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the tax news has been all good lately for some of the nation’s leading banks. First, JPMorgan Chase found out it will receive a fat refund from the federal government, and now Bank of America and Wells Fargo won’t have to pay federal income taxes for 2009.
BofA is off the hook because it reportedly lost money last year. As for Wells Fargo, the country’s fourth largest bank won’t have to pay income taxes because of losses it sustained from rescuing Wachovia.
JPMorgan Chase is expecting a tax refund of possibly as much as $4 billion as a result of the stimulus plan and its takeover of Washington Mutual.
Prior to the stimulus, companies could only “carry-back” their losses for two years, but the stimulus plan extended that period to five years. This allowed the big banks and others to average out their tax payments over a longer period that included the loss years of 2008 and 2009.
i would like to add that there is an interesting thing going on now with these big banks:
Washington Mutual Inc. filed a Chapter 11 plan on Friday, sketching out how it plans to distribute more than $7 billion accumulated in the wake of the largest banking failure in U.S. history, that of its former subsidiary Washington Mutual Bank, or WaMu.
Documents filed in the U.S. Bankruptcy Court in Wilmington, Del. say the money must stretch across at least $8 billion worth of debts left behind when regulators seized Washington Mutual's prized thrift, WaMu, and sold it to J.P. Morgan Chase & Co. (JPM).
It's possible, but not certain, that creditors on the bottom ranks, such as holders of preferred equity shares, will see a return from the bankruptcy, court documents say. Common shareholders, however, will get nothing out of the case, Washington Mutual said.
Creditors and shareholders at the time were outraged at the regulatory takeover and sale to J.P. Morgan Chase for $1.9 billion. They slammed the deal as an unwarranted bargain for J.P. Morgan, which had tried to buy WaMu outright, and a fumble by regulators.
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