The question is not whether banks "pay" taxes or whether anyone can "pay"
anything with FRNs or other debt instruments. Banks DO file tax returns and
the question here is, do they ever take a deduction for alleged losses on
defaulted credit cards?
It just means they have taken the alleged debt out of the category of a
delinquent credit card and it is now a closed account in collections. No
one has ever been able to prove whether or not they take a deduction on
their taxes for the "alleged" loss.
No one can prove that any bank pays taxes. What would they pay taxes with?