John R. Hernandez - Page 12

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          sidewalks, streets, etc.).”  Sec. 1.103-1(b), Income Tax Regs.              
          But, as we noted in Hernandez I, the Pasco County tax                       
          certificates in issue in the case at hand “`are only a means                
          of evidencing unpaid taxes and to enable the sale thereof for               
          the purpose of realizing funds or current governmental                      
          expenditures’”.  Hernandez v. Commissioner, T.C. Memo. 1998-46              
          (quoting Smith v. City of Arcadia, 185 So. 2d 762, 767 (Fla.                
          Dist. Ct. App. 1966)).  In short, the tax certificates in issue             
          are not issued to finance public improvements.  In each of the              
          above-cited special assessment cases, municipal obligations were            
          issued to finance particular public improvement projects.  See,             
          e.g., Independent Gravel Co. v. Commissioner, supra at 705 ("We             
          have on many occasions in the past dealt with the exemption of              
          interest paid on instruments issued by a governmental unit in               
          consideration for municipal improvements") (street and sewer                
          improvements); Estate of Shamberg v. Commissioner, supra (bridges           
          and tunnels); Riverview State Bank v. Commissioner, supra (street           
          improvements); Carey-Reed Co. v. Commissioner, supra (street,               
          paving, and sewer improvements); Pontarelli v. Commissioner, 35             
          B.T.A. 872 (1937)(sewer improvements).  In Florida, however, tax            
          certificates are sold solely as a means of collecting delinquent            
          real property taxes.  Fla. Stat. Ann. sec. 197.432 (West 1989 &             
          Supp. 1997).                                                                

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