Rev. Rul. 58-49

Advice has been requested whether an agreement to change a mortgage bond arrangement so as to make payments on a first and a second mortgage on the same date constitutes such a material change as to make the mortgage bond taxable as a new issue under sections 4311 and 4313 of the Internal Revenue Code of 1954.

In the instant case, a loan, evidenced by a bond and mortgage, was made for the purpose of expanding the facilities of a certain institution. An additional loan was made for the same purpose which also was evidenced by the borrower's bond and secured by a second mortgage. Documentary stamps were affixed to both bonds. An agreement was made between the institution and the mortgagee whereby the payments on the first mortgage and the second mortgage were to be made on the same day. The agreement was limited to this one change in the terms of the bonds and mortgages. The maturity dates of the bonds were not extended.

Section 4311 of the Code provides that a tax shall be imposed on all certificates of indebtedness issued by a corporation. Section 4313 of the Code provides that every renewal of any certificate of indebtedness shall be taxed as a new issue.

It is held that a mere agreement to make payments on a first and a second mortgage on the same date does not constitute such a material change in the mortgage bond as to make it taxable as a new issue under sections 4311 and 4313 of the Code.