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1994) (Hernandez II), we dealt with similar facts regarding
whether interest paid on the redemption of tax certificates sold
by Pasco County, Florida, for delinquent taxes owed on real
property is excluded from gross income. In both cases, we held
that the interest is not excluded from gross income under section
103 because the tax certificates are not obligations of a State
or political subdivision. Hernandez v. Commissioner, T.C. Memo.
1998-46. We follow our prior holdings, and we sustain
respondent’s determination that interest from the tax
certificates is includable in income under section 61(a)(4).
In Hernandez I and II, petitioner argued that he purchased
the tax certificates at auction on behalf of other people. At
both trials, petitioner failed to present witnesses and documents
to support his arguments, and we held that petitioner must
include the interest as his income.
In this case, petitioner also asserted that the tax
certificates were purchased on behalf of third parties. Vincent
Hernandez (Vincent), petitioner’s brother, testified generally
that he began investing in tax certificates through petitioner in
1984. Vincent also testified that all of the interest income he
received through petitioner was deposited in Vincent’s account,
and that Vincent reported all of the interest income on his
Federal income tax return. Vincent did not produce any of his
tax returns, bank statements, or other documents to lend credence
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