Bank of America (BAC) recently announced it would be buying Countrywide (CFC) for $4.1 Billion putting an end to rumors that CFC was considering bankrupcy.

Apart from gaining access to CFC’s technology, banking business and god-only knows what it has thats of any worth, Bank of America will also inherit it’s losses. According to tax guru Robert Willens, the tax break could total about $500 Billion dollars over the first five years and may even be worth considerably more from the sixth year, depending on how big Countrywide’s losses are when Bank of America formally acquires it.

This isn’t the first time this has happened. In 1988, Bank of America purchased the failed FirstRepublic Bank of Dallas in auction. Using a complex tax strategy allowed Bank of America to save $1 Billion in taxes.

Willens estimates that Bank of America will be able to deduct $270 million of Countrywide’s losses annually for the first five years it owns the firm, which would total $1.35 Billion! If Countrywide’s losses turn out to bigger, Bank of America gets to write off even more of its profits.

CFC’s CEO Mazillo will get a going-away present of $115 million, including company jet time and country club fees. Its not enough that he had been pumping the stock on CNBC for the past 18 months while simultaneously dumping $100 million worth of stock. He should be investigated by the SEC for painting a rosy picture of his company’s business when he must have known the stock was going to drop like a rock. If not illegal, it was definitely unethical.

On the other hand, Bank of America which currently owns 9.7% of US deposits will be breaking the law when it acquires CFC. Countrywide’s Bank has savings deposits which will push Bank of America over the federally regulated limit preventing individual banks from possessing more than 10% of all deposits. I guess they’ll just have to give the depositors some of their money back! It’ll be like a reverse bank-run.