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More big business stimulus tax breaks

How does this keep happening? Apparently private sector lawyers are much better than Uncle Sam's attorneys.

Or, as Scott Jagow who blogs at Marketplace radio's The Scratchpad, puts it: "The government's generosity toward big business in this recession has known few boundaries." 

FILE PHOTO: JP Morgan Chase Posts 36 Percent Increase In Q2 Profits
The latest example, per the Wall Street Journal, is JP Morgan Chase & Co., which is nearing a deal that would allow it to benefit from a tax refund of as much as $1.4 billion, becoming the latest company to tap a little-noticed plank in an economic stimulus bill.

That law let companies apply losses from 2008 or 2009 against taxes paid in the previous five years, instead of the previous two years. According to the paper:

Failed Seattle thrift Washington Mutual Inc. is eligible for about $2.6 billion in tax refunds, thanks to big losses in 2008. Now J.P. Morgan, which took over WaMu's banking operations in September 2008, is in discussions with the Federal Deposit Insurance Corp. and bondholders about the refund.

Basically, Chase will use the tax break to get back most of the money it spent buying Washington Mutual.

Many more corporate beneficiaries: Chase's tax stance is not unusual. A review of SEC filings by the WSJ revealed that more than 250 companies are expecting a total of $12 billion in refunds because of the provisions of this particular legislative package.

This tax break is very similar to the net operating loss issue that was raised with a Treasury rule back in the fall of 2008 in the wake of the Freddie Mac and Fannie Mae rescue.

And the stimulus language now in question didn't go totally unnoticed when the bill was being debated in early 2009. Back then the Citizens for Tax Justice pointed out what it saw as The Six Worst Tax Cuts in the Senate Stimulus Bill.

Among that group was the provision allowing for five-year carryback of net operating losses.

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