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indebtedness constitutes investment-type property under section
148(b)(2)(D).1
The findings of facts are set forth in our previous opinion,
City of Columbus v. Commissioner, 106 T.C. 325 (1996), and are
incorporated herein by this reference. We repeat only those
facts necessary to an understanding of the instant issue.
In 1965, the State of Ohio created a fully funded statewide
pension fund for police officers and firefighters (the State
fund) to replace the unfunded plans maintained by petitioner and
other Ohio municipalities. The State fund assumed and guaranteed
the pre-1967 pension liabilities of such municipalities,
including petitioner (the State fund obligation). State law
required each municipality to transfer its pension liabilities
and assets to the State fund and to pay the State fund, either
immediately or over time with interest, an amount equal to its
accrued unfunded pension liability. Petitioner transferred its
pension liabilities and assets on January 1, 1967, and chose to
pay its accrued unfunded pension liability over time (the city
obligation). Petitioner made scheduled payments until November
1993, when it entered into a prepayment agreement with the State
fund whereby petitioner paid the balance remaining on the city
obligation (the remaining obligation) in a lump-sum equal to 65
1 Unless otherwise indicated, all statutory references are
to the Internal Revenue Code, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
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