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U.S. Supreme Court

FNB Atlanta v. County Tax Assessors, 470 U.S. 583 (1985)

First National Bank of Atlanta v.

Bartow County Board of Tax Assessors

No. 83-1620

Argued October 30, 1984


Prior to 1982, Rev.Stat. § 3701 provided that

"[a]ll stocks, bonds, Treasury notes, and other obligations of the United States, shall be exempt from taxation by or under State or municipal or local authority,"

and, as amended in 1959, further provided that such

"exemption extends to every form of taxation that would require that either the obligations or the interest thereon, or both, be considered, directly or indirectly, in the computation of the tax,"

except nondiscriminatory franchise or other nonproperty taxes or estate or inheritance taxes. Effective in 1980, a Georgia statute imposed a property tax on the fair market value of the shares of stockholders of banks. The fair market value of a bank's share was to be determined by dividing the bank's net worth by the number of outstanding shares. In calculating net worth, a bank was not allowed to deduct the value of United States obligations it held. Appellant bank's predecessor in interest, nevertheless, in its 1980 tax return, deducted from its net worth the total value of the federal securities it held. Appellee Bartow County Board of Tax Assessors disallowed the deduction. The county Superior Court agreed. The Georgia Supreme Court construed the Georgia statute to allow a bank to deduct from its net worth not the full value of United States obligations it held, but only the percentage of the federal obligations attributable to assets.

Held: Section 3701 is satisfied by the limited pro rata deduction for United States obligations approved by the Georgia Supreme Court. Pp. 470 U. S. 588-597.

(a) American Bank & Trust Co. v. Dallas County, 463 U. S. 855, is not authority for allowing federal obligations to be excluded in full from a bank's total assets before net worth is determined. That case -- which held that § 3701 prohibited a State from imposing on bank shares a property tax computed on the basis of the bank's net worth without any deduction for tax-exempt United States obligations held by the bank -- addressed the forms of taxation that must allow an exemption for federal obligations, not the scope of the exemption that must be provided. Pp. 470 U. S. 588-589. chanrobles.com-red

Page 470 U. S. 584

(b) The tax exemption for Government obligations that is required by the Constitution is not a total exclusion, but, instead, may be limited by charging the obligations and their interest a fair share of related expenses or burdens. Pp. 470 U. S. 589-593.

(c) Section 3701, as amended in 1959, provided an exemption no broader in scope than that which the Constitution requires. Pp. 470 U. S. 593-596.

(d) The tax exemption required by the Constitution and § 3701 is not a tax shelter. Federal obligations may be acquired, in part, by liabilities, and, when they are, a pro rata method of allocating a fair share of the obligations to liabilities does not infringe upon the constitutional or statutory immunity the obligations enjoy. Pp. 470 U. S. 596-597.

251 Ga. 831, 312 S.E.2d 102, affirmed.

BLACKMUN, J., delivered the opinion for a unanimous Court. chanrobles.com-red

Page 470 U. S. 585


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