by Calculated Risk on 9/09/2008 09:35:00 AM

From CFO.com: Fannie, Freddie Get Tax Pass, Too (hat tip Alain)

Treasury Secretary Henry Paulson ... had the IRS issue Notice 2008-76, which essentially allows the two government-sponsored enterprises to retain all of their [net-operating losses] NOLs, despite a change of control of ownership, tax expert Robert Willens told CFO.com.

Under the tax code — specifically Section 382 — NOLs are severely limited when there is a change of control. The rule is in place to prevent acquiring companies from buying up targets just to gain access to their NOLs. The NOLs for Fannie and Freddie are substantial. Over the last four quarters, Fannie and Freddie recorded about $14 billion in aggregate losses.

In essence, Paulson changed tax law so that the two lenders aren't paying more in taxes to the government as a result of that same government becoming their controlling investor. ...

"I am not saying that the IRS ruling is a good thing, or a bad thing, it is just unusual," asserts Willens. "Then again, this is a very unusual situation."

Not a big deal - but another interesting aspect of the Paulson Plan.