Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 67-17

1967-1 C.B. 179

Tax Treaties

Sec. 822

Full Text

Rev. Rul. 67-17

M , a mutual casualty insurance company taxable under section 821 of the Internal Revenue Code of 1954, purchased both taxable and tax-exempt bonds for cash through a registered broker. The bonds were purchased between interest dates at a price including unpaid interest accrued to the date of purchase. The bonds were not in default.

Held , under the facts presented, M should not include the amount which it paid for accrued interest as part of the cost of the bonds for purposes of computing the amount of bond premium to be amortized in accordance with the provisions of section 822(d)(2) of the Code. In addition, the purchased accrued interest attributable to the bonds represents a return of capital when received. Accordingly, none of the purchased accrued interest is includible in M's taxable investment income.