- 6 - Respondent seeks comfort from Consolidated Edison Co. of New York, Inc. v. United States, supra. In that case, the taxpayer prepaid real property taxes to New York City and received a discount. It contended that the discount was tax-exempt interest. The Court of Appeals for the Second Circuit rejected that contention and held that the discount was includable in gross income. The Court of Appeals then went on to hold that, under the particular circumstances involved, the taxpayer was entitled to deduct the full amount of the accrued taxes, unreduced by the discount, on the ground that it utilized the economic value of the discount to make the payments. There is not the slightest indication by the Court of Appeals that it considered the economic value of the discount as constituting property, which is the issue involved herein. Such being the case, and given the totally different circumstances involved herein, we find respondent's reliance on Consolidated Edison Co of New York, Inc. misplaced. The long and short of the matter is that the discount involved herein had economic value but that value cannot be equated with property for which petitioner made the prepayment. Consequently, we answer in the negative the threshold question delineated by the remand. Since there is no prepayment for property, we hold that the prepayment in and of itself does not constitute investment-typePage: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011