[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2494 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 2494

To amend the Internal Revenue Code of 1986 to provide for the treatment 
  of bad debt reserves of savings associations which are required to 
              convert into banks, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 18, 1995

 Mr. Archer (for himself, Mr. Leach, and Mrs. Roukema) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide for the treatment 
  of bad debt reserves of savings associations which are required to 
              convert into banks, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Thrift Charter Conversion Tax Act of 
1995''.

SEC. 2. TREATMENT OF RESERVES FOR BAD DEBTS OF SAVINGS ASSOCIATIONS 
              WHICH ARE REQUIRED TO CONVERT INTO BANKS.

    (a) In General.--Section 593 of the Internal Revenue Code of 1986 
(relating to reserves for losses on loans) is hereby repealed.
    (b) Conforming Amendments.--
            (1) Subsection (e) of section 52 of such Code is amended by 
        striking paragraph (1) and by redesignating paragraphs (2) and 
        (3) as paragraphs (1) and (2), respectively.
            (2) Subsection (a) of section 57 of such Code is amended by 
        striking paragraph (4).
            (3) Section 246 of such Code is amended by striking 
        subsection (f).
            (4) Clause (i) of section 291(e)(1)(B) of such Code is 
        amended by striking ``or to which section 593 applies''.
            (5) Subparagraph (A) of section 585(a)(2) of such Code is 
        amended by striking ``other than an organization to which 
        section 593 applies''.
            (6) Section 596 of such Code is hereby repealed.
            (7) Subsection (a) of section 860E of such Code is 
        amended--
                    (A) by striking ``Except as provided in paragraph 
                (2), the'' in paragraph (1) and inserting ``The'',
                    (B) by striking paragraphs (2) and (4) and 
                redesignating paragraphs (3) and (5) as paragraphs (2) 
                and (3), respectively, and
                    (C) by striking in paragraph (2) (as so 
                redesignated) all that follows ``subsection'' and 
                inserting a period.
            (8) Paragraph (3) of section 992(d) of such Code is amended 
        by striking ``or 593''.
            (9) Section 1038 of such Code is amended by striking 
        subsection (f).
            (10) Clause (ii) of section 1042(c)(4)(B) of such Code is 
        amended by striking ``or 593''.
            (11) Subsection (c) of section 1277 of such Code is amended 
        by striking ``or to which section 593 applies''.
            (12) Subparagraph (B) of section 1361(b)(2) of such Code is 
        amended by striking ``or to which section 593 applies''.
            (13) The table of sections for part II of subchapter H of 
        chapter 1 of such Code is amended by striking the items 
        relating to sections 593 and 596.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.
    (d) 6-Year Spread of Adjustments.--
            (1) In general.--In the case of any taxpayer who is 
        required by reason of the amendments made by this section to 
        change its method of computing reserves for bad debts--
                    (A) such change shall be treated as a change in a 
                method of accounting,
                    (B) such change shall be treated as initiated by 
                the taxpayer and as having been made with the consent 
                of the Secretary, and
                    (C) the net amount of the adjustments required to 
                be taken into account by the taxpayer under section 
                481(a) of the Internal Revenue Code of 1986 (as 
                modified by paragraph (2)) shall be taken into account 
                ratably over the 6-taxable year period beginning with 
                the first taxable year beginning after December 31, 
                1995.
            (2) No inclusion of portion of reserve.--In the case of a 
        taxpayer to which paragraph (1) applies and which is a large 
        bank (as defined in section 585(c)(2) of such Code) for its 
        first taxable year beginning after December 31, 1995--
                    (A) no amount shall be includible in gross income 
                by reason of the reduction of its reserve for bad debts 
                to the extent that the amount of such reserve as of the 
                close of its last taxable year beginning before January 
                1, 1996, does not exceed the amount applicable to such 
                taxpayer under section 585(b)(2)(B) of such Code for 
                such last taxable year, and
                    (B) the net amount of adjustments taken into 
                account under paragraph (1)(C) shall be reduced by the 
                amount not includible in gross income by reason of 
                subparagraph (A) of this paragraph.
            (3) Suspension of recapture if residential loan requirement 
        met.--
                    (A) In general.--In the case of a taxpayer which 
                meets the residential loan requirement of subparagraph 
                (B) for any taxable year--
