New Mexico Bancorporation & Subsidiaries v. Commissioner
United States Tax Court
Petitioner offered repurchase agreements as an ordinary and customary bank deposit. Repurchase agreements were backed by taxable Federal securities, tax-exempt State or municipal securities, or a combination of the two. Held: Under sec. 163, I.R.C. 1954, a deduction for interest paid to depositors on repurchase agreements backed by tax-exempt obligations is allowed. Sec. 265(2) will not apply to disallow the deduction.
1Opinion of the Court
Sterrett, Judge:
Respondent determined deficiencies, in a notice dated February 17, 1978, in petitioner’s consolidated corporate income taxes for the taxable years 1973, 1974, and 1975 in the amounts of $7,470.63, $16,669.84, and $553.65, respectively. The only issue for our decision is whether petitioner is entitled to claim an interest deduction, pursuant to section 163, I.R.C. 1954, for interest paid with respect to certain repurchase agreements, or whether the interest deduction is prohibited by section 265(2) because the repurchase agreements are considered to be indebtedness incurred or…
2Cases cited9 opinions
- The Wisconsin Cheeseman, Inc. v. United StatesCourt of Appeals for the Seventh Circuit · 1968
- John E. Leslie and Evelyn G. Leslie v. Commissioner of the Internal RevenueCourt of Appeals for the Second Circuit · 1969
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- Constance M. Bishop v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1965
- Bishop v. CommissionerUnited States Tax Court · 1963
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