Bailout Related Tax Changes and Impacts*

The Act contains a number of significant tax provisions, particularly in the area of employee benefits and executive compensation. Also attached to the legislation was a package of tax extenders, one year of alternative minimum tax relief, disaster tax relief and energy tax incentives.¹ The tax provisions directly related to the TARP are as follows:

Gain on Fannie/Freddie Preferred Stock

Gain or loss realized by banks, savings and loan associations and certain other specified financial institutions on Fannie Mae or Freddie Mac preferred stock held on September 6, 2008 or sold or exchanged on or after January 1, 2008 and before September 7, 2008 will be treated as ordinary rather than capital gain or loss.