JPMorgan's $1.4bn tax refund deal nears completion

25 March 2010

Investment bank JPMorgan is on the brink of securing a deal which could lead to it receiving a tax refund worth $1.4 billion.

According to unnamed sources, the financial service provider is in talks with the Federal Deposit Insurance Corporation (FDIC) to reach a settlement over its share of a tax refund due to Washington Mutual (WaMu), the Wall Street Journal reported.

The bank is taking advantage of a loop hole in US economic legislation, which allows companies to apply losses against taxes paid during the last five years.

JPMorgan acquired (WaMu) for $1.9 billion after the failed firm was seized by the FDIC in 2008.

WaMu is thought to be eligible for $2.6 billion in refunds and JPMorgan is negotiating over its rights to a share of the sum.

The news provider estimated that a further 250 companies are anticipating receiving approximately $12 billion as part of a federal tax refund.

Earlier in the month, JPMorgan, FDIC and WaMu agreed that the latter should receive $4 billion worth of deposits.

Law suits were filed by the three parties over which one of them was entitled to receive the funds.

By Jim Ottewill

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