Morgan Stanley has changed the tax status of its wealth arm Morgan Stanley Smith Barney from a partnership to a corporation.

With the change, Morgan Stanley released a deferred tax liability for which it had previously accounted.

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Morgan Stanley said that it expects to recognize a $1.3bn tax benefit during the fourth quarter after as result of this move.

Morgan Stanley had gradually acquired Citigroup’s equity in a wealth-management joint venture the two banks created, acquiring the remaining 35% stake in the brokerage joint venture last year.

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