Internal Revenue ServiceWell, the IRS didn't exactly cause the Housing Bubble, but they are certainly doing their part to screw anybody that didn't have anything to do with it. How, you ask?
By socializing $290B in losses, and we're just getting started.
2008-04-23: Fannie, Freddie May Pay Lower Taxes After Rule Change
April 23 (Bloomberg) -- Fannie Mae, Freddie Mac and other companies suffering as mortgage delinquencies rise won a two-year battle with the IRS yesterday, allowing them to use those losses to reduce their tax burden.
The Internal Revenue Service withdrew proposed regulations that had asserted that mortgage loans are capital assets and any losses from them could be used only to offset capital gains. The agency also said it wouldn't challenge companies that count such losses against ordinary income.
The action also clears the way for Fannie Mae, Freddie Mac and some other holders of defaulted loans ranging from auto lenders to credit card issuers to benefit from Senate-passed tax legislation that would allow companies to apply those losses against previous tax years to get immediate refunds. So far, 70 of the world's biggest banks, securities firms and mortgage companies have taken about $290 billion in asset writedowns and credit losses since the beginning of 2007.
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Carry backs currently are limited to two years; the Senate legislation would temporarily expand that to four. A House panel passed a separate relief measure that doesn't contain the provision.
2008-04-23: Fannie, Freddie May Pay Lower Taxes After Rule Change
April 23 (Bloomberg) -- Fannie Mae, Freddie Mac and other companies suffering as mortgage delinquencies rise won a two-year battle with the IRS yesterday, allowing them to use those losses to reduce their tax burden.
The Internal Revenue Service withdrew proposed regulations that had asserted that mortgage loans are capital assets and any losses from them could be used only to offset capital gains. The agency also said it wouldn't challenge companies that count such losses against ordinary income.
The action also clears the way for Fannie Mae, Freddie Mac and some other holders of defaulted loans ranging from auto lenders to credit card issuers to benefit from Senate-passed tax legislation that would allow companies to apply those losses against previous tax years to get immediate refunds. So far, 70 of the world's biggest banks, securities firms and mortgage companies have taken about $290 billion in asset writedowns and credit losses since the beginning of 2007.
...
Carry backs currently are limited to two years; the Senate legislation would temporarily expand that to four. A House panel passed a separate relief measure that doesn't contain the provision.
It means that the losses they sustain on these instruments will be eligible for the four-year carry back, assuming that provision gets enacted,'' Willens said. The biggest beneficiaries of the IRS action will be Fannie, Freddie and mortgage originators,
1 comment:
I hate everything about the IRS!
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