Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC) Won’t Have to Pay 2009 Income Tax

The U.S. tax code has been kind to both Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC) as neither bank will likely have to pay any amount of money in income taxes for 2009.

Bank of America likely will not have to pay any federal taxes because it had a net loss in the United States for the year. Wells Fargo was profitable for the yaer, but can write down its tax bill to nothing because of losses stemming from its merger with Wachovia in 2008.

Wells Fargo will benefit particularly from a little known section of the stimulus package which allows companies to write off losses from prior years. The San Francisco-based bank will be able to write off losses from 2008 allowing it to keep its 2009 profit without having to pay any federal tax on it.

Wells Fargo received a tax benefit of $4 billion in 2009 from the federal government and an additional $334 million from state governments. The company paid $164 million in foreign taxes and reported an overall income tax expense of $5.3 billion, which was largely offset by tax benefits from Wachovia losses.

According to Bank of America’s annual report, it received a $2.3 billion net benefit related to income taxes in 2009. Bank of Ameriac received a $3.6 billion tax benefit and had a $1.3 billion worth of tax related expenses that it paid to state and foreign governments.

Corporate tax returns are not public information, so it will be difficult to assertain whether or not either company paid any taxes to the federal governemnt.