WASHINGTON -- The tax-exempt status of a multifamily housing bond issue will not be jeopardized if only part of the issue is redeemed with money from the foreclosure sales of seven of the 33 projects that were financed with the bonds, the Internal Revenue Service has ruled.

Bond lawyers said the ruling, which the IRS published yesterday, is favorable to issuers and will be particularly helpful during recessions because it will not force them to sell all of the residential rental projects financed by a tax-exempt multifamily bond issue when only some of those projects are in serious financial difficulties.

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