Apparently, Bank of America made for an irresistible first target. It received $45bn taxpayer bailout funds in 2008 and 2009 – and paid zero federal income tax in 2009.
Why did Bank of America need a big bailout?
Because it lost a lot of money.
What do you pay the federal income tax on (actually, the corporate profits tax)?
If you’ve lost a lot of money what are your profits?
So what is your corporate profits tax bill?
What if you made a profit this year but losses last year?
You are taxed on your cumulative profits so you can offset the losses in one year against the profits in another.
So if you lost lots of money last year and made some profits this year, what is your tax bill?
This accounting and finance thing is really tough, isn’t it?