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American Capital Agency Corp. Message Board

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  • jdg8002 jdg8002 Feb 7, 2012 9:58 PM Flag

    Core spread income

    Exactly. With the caveat that unrealized gains are not recognized for tax purposes (only GAAP purposes).

    The .62 represents only the realized gains on things like trading and hedging activities. They collected all 1.61 in cash and had the ability to use that cash to pay the dividend.

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    • dderringer311 Feb 7, 2012 10:23 PM Flag

      If the 0.62 was realized then it would be taxable, but it states that only the 0.99 was taxable and the 0.62 is unrealized.

      • 1 Reply to dderringer311
      • The .62 was realized because its in the taxable income (the 1.61 net taxable income is .62 higher than the GAAP net income of .99). It goes on to give a quick review of the differences between GAAP & Tax basis accounting.

        "The primary differences between tax and GAAP net income are (i) unrealized gains and losses associated with interest rate swaps and other derivatives and securities marked-to-market in current income for GAAP purposes, but excluded from taxable income until realized or settled, (ii) temporary differences related to the amortization of premiums paid on investments and (iii) timing differences in the recognition of certain realized gains and losses."

        If the gains were not realized, than they would not be in the taxable income. Make sense?

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