A series of tax relief measures is saving companies bailed out by the government billions of dollars at a time when concern over tax revenues has risen.
Although the Treasury Department first provided the tax guidance in the fall of 2008, the magnitude of the tax savings has become clearer in the past year. The tax relief drew new scrutiny last month after Wall Street bankers touted it to investors in the initial public offering of General Motors Corp
The tax breaks, already known to apply at GM and Citigroup
Inc., also are helping results at another company rescued by Uncle Sam, American International Group Inc
., according to tax experts and people familiar with the companies.
The Treasury gave the same treatment to mortgage agencies Fannie Mae and Freddie Mac
, but their ability to save taxes as a result is less certain, the same people said.
The tax treatment allows companies whose ownership changes to keep the right to use past losses and other deductions to offset future profits for as long as 20 years. Ordinarily, companies' ability to use such tax assets is curtailed when they are acquired, under a 1986 law aimed at curbing "trafficking" acquisitions arranged to capture tax shelters.