State Taxation of Income from Repurchase Agreements: Loewenstein v. Department of Revenue
Loading...
Authors
Sumrow, Shad E.
Issue Date
1995
Volume
28
Issue
Type
Journal Article
Language
Keywords
Alternative Title
Abstract
INTRODUCTION|Through the years, the issue of intergovernmental tax immunity addressed in McCulloch v. Maryland has expanded into other contexts, including the use of "repurchase agreements." A standard repurchase agreement is a transaction whereby a holder of federal securities sells the obligations to a party for cash. In this transaction, the buyer promises to sell the security back to the seller at an agreed upon date and price, including a specified amount of interest. After World War II, dealers in federal securities began to use repurchase agreements to finance their positions. Large financial institutions later began to use repurchase agreements to finance their own dealer positions as well as their own government portfolios. With this increase in the repurchase agreement market, states have increasingly began to tax the interest earned from the transactions as a source of revenue. State taxation of income derived from repurchase agreements involving federal securities has become a source of controversy because of section 3124 of Title 31 of the United States Code ("section 3124") which exempts federal securities from...
Description
Citation
28 Creighton L. Rev. 275 (1994-1995)
Publisher
Creighton University School of Law