1.Short title; table of
contents
(a)This Act may be cited as the Community Banks Serving Their Communities First
Act
or the Communities First Act
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Title I—Targeted Regulatory Relief for Community
Banks
Sec. 101. Short form reports of condition for certain community
banks.
Sec. 102. Community bank exemption from annual management
assessment of internal controls requirement of the Sarbanes-Oxley Act of
2002.
Sec. 103. Changes required to small bank holding company policy
statement on assessment of financial and managerial factors.
Sec. 104. Accounting principles shall reflect business
models.
Sec. 105. Accounting principles cost-benefit
requirements.
Sec. 106. Increase in shareholder registration
threshold.
Sec. 107. FSOC review of Bureau regulations.
Sec. 108. Federal Reserve examination authority.
Title II—Regulatory Relief for Community Banks and Their
Customers
Sec. 201. Escrow requirements.
Sec. 202. Exception to annual privacy notice requirement under
the Gramm-Leach-Bliley Act.
Sec. 203. Fees for agriculture loans.
Sec. 204. Reimbursement for production of mandated
records.
Sec. 205. Loan amortization.
Sec. 206. Loan appraisals.
Sec. 207. Credit ratings.
Sec. 208. Small business data collection exclusion.
Title III—Tax Relief for Bank Depositors, Rural Banks,
Municipalities, Banks Organized As Limited Liability Companies, and Young
Savers
Sec. 301. Reduced rate and deferral of income recognition on
long-term certificates of deposit.
Sec. 302. Exclusion for interest on loans secured by
agricultural real property.
Sec. 303. Update in cap on qualified small issue
bonds.
Sec. 304. Limited liability company tax treatment for
FDIC-insured limited liability companies.
Sec. 305. Young savers’ accounts.
Title IV—Tax Relief for Community Banks and Holding
Companies
Sec. 401. Limited tax credit.
Sec. 402. Qualifying investments in small bank
issuers.
Sec. 403. 5-year NOL carryback for certain banks.
Title V—Small Business Subchapter S Reforms
Sec. 501. Increasing shareholder limit for subchapter S to
200.
Sec. 502. Issuance of preferred stock permitted for subchapter
S corporations.
Sec. 503. IRA shareholders.
<enum>I</enum><header>Targeted
Regulatory Relief for Community Banks</header>
<section id="HB00B89C0389B40FFA42952985CD09596"><enum>101.</enum><header>Short form
reports of condition for certain community banks</header>
<subsection id="H8DC5BB2239B44A3BB63921FA891AC46B"><enum>(a)</enum><header>In
general</header><text>Section 7(a) of the Federal Deposit Insurance Act (12
U.S.C. 1817(a)) is amended by inserting at the end the following new
paragraph:</text>
<quoted-block id="H9A2E8EC6F68A476EBBCE6944A67DB694" style="OLC">
<paragraph id="H1105AAEA04CC44208A66E86189305260"><enum>(12)</enum><header>Short form
reports of condition for community banks</header>
<subparagraph id="H62F1A0A90F8F45DB805E21E788C6CB40"><enum>(A)</enum><header>In
general</header><text>With respect to reports of condition required under
paragraph (3) for each calendar quarter, an insured depository institution
described in subparagraphs (A), (B), (C), and (D) of section 10(d)(4) may
submit a short form of any such report of condition in 2 nonsequential quarters
of any calendar year.</text>
</subparagraph><subparagraph id="HED213123A1C94A79B60B82A9F9ED32A1"><enum>(B)</enum><header>Asset
adjustments</header><text>For purposes of this paragraph, the asset levels for
section 10(d)(4) shall be $10,000,000,000 in the case of subparagraph (A) and
$1,000,000,000 in the case of subparagraph (C).</text>
</subparagraph><subparagraph id="HEA4482E113C34AB6AEC5B5FF815AAF7C"><enum>(C)</enum><header>Short form
defined</header><text>The term <term>short form</term>, when used in connection
with any report of condition required under paragraph (3), means a report of
condition in a format established by the appropriate Federal banking agency,
after notice and opportunity for comment, that—</text>
<clause id="H509CFDC94EFB45D5A8A89D0A0600B5CF"><enum>(i)</enum><text>is
significantly and materially less burdensome for the insured depository
institution to prepare than the format of the report of condition required
under paragraph (3); and</text>
</clause><clause id="HF754FAFC89B24E23ADF2859B82B28F36"><enum>(ii)</enum><text>provides
