[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: 26CFR1.103-4]

[Page 353]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.103-4  Interest upon United States obligations.

    (a) Issued before March 1, 1941. (1) Interest upon obligations of 
the United States issued on or before September 1, 1917, is exempt from 
tax. In the case of obligations issued by the United States after 
September 1, 1917, and in the case of obligations of a corporation 
organized under act of Congress, if such corporation is an 
instrumentality of the United States, the interest is exempt from tax 
only if and to the extent provided in the acts authorizing the issue 
thereof, as amended and supplemented.
    (2) Interest on Treasury bonds issued before March 1, 1941, is 
exempt from Federal income taxes except surtaxes imposed upon the income 
or profits of individuals, associations, or corporations. However, 
interest on an aggregate of not exceeding $5,000 principal amount of 
such bonds is also exempt from surtaxes. Interest in excess of the 
interest on an aggregate of not exceeding $5,000 principal amount of 
such bonds is subject to surtax and must be included in gross income.
    (3) Interest credited to postal savings accounts upon moneys 
deposited before March 1, 1941, in postal savings banks is wholly exempt 
from income tax.
    (b) Issued on or after March 1, 1941. (1) Under the provisions of 
sections 4 and 5 of the Public Debt Act of 1941 (31 U.S.C. 742a), 
interest upon obligations issued on or after March 1, 1941, by the 
United States, or any agency or instrumentality thereof, shall not have 
any exemption, as such, from Federal income tax except in respect of any 
such obligations which the Federal Maritime Board and Maritime 
Administration (formerly United States Maritime Commission) or the 
Federal Housing Administration has, before March 1, 1941, contracted to 
issue at a future date. The interest on such obligations so contracted 
to be issued shall bear such tax-exemption privileges as were at the 
time of such contract provided in the law authorizing their issuance. 
For the purposes hereof, under section 4(a) of the Public Debt Act of 
1941, a Territory and a possession of the United States (or any 
political subdivisions thereof), and the District of Columbia, and any 
agency or instrumentality of any one or more of the foregoing, shall not 
be considered as an agency or instrumentality of the United States.
    (2) In the case of obligations issued as the result of a refunding 
operation, as, for example, where a corporation exchanges bonds for 
previously issued bonds, the refunding obligations are deemed, for the 
purposes of this section, to have been issued at the time of the 
exchange rather than at the time the original bonds were issued.