[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3254 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 3254

 To amend the Internal Revenue Code of 1986 to allow banks to be taxed 
        as limited liability companies, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 11, 2008

Mr. Hatch (for himself and Mrs. Lincoln) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to allow banks to be taxed 
        as limited liability companies, 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. ELECTION FOR CERTAIN BANKING ENTITIES TO BE TAXED AS LIMITED 
              LIABILITY COMPANIES.

    (a) In General.--Section 7701 of the Internal Revenue Code is 
amended by redesignating subsection (p) as subsection (q) and by 
inserting after subsection (o) the following new subsection:
    ``(p) Classification Election for Certain Banking Entities.--
            ``(1) In general.--For purposes of this title, an entity 
        described in paragraph (2) may elect to be treated as a 
        partnership or, if the entity has a single owner, to be 
        disregarded as an entity separate from the owner.
            ``(2) Entity described.--An entity is described in this 
        paragraph if--
                    ``(A) it is a State-chartered business entity 
                conducting banking activities,
                    ``(B) any of its deposits are insured under the 
                Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
                or a similar Federal law, and
                    ``(C) it is organized as a limited liability 
                company under the laws of a State.
            ``(3) Treatment of entity.--An entity that makes an 
        election under paragraph (1) shall not be considered a bank as 
        defined in section 581.
            ``(4) Transitional rule.--
                    ``(A) In general.--In the case of an entity that 
                makes an election under paragraph (1) before the 
                beginning of the third taxable year beginning after the 
                date of the enactment of this subsection--
                            ``(i) no gain or loss shall be recognized 
                        to the entity or its owners by reason of such 
                        election, and
                            ``(ii) rules similar to the rules of 
                        section 1374 shall apply to the entity.
                    ``(B) Exception.--Subparagraph (A)(ii) shall not 
                apply to an entity that began conducting banking 
                activities after February 12, 2003.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to elections made after the date of the enactment of this Act 
with respect to taxable years ending on or after December 31, 2007.
                                 <all>