In the case of Federal Land Bank of New Orleans v. Crosland, Judge of Probate (1922), the U.S. Supreme Court ruled that a state probate court could not impose an inheritance tax on land owned by a federal entity such as the Federal Land Bank. The bank had acquired property in Alabama through foreclosure and was later assessed for unpaid taxes when it sold the property to settle an estate. The bank argued that as a federal instrumentality, it was immune from state taxation under the Supremacy Clause of the Constitution which states that federal law is supreme over state law when there's conflict between them. The Supreme Court agreed with this argument and held that while states have broad powers to levy taxes, they cannot interfere with or impede operations of federal entities without explicit congressional authorization - something absent in this case. This decision reinforced principles established earlier regarding intergovernmental tax immunities and clarified their application to newer forms of government corporations like Federal Land Banks.

The dissenting opinion in the Federal Land Bank of New Orleans v. Crosland case argued that the majority's decision to allow federal land banks to be exempt from state taxation was a misinterpretation of Congress' intent when it passed the Federal Farm Loan Act. The dissenters believed that this exemption should only apply to direct taxes and not indirect ones, such as those imposed by states on mortgage transactions or transfers involving property owned by these banks. They contended that allowing such broad tax immunity would give an unfair advantage to federal land banks over other financial institutions operating within state jurisdictions, potentially disrupting local economies and infringing upon states' rights. Furthermore, they expressed concern about potential abuse of this privilege if left unchecked.