The opinion
Muedock, J., dissenting: I do not agree that the money borrowed to purchase the Federal Land Bank bonds represented borrowed capital. The taxpayer purchased those bonds knowing that it would sustain an income loss because it borrowed money to buy the bonds at an interest rate higher than that paid by the bonds. The only advantage which it expected was a tax advantage in that it thought, mistakenly, that the interest on the bonds would be tax exempt and it would be allowed a deduction for the interest on the money borrowed. This point should be decided against the petitioner on the authority of Hart-Bartlett-Sturtevant Grain Co., 12 T. C. 760 , affd. 182 F. 2d 153 , which can not be distinguished satisfactorily.
TurNer, Harron, and Raum, JJ., agree with this dissent.