
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, March 7, 1991                   TAG: 9103070110
SECTION: BUSINESS                    PAGE: A-9   EDITION: METRO 
SOURCE: 
DATELINE: WASHINGTON                                LENGTH: Short

LOSS DEDUCTIONS BY FAILED S&LS BARRED

Bailed-out savings institutions cannot deduct losses from their taxes when the government compensates them for the loss, the Treasury Department said Wednesday.

If courts uphold the ruling, a reversal of policy of the late 1980s, taxpayers could save $2.5 billion and $3.5 billion over the next five to six years, said a Treasury Department official.

The department's position affects 96 thrift rescue packages negotiated by the now-defunct Federal Home Loan Bank Board.

In most of the deals, estimated to cost $69 billion, the government agreed to make good on any losses realized when the new owners sold the thrifts' sour loans, junk bonds and other shaky assets.

Even though the reconstituted S&Ls suffer no actual loss, they have been deducting the loss from their taxes as if they had never received government compensation. The Bush administration wants to put an end to that practice. - Associated Press

by CNB