A Tax Anticipation Note (TAN) is a short-term debt instrument issued by a municipality to finance current operating expenses in anticipation of future tax revenue. TANs are typically issued in the months leading up to the municipality's fiscal year, and are repaid from tax revenue received during that fiscal year.
TANs are similar to Tax Revenue Anticipation Notes (TRANs), which are also issued to finance current operating expenses in anticipation of future tax revenue. However, TRANs are typically issued during the municipality's fiscal year, and are repaid from tax revenue received during that fiscal year. Are tax anticipation notes taxable? The answer is: it depends.
If the tax anticipation note is issued by a state or local government, then the answer is generally no, because the interest on these types of bonds is exempt from federal income tax.
However, if the tax anticipation note is issued by a corporation, then the answer is yes, because the interest on corporate bonds is taxable.
What is a tax note? A tax note is a municipal bond issued by a state or local government to finance a specific project or purpose. The interest on tax notes is usually exempt from federal and state income taxes, making them attractive investments for taxpayers in high tax brackets.
Are tax anticipation notes money market instruments?
Yes, tax anticipation notes (TANs) are money market instruments. TANs are short-term debt obligations issued by municipalities in anticipation of future tax revenue. They are typically issued with maturities of one year or less, and are often used to finance short-term operating expenses. What are TANs RANs and BANs? A TAN, or tax anticipation note, is a short-term debt issued by a municipality in order to raise funds for upcoming expenses.
A RAN, or revenue anticipation note, is a short-term debt issued by a municipality in order to raise funds for upcoming revenue.
A BAN, or bond anticipation note, is a short-term debt issued by a municipality in order to raise funds for an upcoming bond issuance.
What does anticipation mean in accounting?
In accounting, anticipation refers to the act of expecting or anticipating something. In the context of municipal bonds, anticipation refers to the act of expecting or anticipating that the municipality will issue bonds in the future. This is often done in order to secure financing for a project or to avoid having to pay interest on a loan.