Appeal from the District Court of the United States for the Southern District of New York.
Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
AUGUSTUS N. HAND, Circuit Judge.
The interests in real estate belonging to the decedent, Isham, were condemned by the city of New York under section 976 of the Greater New York Charter. By virtue of that section, title to the interest in the first plot passed to the city on April 1, 1925, and to the second plot on June 2, 1926. Upon the making of the award in the condemnation proceedings, interest at 6 per cent. was allowed to the property owner from the dates when the city took title. In the case of the first plot condemned, the decedent received his award, with interest, in 1927, and in the case of the second plot in 1928.
Section 213 (b) (4) of the Revenue Act of 1926, 26 USCA § 954 (b) (4), providing certain exemptions from income taxes reads as follows:
Section 213 (b) "The term 'gross income' does not include the following items, which shall be exempt from taxation under this title: * * *
"(A) the obligations of a State, Territory, or any political subdivision thereof, or the District of Columbia; or
" (B) securities issued under the provisions of chapters 7 and 8 of Title 12 (the Federal Farm Loan Act), or under the provisions of such Act as amended; or
"(C) the obligations of the United States or its possessions.
"Every person owning any of the obligations or securities enumerated in clause (A), (B), or (C) shall, in the return required by this chapter, submit a statement showing the number and amount of such obligations and securities owned by him and the income received therefrom, in such form and with such information as the Commissioner may require.
"In the case of obligations of the United States issued after September 1, 1917 (other than postal savings certificates of deposit), the interest shall be exempt only if and to the extent provided in the respective Acts authorizing the issue thereof as amended and supplemented, and shall be excluded from gross income only if and to the extent it is wholly exempt to the taxpayer from income taxes."
The plaintiff-appellant contends that the foregoing section applied to the interest received by the decedent upon his award in the year 1927 and rendered it exempt from taxation.
Section 22 (b) of the Revenue Act of 1928, 26 USCA § 2022 (b), is identical with section 213 (b) of the Revenue Act of 1926, 26 USCA § 954 (b). The plaintiff-appellant contends that it applied to the interest received by the ...