State of Washington v. Commissioner of Internal Revenue

J. SKELLY WRIGHT, Circuit Judge:

The Commissioner of the Internal Revenue Service (IRS), appellant, seeks review of a Tax Court decision which held that the discount and issuance expenses incurred by the State of Washington, appellee, on a proposed sale of bonds can be considered in computing bond yield under Section 103(c)(2)(A) of the Internal Revenue Code (IRC). 1 Because we find the Tax Court decision to be the correct interpretation of the statute, we affirm.

I. Background

In April 1971, the State of Washington issued limited revenue bonds to finance the construction of public schools. 2…