Security Bank S.S.B. & Subsidiaries, Formerly Known as Security Savings and Loan Association v. Commissioner of Internal Revenue

RIPPLE, Circuit Judge.

Security Bank S.S.B. and its subsidiaries (“SSB”) seek review of a decision of the Tax Court. SSB made loans secured by mortgages on real property. When the borrowers defaulted, SSB acquired the real property through, or in lieu of, foreclosure. The Tax Court held that the gain realized in the subsequent sale of the real property ought to be treated as unpaid interest, and therefore income, by SSB. In accord with the other circuits that have addressed the issue, we now affirm the judgment of the Tax Court.

I

BACKGROUND; SSB is a savings and loan association that made loans…