Morrison Bond Co. v. Commissioner

MORRISON BOND COMPANY, LTD., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Morrison Bond Co. v. Commissioner Docket Nos. 93362, 95986. United States Board of Tax Appeals 42 B.T.A. 720; 1940 BTA LEXIS 959; September 24, 1940, Promulgated *959 Interest received during the taxable years 1934 - 1936 on bonds issued under certain California improvement acts, held, not subject to Federal income tax, following Bryant v. Commissioner, 111 Fed.(2d) 9, and District Bond Co. v. Commissioner, 113 Fed.(2d) 347. Dana Latham, Esq., for the petitioner. Byron M. Coon, Esq., for the respondent. HILL *720 SUPPLEMENTAL OPINION. HILL: A report in these consolidated proceedings was promulgated March 28, 1940 (41 B.T.A. 669) in which we held, on authority of our prior decision in District Bond Co.,39 B.T.A. 739, that interest received on bonds issued under (a) the California Improvement Act of 1911, approved February 7, 1911, (b) the California Street Opening Bond Act of 1911, approved April 27, 1911, and (c) the California County Improvement Act of 1921, approved June 3, 1921, was subject to Federal income tax. In the report promulgated herein March 28, 1940, we also held, on authority of our prior decision in *960 Susanna Bixby Bryant,38 B.T.A. 618, that interest on bonds issued under the California Improvement Act of 1893, approved February 27, 1893, was subject to Federal income tax. In the same report we further held that interest on bonds issued under the California Boundary Line Act of 1911, approved April 21, 1911, was subject to Federal income tax. The bonds last mentioned were issued under the terms of the California Improvement Act of April 7, 1911. In Bryant v. Commissioner, 111 Fed.(2d) 9, the United States Circuit Court of Appeals for the Ninth Circuit, on April 12, 1940, reversed our decision in Susanna Bixby Bryant, supra, and the same court on June 28, 1940, 113 Fed.(2d) 347, reversed our decision in District Bond Co., supra, on the point here involved, holding that interest on bonds issued under all of the California improvement acts above mentioned was not subject to Federal income tax. *721 On the authority of the above court decisions we hereby modify our report herein of March 28, 1940, respecting the taxability of interest on the bonds herein involved and hold that such interest is not*961 subject to Federal income tax. Reviewed by the Board. Decisions will be entered under Rule 50.