- 41 -
Here, the issuer has thus far refused to pay that amount.
Accordingly, we hold that the Whitewater and the Ironwood bonds
are to be treated as arbitrage bonds pursuant to section 148(f)
and that the interest earned thereon is includable in
petitioners' income.19
Because we have determined that the Bonds are to be treated
as arbitrage bonds under section 148(f), we must address some of
the other arguments advanced by petitioners. Petitioners contend
that respondent lacks the authority to tax the bondholders, and
that her sole remedy is to disqualify the issuer from certifying
the nonarbitrage status of its tax-exempt bonds in the future
under section 1.103-13(a)(2)(iv), Income Tax Regs. The
regulation cited by petitioners neither states nor implies such a
proposition. Petitioners have cited no authority to show why the
decertification remedy is inconsistent with the Commissioner's
concurrent duty to collect income taxes on interest from bonds
that are not exempt from tax under section 103. See secs. 6212,
7601. It is not uncommon for the Commissioner to have a variety
of ways to carry out her duties. See, e.g., Pesch v.
Commissioner, 78 T.C. 100, 117-118 (1982).
19The parties addressed the following additional issues on
brief: (1) Whether the Bonds are arbitrage bonds within the
meaning of sec. 103(c)(2); (2) whether the Bonds are taxable
industrial development bonds within the meaning of sec. 103(b);
and (3) with respect to one of the involved bond issues, whether
the public approval requirement set forth in sec. 103(k) was
satisfied. However, because we hold that the Bonds are to be
treated as arbitrage bonds under sec. 148(f), we need not decide
these issues.
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