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Treasury finalizes Section 597 regulations

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Treasury finalizes Section 597 regulations The Treasury Department finalized regulations (T.D. 9825) under Section 597, largely adopting the proposed regulations (REG-140991-09), which were issued in May, 2015.

The final regulations provide guidance on the federal income tax treatment to banks, domestic building-and-loan associations, and related parties that receive federal financial assistance (FFA) from agencies such as the Federal Depositors Insurance Corporation (FDIC).

FFA generally arises in transactions where the FDIC or another agency provides assistance to facilitate the acquisition of troubled financial institutions. The regulations address the inclusion of FFA as ordinary income, preventing taxpayers from obtaining the tax benefit of losses which are compensated for with FFA, and the timing of inclusion of FFA. The regulations also address valuation issues with regard to how to measure FFA. The final regulations are effective as of Oct. 19, 2017.

Contact: Andy Cordonnier
Partner, Washington National Tax Office
T +1 202 521 1502

Jeff Borghino
Partner, Washington National Tax Office
T +1 202 521 1532

Greg Fairbanks
Managing Director, Washington National Tax Office
T +1 202 521 1503


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