the actual payments by the conduit borrower may be made at any time, for this purpose, a pro rata portion of each payment made by a conduit borrower is treated as a reimbursement of reasonable administrative costs, if the present value of those payments does not exceed the present value of the reasonable administrative costs paid by the issuer, using the yield on the issue as the discount rate.
(ii) Definition of qualified administrative costs of purpose investments --
(A) In general.
Except as otherwise provided in this paragraph (e)(3)(ii), qualified administrative costs of a purpose investment means --
(1) Costs or expenses paid, directly or indirectly, to purchase, carry, sell, or retire the investment; and
(2) Costs of issuing, carrying, or repaying the issue, and any underwriters‘ discount.
(B) Limitation on program investments.
For a program investment, qualified administrative costs include only those costs described in paragraph (e)(3)(ii)(A)(2) of this section.
[T.D. 8418, 57 FR 20971-21033, May 18, 1992; corrected by 57 FR 44974-44989, Sept. 30, 1992; revised by T.D. 8476, 58 FR 33510-33553, June 18, 1993, as corrected by 58 FR 44451-44454, Aug. 23, 1993; amended by T.D. 8538, 59 FR 24039-24046, May 10, 1994; T.D. 8718, 62 FR 25502-25514, May 9, 1997; T.D. 8801, 63 FR 71748-71752, Dec. 30, 1998.]