New IRS Notice Allows Better Use of Bank Losses Following an Ownership Change

On September 30, the IRS issued Notice 2008-83, which allows more effective use of unrealized losses in loans held by a bank following a change in ownership of the bank. Specifically, the Notice effectively suspends certain limitations that otherwise would apply under section 382 of the Code. The Notice is not limited to Government takeovers but also applies to changes in ownership arising from private investments. The Notice may be significant not only in evaluating bank acquisitions but also in determining the consequences of new issuances of stock, either alone or when combined with other shifts in ownership.

Notice 2008-83 is described in the attached alert memorandum.

Questions regarding the Notice may be directed to James M. Peaslee, Jason R. Factor, or any of our other partners or counsel in New York listed under the Tax section of this website.