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the amount of $27,703 from redeemed Escambia County tax
certificates. Petitioners offered no evidence or argument
disputing respondent’s determination that they received $433 in
interest from Bay County, Florida, in 1996, and we accordingly
find that they received such interest.4
Having concluded that petitioners received $28,136 of
interest income in 1996 from Escambia and Bay Counties, Florida,
we must decide whether any portion of this amount may be excluded
from petitioners’ gross income. Petitioners argue that the
interest reflected on Forms 1099 from Bay County and Escambia
County, Florida, as interest earned on redeemed tax certificates
is tax-exempt interest under section 103. In general,
subsections (a) and (c)(1) of section 103 exclude from gross
income the interest earned on specified State or local bonds,
provided such bonds represent an obligation of a State or its
political subdivisions.
This Court has previously held that interest received on
account of taxpayers’ holding Florida tax certificates that are
redeemed is not excluded from gross income under section 103
because the certificates are not obligations of the State of
4 As petitioners neither asserted a reasonable dispute nor
introduced credible evidence with respect to their receipt of the
interest income as determined by respondent, the burden of proof
does not shift to respondent in this case. See secs. 6201(d),
(effective for court proceedings on or after July 30, 1996),
7491(a)(effective in connection with examinations commencing
after July 22, 1998).
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