sufficient material information for the appropriate Federal banking agency to
assure the maintenance of the safe and sound condition of the depository
institution and safe and sound
practices.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5D6A3ADFA96C4E558414480FFE68F929"><enum>(b)</enum><header>Regulations</header><text>Any
regulation required to carry out the amendment made by subsection (a) shall be
published in final form before the end of the 6-month period beginning on the
date of the enactment of this Act.</text>
</subsection></section><section id="H55F92B7ADF1F4DA887515380A8AC6EDE"><enum>102.</enum><header>Community bank
exemption from annual management assessment of internal controls requirement of
the Sarbanes-Oxley Act of 2002</header><text display-inline="no-display-inline">Section 404 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7262) is amended by adding the following new subsection:</text>
<quoted-block id="H53B721A1DFF243A0B16AB6D35715CC6C" style="OLC">
<subsection id="H7E2A81DAC04F4784A97763B2C080860F"><enum>(d)</enum><header>Community bank
exemption</header>
<paragraph id="H6F366C95EE2D4D5C837260536FF712BD"><enum>(1)</enum><header>In
general</header><text>This section shall not apply in any year to any insured
depository institution which, as of the close of the preceding year, had total
assets, as determined on a consolidated basis, of $1,000,000,000 or
less.</text>
</paragraph><paragraph id="H0472BB8737AE4E50A413E91DCB34573B"><enum>(2)</enum><header>Adjustment of
amount</header><text>The Commission shall annually adjust the dollar amount in
paragraph (1) by an amount equal to the percentage increase, for the most
recent year, in total assets held by all depository institutions, as reported
by the Federal Deposit Insurance
Corporation.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="HE6E1A2076F9D46DDA5AFC4524B57063E"><enum>103.</enum><header>Changes
required to small bank holding company policy statement on assessment of
financial and managerial factors</header>
<subsection id="H14631E1AD54849F79B58DF970027C047"><enum>(a)</enum><header>Small bank
holding company policy statement on assessment of financial and managerial
factors</header>
<paragraph id="H2D07E549D7AF4A7D8D6B5FA9A7874433"><enum>(1)</enum><header>In
general</header><text>Before the end of the 6-month period beginning on the
date of the enactment of this Act, the Board of Governors of the Federal
Reserve System shall publish in the Federal Register proposed revisions to the
Small Bank Holding Company Policy Statement on Assessment of Financial and
Managerial Factors (12 C.F.R. part 225—appendix C) that provide that the policy
shall apply to a bank holding company which has pro forma consolidated assets
of less than $1,000,000,000 and that—</text>
<subparagraph id="H3A24E120F83C43D3AD5E362797D012AB"><enum>(A)</enum><text>is not engaged in
any nonbanking activities involving significant leverage; and</text>
</subparagraph><subparagraph id="H3D1440C4C2884923B7B10E5BBF8E765E"><enum>(B)</enum><text>does not have a
significant amount of outstanding debt that is held by the general
public.</text>
</subparagraph></paragraph><paragraph id="HEA956F533096468B87AACAD5851D0641"><enum>(2)</enum><header>Adjustment of
amount</header><text>The Board of Governors of the Federal Reserve System shall
annually adjust the dollar amount referred to in paragraph (1) in the Small
Bank Holding Company Policy Statement on Assessment of Financial and Managerial
Factors by an amount equal to the percentage increase, for the most recent
year, in total assets held by all insured depository institutions, as
determined by the Board.</text>
</paragraph></subsection><subsection id="H6E576248562442D0B25718599FB5C1D3"><enum>(b)</enum><header>Increase in
debt-to-Equity ratio of small bank holding company</header><text>Before the end
of the 6-month period beginning on the date of the enactment of this Act, the
Board of Governors of the Federal Reserve System shall publish in the Federal
Register proposed revisions to the Small Bank Holding Company Policy Statement
on Assessment of Financial and Managerial Factors (12 C.F.R. part 225—appendix
C) such that the debt-to-equity ratio allowable for a small bank holding
company in order to remain eligible to pay a corporate dividend and to remain