                            (i) no adjustment shall be taken into 
                        account under paragraph (1) for such taxable 
                        year, and
                            (ii) such taxable year shall be disregarded 
                        in determining--
                                    (I) whether any other taxable year 
                                is a taxable year for which an 
                                adjustment is required to be taken into 
                                account under paragraph (1), and
                                    (II) the amount of such adjustment.
                    (B) Residential loan requirement.--A taxpayer meets 
                the residential loan requirement of this subparagraph 
                for any taxable year if the principal amount of the 
                residential loans made by the taxpayer during such year 
                is not less than the average of the principal amounts 
                of such loans made by the taxpayer during the 6 most 
                recent testing years ending before such taxable year.
                    (C) Testing years.--For purposes of subparagraph 
                (B), the term ``testing year'' means--
                            (i) each taxable year ending on or after 
                        December 31, 1990, and before January 1, 1996, 
                        and
                            (ii) each taxable year ending after 
                        December 31, 1995, for which the taxpayer meets 
                        the residential loan requirement of 
                        subparagraph (B).
                    (D) Residential loan.--For purposes of this 
                paragraph, the term ``residential loan'' means any loan 
                described in section 7701(a)(19)(C)(v) of such Code.
                    (E) Controlled groups.--In the case of a taxpayer 
                which is a member of any controlled group of 
                corporations described in section 1563(a)(1) of such 
                Code, subparagraph (B) shall be applied with respect to 
                such group.
                    (F) Coordination with estimated tax payments.--For 
                purposes of applying section 6655(e)(2)(A)(i) of such 
                Code with respect to any installment, the determination 
                under subparagraph (A) of whether an adjustment is 
                required to be taken into account under paragraph (1) 
                shall be made as of the last day prescribed for payment 
                of such installment.
            (4) Continued application of paragraph (2) under section 
        585 transitional rules.--In the case of a taxpayer to which 
        paragraph (1) applied and which was not a large bank (as 
        defined in section 585(c)(2) of such Code) for its first 
        taxable year beginning after December 31, 1995--
                    (A) In general.--Rules similar to the rules of 
                paragraph (2) shall apply for purposes of applying 
                section 585(c)(3) of such Code with respect to the 
                amount of such taxpayer's reserve for bad debts as of 
                the close of the last taxable year before the 
                disqualification year.
                    (B) Treatment under elective cut-off method.--No 
                amount shall be includible in gross income under 
                section 585(c)(4) of such Code by reason of the 
                reduction of such taxpayer's reserve for bad debts 
                below the amount applicable to such taxpayer under 
                section 585(b)(2)(B) of such Code for the last taxable 
                year before the disqualification year.
            (5) Continued application of section 593(e).--
        Notwithstanding the amendments made by this section, in the 
        case of a taxpayer to which paragraph (1) of this subsection 
        applies, section 593(e) of such Code (as in effect on the day 
        before the date of the enactment of this Act) shall continue to 
        apply to such taxpayer as if such taxpayer were a domestic 
        building and loan association but the amount of the reserve 
        taken into account under such section 593(e) shall be only the 
        amount of such taxpayer's reserve for bad debts which is not 
        includible in gross income by reason of paragraph (2) or (4) of 
        this subsection.
            (6) Regulations.--The Secretary of the Treasury or his 
        delegate shall prescribe such regulations as may be necessary 
        to carry out this subsection, including regulations providing 
        for the application of paragraph (3) in the case of mergers, 
        spin-offs, and other reorganizations.

SEC. 3. DEDUCTION FOR SPECIAL ASSESSMENTS.

    For purposes of subtitle A of the Internal Revenue Code of 1986, 
the amount allowed as a deduction under section 162 of such Code for 
the taxable year shall include the amount paid during 1996 as a special 
assessment under section 7(b)(6)(B) of the Federal Deposit Insurance 
Act, as amended by the Thrift Charter Conversion Act of 1995, as 
proposed by H.R. 2491, as introduced in the 104th Congress.
                                 <all>