Nebraska Department of Revenue v. John Loewenstein (513 U.S. 123)
U.S. Supreme Court · decided December 12, 1994 · Supreme Court Database (Spaeth)
- Citation
- 513 U.S. 123 · 115 S. Ct. 557
- Decided
- December 12, 1994
- Term
- October Term 1994
- Vote
- 9–0
- Majority author
- Justice Thomas
- Issue area
- Federalism
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Thomas delivered the opinion of the Court. We took this case to decide whether States may tax interest income derived from repurchase agreements involving federal securities. If the income that taxpayers earn by participating in such agreements constitutes interest on federal securities, then the taxation violates 31 U. S. C. § 3124(a), which exempts interest on “obligations of the United States Government” from taxation by States. On the other hand, if that income constitutes interest on loans to a private party, the taxation is not prohibited by the statute. With respect to the repurchase agreements at issue in this case, we conclude that for purposes of § 3124(a), the interest earned by taxpayers is interest on loans to a private party, not interest on federal securities. Accordingly, we hold that § 3124(a) does not prohibit States from taxing such income. I Respondent is a Nebraska resident who owns shares in two mutual funds, the Trust for Short-Term U. S. Government Securities and the Trust for U. S. Treasury Obligations (Trusts). The Trusts earn a portion of their income by participating in “repurchase agreements” that involve debt securities issued by the United States Government and its agencies (federal securities). A typical repurchase agreement used by the Trusts, see App. 65-81, establishes a two-part transaction, commonly called a “repo,” between a party…
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