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first computation date according to respondent. In their briefs,
petitioners did not attempt to refute respondent's calculations.
We are convinced that the amounts earned on the GIC's
substantially exceeded the amounts which would have been earned
if the GIC's had paid a rate equal to the yield of the Bonds.
Petitioners do not seriously contend otherwise. We need not, and
do not, decide the exact amount of that excess. In order to hold
that the Bonds should be treated as arbitrage bonds within the
meaning of section 148(f), it is sufficient to find, as we do,
that the amount earned on the nonpurpose investments (the GIC's)
substantially exceeded the amount that would have been earned if
the nonpurpose investment had been invested at a rate equal to
the yield on the Bond issues, and that the Bond issuer failed to
pay the amount of that excess to the United States at the
required time.
Petitioners argue that a literal reading of section 148(f)
should not apply to the Bonds at issue, because the statute was
intended only to recapture the economic benefit received by the
issuer. Petitioners cite Washington v. Commissioner, 692 F.2d
128 (D.C. Cir. 1982), affg. 77 T.C. 656 (1981), for the
proposition that a bond issuer must realize an economic benefit
in order to trigger the arbitrage provisions. In State of
Washington, this Court concluded that the general arbitrage
provisions of section 103(c) were intended to apply only where
the issuer of the bond realized an economic benefit. As a
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