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Tax Treatment of Prepaid FDIC Assessments

Author: Chris Immelman.; Natalie Tucker.

Source: Volume 23, Number 05, May/June 2010 , pp.5-7(3)

Journal of Taxation and Regulation of Financial Institutions

Abstract:

In general, the 12-month rule of Treasury Regulation Section 1.263(a)-4(f) doesn’t allow taxpayers to split up a prepayment that covers multiple periods in order to gain preferential early deductions. In November 2009, the FDIC adopted a final rule amending the assessment regulations to require insured depository institutions to prepay their quarterly risk-based assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012. The prepayment was to be made on December 30, 2009. The authors explain how insured depository institutions should treat these prepayments.

Keywords: FDIC assessment; Treas. Reg. Sec. 1.263(a)-4(f); prepayments; method of accounting

Affiliations: 1: RSM McGladrey; 2: RSM McGladrey.