Banks Not Limited in Deducting Special FDIC Assessment, IRS Says

The IRS has concluded that institutions paying special assessments imposed by the Federal Deposit Insurance Corporation after two major banks failed last year are exempt from certain deduction and capitalization rules.

The FDIC last year imposed a one-time assessment of $16.3 billion to help replenish losses in FDIC funds for protecting uninsured deposits after the closure of Silicon Valley Bank and Signature Bank. The final rule was effective as of April of this year.

An IRS Chief Counsel memo on Friday said banks making special payments are not subject to expense limitations under §162(r) or capitalization under §263(a). The agency ...