Spencer D. And Mary Jane Stewart v. United States

The Commissioner of the Internal Revenue Service determined a deficiency in Spencer and Mary Stewart’s 1969 and 1970 tax returns based on the reporting of two transactions: the sale of a water utility system and a sale of securities. The Stew-arts paid the deficiencies and sued for a refund. The district court found three errors in the Commissioner’s determination, and entered judgment for $50,168.81. The government challenges the following three determinations made by the district court:

1. Interest the City of Phoenix paid the Stewarts on the deferred payment of the purchase price of a water…