Help me grasp something here (so I can get a better overall picture)

[The Straight Story]

let's say JP Morgan Chase buys up a defunct bank and absorbs all it's branches, then they adjust their balance sheets to show that they own, I dunno, 100 million more worth of real estate (because of the land and buildings those branches sit on).

Now say there is a down turn in the market and the estimated value goes down - is this now a loss and could they deduct it on their taxes?

Is there any relation to the above and the current crisis at all (ie, will those losses turn into gains if the market changes?).

[MNDemNY]

1. They could certainly charge off depreciated value against any gains.

[Sebastian Doyle]

3. Not to mention any WaMu branches that might close eventually.

Chase bank really didn't exist on the West Coast before now, so I imagine all the (former) WaMu banks will remain open on this side of the country, but if there are cities where a Chase branch and a WaMu branch are in close proximity, odds are one of them will probably close. And that probably would be wrote off as a "loss" when that happens.

Chase claims that nothing like that is going to happen until "late next year" though.....

http://www.chase.com/welcomewamu/

[Vincardog]

2. You do not take a gain or loss until you dispose of the asset. The price you pay is they purchase

price you never know the sale price until you sell. Intermediate fluctuation have no effect.