Fred M. Vinson

“ Congress, and the Treasury in advising Congress, may well have concluded that the best manner of affording him relief and correcting the inequitable treatment of bondholders whose interest receipts were taxable, was to define the scope of the amendment by reference to types of bonds rather than causes of premium payment.
As 'bond premium' is used by accountants and other writers in the securities field, it is any payment in addition to face value. ”

“ As Congress wrote the statute, the scope of 'bond premium' is adequately denoted by defining 'bond.' There was no need for Congress to qualify both words in order to make its meaning clear; 'premium' as an isolated term may not be defined in the statute nor explained in the legislative history, but 'premium' is never used in the statute apart from its mate 'bond.' No attempt to define and distinguish the reasons for paying premium mark the pertinent Treasury Regulations, 111, § 29.125. ”

“ In the case of taxable bonds, whether the tax paid on capital gains will exceed the tax avoided by the deduction depends in each particular instance upon the uncertainties of market fluctuations and tax rates and the cluster of other factors which induces a bondholder to act and determines his tax in given years. [8] These factors may combine in a specific case to produce an effect upon revenue which to some may appear too drastic for Congress to have intended. ”