Of course, I could be wrong here. And I realize that not all of the banks that are in repayment would be eligible to claim the NOL.

But here’s what we do know: the rules keep shifting. I happen to think that’s not a coincidence.

The Citigroup section 382 ruling with respect to TARP funds to which you link is fundamentally different than the 5-year carryback rule. There are many good arguments for why the government’s temporary share ownership via TARP should be disregarded for section 382 purposes. The Wells Fargo – Wachovia section 382 ruling is also quite different, although less defensible.

You say:
“There was just one problem: businesses that receive assistance under TARP are not eligible.

But banks (and other companies) that exit TARP?”

The Rev Proc that the IRS recently issued on the 5-year carryback, 2009-52, provides as follows in section 2.10:

Section 13(f) of the Act provides that § 172(b)(1)(H) does not apply to any taxpayer that received certain benefits (whether or not repaid) under the Emergency Economic Stabilization Act of 2008, Title I of Div. A of Pub. L. No. 110-343, 122 Stat. 3765 (TARP recipients), or to members of the taxpayer’s affiliated group.

Note the “whether or not repaid” parenthetical.

The text of section 13(f) of the law is not as completely clear as this Rev Proc language, but it is at least consistent with the Rev Proc as it does not include any exception for companies that have repaid TARP funds.

Here is the text of 13(f):

(f) Exception for TARP Recipients- The amendments made by this section shall not apply to–

(1) any taxpayer if–

(A) the Federal Government acquired before the date of the enactment of this Act an equity interest in the taxpayer pursuant to the Emergency Economic Stabilization Act of 2008,

(B) the Federal Government acquired before such date of enactment any warrant (or other right) to acquire any equity interest with respect to the taxpayer pursuant to the Emergency Economic Stabilization Act of 2008, or

(C) such taxpayer receives after such date of enactment funds from the Federal Government in exchange for an interest described in subparagraph (A) or (B) pursuant to a program established under title I of division A of the Emergency Economic Stabilization Act of 2008 (unless such taxpayer is a financial institution (as defined in section 3 of such Act) and the funds are received pursuant to a program established by the Secretary of the Treasury for the stated purpose of increasing the availability of credit to small businesses using funding made available under such Act), or

(2) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, and

(3) any taxpayer which at any time in 2008 or 2009 was or is a member of the same affiliated group (as defined in section 1504 of the Internal Revenue Code of 1986, determined without regard to subsection (b) thereof) as a taxpayer described in paragraph (1) or (2).