According to The Charlote Observer [TCO], it appears that Bank of America (BAC) and Wells Fargo (WFC) will not have to pay federal income taxes for 2009.
Bofa probably won’t pay federal taxes because it lost $1 billion in the U.S. during fiscal 2009. For the year the country’s Nr. 1 bank, like its rivals, faced significant challenges in building business while keeping credit losses down as economies worldwide were struggling to emerge from a deep recession. Wells Fargo was profitable with $8 billion in earnings applicable to common shareholders, but can write down its tax bill because of losses at Wachovia, which it rescued from a near collapse (Wells acquired Wachovia in Oct. 2008 in a $15.1 billion all-stock deal).
TCO: The idea of the country’s No. 1 and No. 4 banks not paying federal income taxes may be anathema to millions of Americans who are grumbling as they fill out their own tax forms this month”, said TCO.
Bob McIntyre, at Citizens for Tax Justice, told the paper he opposes the government giving corporations such a break.
“If you or I lose money in the stock market, we don’t get to carry back our losses to any significant degree,” said McIntyre. His group works on closing tax breaks for corporations.
To put it in other words, it’s mind-boggling there are laws and regulations that permit such actions. No wonder, there’s something deeply dysfunctional with the culture at these institutions.