John R. Hernandez - Page 11

                                       - 11 -                                         
          and bonds.  Shortly thereafter, the language in question in                 
          section 1.103-1, Income Tax Regs., quoted supra p. 3, was added             
          to the regulations when they were republished under the 1954                
          Code.  See T.D. 6220, 1957-1 C.B. 34, 38.                                   
               Our review of the judicial and administrative history of               
          section 1.103-1(b), Income Tax Regs., impels us to conclude that            
          the addition of the language at issue was intended to conform               
          administrative interpretation of section 103 with our holding in            
          Riverview State Bank v. Commissioner, supra, by recognizing that            
          special assessment indebtedness, whether labeled bonds, bills, or           
          otherwise, can be an obligation of a State or a political                   
          subdivision for purposes of section 103.  See Independent Gravel            
          Co. v. Commissioner, 56 T.C. 698 (1971).  In Riverview State                
          Bank, we declined to make any differentiation based upon the form           
          in which a special assessment obligation was denominated in                 
          determining whether the interest on the obligation was excluded             
          from gross income.  Riverview State Bank v. Commissioner, supra             
          at 1150.  Following Riverview State Bank, we decline to hold that           
          section 1.103-1(b), Income Tax Regs., applies in this case,                 
          merely because the Pasco County obligations in issue are called             
          "tax certificates".  (Emphasis added.)                                      
               Petitioner's effort to apply section 1.103-1(b), Income Tax            
          Regs., to the case at hand is misconceived and fundamentally                
          flawed.  That regulation requires that special assessment                   
          indebtedness be issued “for public improvements (such as sewers,            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011