Federal Public Law 111-5, the
American Recovery and Reinvestment Act of 2009, amends the Internal Revenue Code (IRC) to provide the federal tax treatment of Build America Bonds. The term "Build America Bonds" means any obligation (other than a private activity bond) if (1) the interest on such obligation would (but for IRC sec. 54AA) be excludable from gross income under sec. 103, IRC, (2) such obligation is issued before January 1, 2011, and (3) the issuer makes an irrevocable election to have sec. 54AA apply.
Section 103 of the IRC provides an exclusion from federal income for interest on any State or local bond.
For federal tax purposes, sec. 54AA provides that the holder of a Build America Bond is allowed a federal income tax credit equal to 35% of the amount of interest payable by the issuer. The holder must include the amount of interest income from the bond in federal gross income.
Interest income from Build American Bonds is interest from state and local bonds and is taxable to Wisconsin.
March 8, 2010