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We hold that the tax certificates issued by Pasco County to
petitioner are not covered by section 1.103-1(b), Income Tax
Regs., to any extent. We reaffirm that they are not obligations
of a political subdivision for purposes of section 103.
Accordingly, none of the interest earned on the Pasco County tax
certificates, whether attributable to special assessments or to
ad valorem property taxes, is exempt from Federal income tax
under section 103.
For the reasons stated, we decline to alter the result
reached in our opinion reported at Hernandez v. Commissioner,
T.C. Memo. 1998-46.
To reflect the foregoing,
An appropriate order
will be issued.
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Last modified: May 25, 2011