Overview
On January 9, 2024 Bloomberg Law quoted Larry Hill in an article titled, "Book Minimum Tax Blunts Some Federal Rescue Tools, Banks Warn." The article discusses how language in the corporate alternative minimum tax (CAMT) changes the way gains from federal financial assistance from the FDIC are taxed and could potentially disrupt future efforts to stave off banking crises.
As a result of the new CAMT language, banks may need more FDIC help to make the math work on deals—effectively sending money from the agency to the IRS. Larry Hill stated, "This is an example of where the extensive scope of the CAMT provisions has potential unintended consequences," and "likely slipped past drafters when writing the new tax in the Inflation Reduction Act."
The American Bankers Association wrote a letter to the IRS that the agency urging them to pass guidance excluding federal financial assistance from adjusted financial statement income and accounting for such income "in the same manner as it is accounted for under Section 597." Larry expressed the need for the Section 597 exception stating, "This may disincentivize banks from purchasing banks or bank assets from FDIC receivership, which could have a negative impact on the financial system."
Read more at Bloomberg Law (subscription required).
