John R. Hernandez - Page 8

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          for Florida tax certificates does not serve the purposes of                 
          section 103, inasmuch as that market is not a source of borrowing           
          for municipalities, which bear no interest costs in the issuance            
          of tax certificates.  Interest on tax certificates is paid only             
          by the delinquent property owner upon redemption of the                     
          certificate; the municipality incurs no obligation to pay any               
          amount to the holder of tax certificates.  In selling a tax                 
          certificate, the municipality always receives up front the full             
          amount of outstanding taxes, interest, costs, and other charges             
          on the respective property.                                                 
          III. Section 1.103-1(b), Income Tax Regs., and Its Predecessors             
               Commencing with the first Federal income tax statute                   
          following the 16th Amendment to the Constitution, the regulations           
          under the statutory predecessors of section 103 had a tortuous              
          history, as numerous issues bearing on the exclusion for                    
          municipal bond interest were teased out and dealt with by the               
          Bureau of Internal Revenue (Bureau) and the Board of Tax Appeals.           
          One area of contention was whether various forms of instruments             
          issued by municipalities to finance public improvements that                
          limited the issuer's repayment obligation to the levying and                
          collection of special assessments were municipal obligations.               
          Initially, the Bureau treated such instruments as municipal                 
          obligations.  See, e.g., O.D. 447, 2 C.B. 93; O.D. 491, 2 C.B.              
          93; O.D. 999, 5 C.B. 102, 102-103; I.T. 1606, II-1 C.B. 69,                 

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