The IRS has released a Chief Counsel Memorandum on the tax deductibility of the special assessment levied on certain banks by the FDIC in 2023 to recover the hit to the Deposit Insurance Fund caused by the FDIC’s decision to protect uninsured depositors following the Silicon Valley Bank and Signature Bank failures. The assessment is only applicable to banks with at least $5 billion in consolidated assets.
Among other things, the memo states that a deduction for the payment of the FDIC special assessment is not subject to the limitations set forth in tax code for ordinary and necessary trade or business expenses [§ 162]. The assessment is also not subject to the capitalization rules for capital expenses [§ 263(a)]. The memo also clarifies other exemption limits.
The FDIC estimates that 114 banks are subject to the special assessment.
