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In 1934 the Bureau began to distinguish among special
assessment obligations primarily on the basis of what they were
called. See G.C.M. 13469, XIII-2 C.B. 125, 125-126.
Accordingly, in 1935, the following language was added to Article
22(b)(4)(1), "Interest upon State obligations", Regulations 86:
"Special tax bills issued for special benefits to property, if
such tax bills are legally collectible only from owners of the
property benefited, are not the obligations of a State,
Territory, or political subdivision." This language reflected
the Bureau's position in G.C.M. 13469, supra, that special
assessment bonds otherwise satisfying the requirements of the
exclusion were exempt, see, e.g., Estate of Shamberg v.
Commissioner, 3 T.C. 131 (1944), affd. 144 F.2d 998 (2d Cir.
1944); Garland v. Commissioner, 42 B.T.A. 324 (1940); Carey-Reed
Co. v. Commissioner, 36 B.T.A. 36 (1937), affd. 101 F.2d 602, 603
(6th Cir. 1939); Pontarelli v. Commissioner, 35 B.T.A. 872
(1937), affd. 97 F.2d 793 (7th Cir. 1938), while special
assessment bills, certificates, and warrants were not, see, e.g.,
District Bond Co. v. Commissioner, 113 F.2d 347 (9th Cir. 1940)
(following Bryant v. Commissioner, 111 F.2d 9 (9th Cir. 1940),
revg. 38 B.T.A. 618 (1938)), revg. 39 B.T.A. 739 (1939); Avery v.
Commissioner, 111 F.2d 19 (9th Cir. 1940); Morrison Bond Co. v.
Commissioner, 42 B.T.A. 720 (1940) (modification of opinion in
response to Bryant v. Commissioner, supra); Estate of Bekins v.
Commissioner, 38 B.T.A. 604 (1938); T.I. Stoner v. Commissioner,
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