Chris Alleva

Interesting Response to the Government's Homebuilder Bailout

To ACapitalist, yes it is true that write down reserves-book entries- are not deductable. It appears that this effort was at least in part driven by Lennar. Lennar has been by far the most aggressive in valuation write down recognition. The transaction they did with Morgan Stanley was structured with the tax loss objective front and center.

Keep in mind that public builders account for only 1/3 of the market share. Private companies have more lattitude to report write downs and would tend to be tax driven in their structure and presentation.