WASHINGTON - Internal Revenue Service agents investigating bond issues should pay special attention to transactions with unusual debt service structures or investments that were not purchased at fair market value, the agency says in a training manual released yesterday.

Agents working in the new tax-exempt bond enforcement program should also pay close attention to bond transactions that "reimburse" issuers for prior expenditures or that contain "replacement proceeds," the manual says. Replacement proceeds are created when projects are financed with bonds. Because the project is bond-financed, funds that would otherwise have been used to finance it are freed up and can be invested to earn profits.

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