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investment of a given sum at the rate of the higher yielding
GIC's would substantially exceed amounts earned upon investment
of that same sum at the yield rate of the Bonds.
The regulations calculate the excess amount to be paid to
the United States as the future value of all nonpurpose receipts
over the future value of all nonpurpose payments. Sec. 1.148-
2(a)(1) and (2), Income Tax Regs. "Receipts" are defined to
include any amount actually or constructively received with
respect to the investment (but not reduced by administrative or
similar expenses). Sec. 1.148-2(b)(2)(i), Income Tax Regs.15
"Payments" are defined to include the amount of gross proceeds of
the bond issue to which the investment is allocated (not
including administrative or similar expenses), whether or not the
investment was directly purchased with such gross proceeds. Sec.
1.148-2(b)(3)(i) and (ii), Income Tax Regs.
The parties have stipulated the schedule of payments for and
receipts pursuant to the Whitewater GIC as follows:
Date Payment Receipt
2/20/86 $16,110,817.98
5/27/86 $678,125
11/26/86 678,125
5/27/87 678,125
11/25/87 678,125
5/27/88 678,125
11/25/88 678,125
15For an investment held at the end of a computation period,
the term "receipt" includes the fair market value of the
investment at the end of that period. Sec. 1.148-2(b)(2)(iii),
Income Tax Regs.
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