WASHINGTON -- A U.S. tax court judge has ruled against a proposal that would have allowed New York City to use a greater portion of its bond proceeds for housing loans without violating the tax law's limit on lending proceeds to private individuals.

Judge Lapsley W. Hamblen on Tuesday denied New York's appeal of a 1992 Internal Revenue Service ruling, saying that to approve the city's proposal "would undermine the specific choices Congress made in deciding which loans that benefit both private and public purposes should be eligible for tax-exempt status."

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