CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. US Treasury And IRS Issue Guidance On Fannie And Freddie Stock Ownership

US Treasury And IRS Issue Guidance On Fannie And Freddie Stock Ownership

by Glen Shapiro, LawAndTax-News.com, New York

31 October 2008


The US Treasury Department and the Internal Revenue Service (IRS) have issued a revenue procedure which provides that certain gains and losses from indirect ownership of Fannie Mae and Freddie Mac preferred stock can be treated as ordinary income and loss.

The Emergency Economic Stabilization Act of 2008 (EESA) provided banks and certain financial institutions ordinary treatment for gains and losses on direct investments in preferred stock of Fannie Mae and Freddie Mac. It also directed the Treasury Department to issue guidance with respect to the treatment of these gains or losses when realized indirectly through certain investment vehicles.

Revenue Procedure 2008-64 provides banks and certain other financial institutions the benefit of ordinary treatment on gains and losses that they are experiencing on certain indirect investments in this preferred stock.

Many financial institutions have invested in Fannie Mae and Freddie Mac preferred stock indirectly through certain adjustable rate preferred programs and other vehicles. Pursuant to the authority granted in EESA, the revenue procedure includes guidance describing when these financial institutions receive ordinary treatment on:

  • gains and losses on this stock recognized by a trust or other entity taxed as a partnership in which the financial institution is a partner;
  • gains and losses on the sale of an interest in a partnership that owns this stock;
  • gains and losses on the sale of this stock that the financial institution received in a distribution from a partnership;
  • gains and losses on this stock recognized by certain subsidiaries of financial institutions; and
  • gains and losses on the sale of this stock that the financial institution received in certain "transferred basis" transactions.

Rev. Proc. 2008-64 is effective immediately and includes rules for application to transactions that occurred prior to its issuance. The revenue procedure also requests comments from taxpayers regarding the guidance.


To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »