JP Morgan (JPM) is nearing an agreement with the FDIC and bondholders for a big tax refund related to its acquisition of Washington Mutual — which the investment banking giant acquired in a firesale in Sept. 2008 — that could amount to $1.4 billion, according to a report in The Wall Street Journal.
Jamie Dimon’s company hopes to benefit from a little noticed change in a tax refund law, incorporated in the 2009 stimulus legislation, that let co.’s to apply losses from 2008 or 2009 against taxes paid in the previous five years rather than the previous two years. Under the new rule – because the imploding WaMu never received TARP aid it could collect about $2.6 billion in refunds based on its 2008 losses.
But it isn’t just JP Morgan that is benefiting from the tax changes. The Journal notes that many other banking firms have benefited from the ’09 tax-refund law already.
WSJ: According to an analysis of securities filings by The [WSJ], more than 250 companies have so far said they expect to get about $12 billion in federal tax refunds under the law.
That remains a partial list. The Joint Committee on Taxation, a congressional committee, estimated the provision would cost $33 billion in its first year.
JP Morgan has noted the refund wouldn’t go to it directly; it would sit in a receivership at the FDIC.