Security State Bank v. Commissioner

BRORBY, Circuit Judge.

In this appeal, we are faced with precisely the issue decided by the Eighth Circuit in Security Bank Minnesota v. Commissioner, 994 F.2d 432 (8th Cir.1993):

whether § 1281 of the Internal Revenue Code, which requires certain taxpayers to accrue discount and interest income on certain short-term obligations, requires a commercial bank, otherwise reporting its income on the cash basis, to report interest income on short-term loans made to borrowers in the ordinary course of business as it accrues.

Id. at 433. The Eighth Circuit, and the tax court in this case, held § 1281…