Minor memos

November 12, 2008

The US Government Accountability Office — an arm of Congress – reported that 28% of large corporations operating in the United States paid no US income taxes in 2005, a year  when the economy was still fairly strong. Overall, roughly two thirds of corporations paid no US income taxes. . . . . Some banks that have been acting as tax equity investors in  US renewable energy projects may have less tax capacity after the latest round of bank mergers and an IRS decision in October. US tax rules make it hard for one corporation that acquires another to make efficient use of existing tax losses in the target corporation. However, in a move aimed at making troubled US banks more attractive to potential suitors, the IRS said it will treat certain tax losses in acquired banks as if they occurred after the acquisition. The announcement is in Notice 2008-83. The change could give Wells Fargo, for example, as much as $74 million in additional losses if it closes on its proposed acquisition of Wachoviaank, according to published reports.