eligible for expedited processing procedures under Regulation Y of the Board of
Governors of the Federal Reserve System would increase from 1:1 to 3:1.</text>
</subsection></section><section id="HC7DA466C050D465E972DD6D1B2B65B31"><enum>104.</enum><header>Accounting
principles shall reflect business models</header>
<subsection id="HCADCB34F48704789AF95D6A99919F9C4"><enum>(a)</enum><text>Section 13(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m) is redesignated as
paragraph (a)(1) and paragraphs (1) and (2) are redesignated as subparagraphs
(A) and (B).</text>
</subsection><subsection id="HC1F0A2FA83D44014AD9E0C7892C1976B"><enum>(b)</enum><text>Section 13(a) is
further amended by adding the following new paragraph—</text>
<quoted-block id="H11E58514C4C2480884CD1146615D1B90" style="OLC">
<paragraph id="HC421EF000DC6499082035FDDF0AD2058" indent="up1"><enum>(2)</enum><text>The Commission shall ensure that
information, documents, and reports accurately and appropriately reflect the
business model of the
issuer.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="H2D297F7856AA4143AC9D380BA54C036D"><enum>105.</enum><header>Accounting
principles cost-benefit requirements</header><text display-inline="no-display-inline">The Securities Exchange Act of 1934 is
amended by inserting after section 13A the following new section:</text>
<quoted-block id="H3DA95322DC7F4F72B24051BCAEB7F9BF" style="OLC">
<section id="HEAD7AB3BE90D4E7C8B96445589C2FE72"><enum>13B.</enum><header>Generally
accepted accounting principles cost-benefit requirements</header><text display-inline="no-display-inline">The Commission shall conduct analyses of the
costs and benefits (including economic benefits) of any new or amended
generally accepted accounting principle and may not approve any new or amended
generally accepted accounting principle unless the Commission determines
that—</text>
<paragraph id="H9CD86B84F74E407699277A315255E1FE"><enum>(1)</enum><text>the benefits of
such principle significantly outweigh its costs; and</text>
</paragraph><paragraph id="HFD6CD94E660E42628C7481CED8AA0967"><enum>(2)</enum><text>such principle
would not have a negative economic impact on insured depository institutions
with total assets of $10,000,000,000 or
less.</text>
</paragraph></section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section commented="no" id="H2C33E8FEFEC64A76AA9F1482582AB6CF"><enum>106.</enum><header>Increase in
shareholder registration threshold</header>
<subsection commented="no" id="H609BB20BC0A247DD813CCED3CA7D8414"><enum>(a)</enum><header>Registration</header><text display-inline="yes-display-inline">Section 12(g) of the Securities Exchange
Act of 1934 (15 U.S.C. 78l(g)) is amended—</text>
<paragraph commented="no" id="H976B987469D84081A1434CA4944335A0"><enum>(1)</enum><text>in paragraph (1),
by striking subparagraphs (A) and (B) and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="H2B23C181463F413188BDA97776F48C0F" style="OLC">
<subparagraph commented="no" id="HE8FD59E6826B40A69DBE927B1BAC7D0E" indent="up1"><enum>(A)</enum><text>in the case of an issuer that is a
bank or a bank holding company, as such term is defined in section 2 of the
Bank Holding Company Act of 1956 (12 U.S.C. 1841), 2000 persons or more;
and</text>
</subparagraph><subparagraph commented="no" id="H6A6EB8C601D8409599D2B53B5F7039D9" indent="up1"><enum>(B)</enum><text>in the case of an issuer that is not a
bank or bank holding company, 500 persons or
more,</text>
</subparagraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="H93E75C794C614825BD67981EF13E41B2"><enum>(2)</enum><text>in paragraph (4),
by striking <quote>three hundred</quote> and inserting <quote>300 persons, or,
in the case of a bank or a bank holding company, as such term is defined in
section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841),
1700</quote>.</text>
</paragraph></subsection><subsection commented="no" id="H0BE779CC4845478C83D26A02C48EA8A8"><enum>(b)</enum><header>Suspension</header><text>Section
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended, in
the third sentence, by striking <quote>three hundred</quote> and inserting
<quote>300 persons, or, in the case of bank or a bank holding company, as such
term is defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C.
