Responding to industry appeals, the Internal Revenue Service said banks will be allowed to use a corporate structure that passes profits to shareholders tax free.

In guidance issued Dec. 20, the IRS said interest earnings will not be counted as "passive income." Rules prohibit so-called S corporations from earning more than 25% of their income from passive investments.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.