[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.103-3]

[Page 352]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.103-3  Interest upon notes secured by mortgages executed to Federal agencies or instrumentalities.

    Section 26 of the Federal Farm Loan Act (12 U.S.C. 931), and section 
210 of such act, as added by section 2 of the act of March 4, 1923 (12 
U.S.C. 1111), provide that first mortgages executed to Federal land 
banks, joint-stock land banks, or Federal intermediate credit banks, and 
the income derived therefrom, shall be exempt from taxation. 
Accordingly, income consisting of interest on promissory notes held by 
such banks and secured by such first mortgages is not subject to the 
income tax.

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