1841), 1700</quote>.</text>
</subsection></section><section id="H60F588BAC1D34E79A9E832DC623027DF"><enum>107.</enum><header>FSOC review of
Bureau regulations</header><text display-inline="no-display-inline">Section
1023(a) of the Consumer Financial Protection Act of 2010 is amended—</text>
<paragraph id="H17935D901E824CC997FAB5554E74C89B"><enum>(1)</enum><text>by striking
<quote>provision would put the safety and soundness of the United States
banking system or the stability of the financial system of the United States at
risk.</quote>; and</text>
</paragraph><paragraph id="HCC96DE8A5B1E4BE78EBBE3AA8AA11B53"><enum>(2)</enum><text>by inserting the
following:</text>
<quoted-block display-inline="no-display-inline" id="HFD73173B69B44926B566B4A82E8B6212" style="OLC">
<quoted-block-continuation-text quoted-block-continuation-text-level="subsection">provision—</quoted-block-continuation-text><paragraph id="H346FF3834DBF485E9E841B24248EE7C3"><enum>(1)</enum><text display-inline="yes-display-inline">is inconsistent with the safe and sound
operation of United States financial institutions; or</text>
</paragraph><paragraph id="H80F5A016F23F48FC9C93F52F57ACA166"><enum>(2)</enum><text>could adversely
impact a subset of the banking industry
disproportionately.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="HD4CE4EF5CD1B46258F5A16A5D68C5631"><enum>108.</enum><header>Federal Reserve
examination authority</header><text display-inline="no-display-inline">Section
1012(c) of the Consumer Financial Protection Act of 2010 is amended—</text>
<paragraph id="H506EA4D15B0944838DBC43212A904905"><enum>(1)</enum><text>by striking
paragraph (1); and</text>
</paragraph><paragraph id="HBB7632F80B714BB0B88F7275F9A411C2"><enum>(2)</enum><text>by redesignating
paragraphs (2), (3), (4), and (5) as paragraphs (1), (2), (3), and (4),
respectively.</text>
</paragraph></section><enum>II</enum><header>Regulatory Relief
for Community Banks and Their Customers</header>
<section id="H61A156076AB0437189BB4106C60456D2"><enum>201.</enum><header>Escrow
requirements</header>
<subsection id="HF500B4694F7241C4AF4F5982779281B9"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 129D(c) of
the Truth in Lending Act, as added by section 1461(a) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, is amended—</text>
<paragraph id="H6B46ED0C81EB494EBA29EDF7C2E3CFA1"><enum>(1)</enum><text>by redesignating
paragraphs (1), (2), (3), and (4) as subparagraph (A), (B), (C), and (D) and
moving such subparagraphs 2ems to the right;</text>
</paragraph><paragraph id="HC8712D8F6C9B42A4BC16617663F7D491"><enum>(2)</enum><text>striking
<quote>The Board</quote> and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="H21B42681C3A440C29E9F841943617437" style="OLC">
<paragraph id="H072EB9F9CA824DD3B61AD0852D599843"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The
Board</text>
</paragraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="HFF232A8E3BDA4726A194EFCA6C161BA0"><enum>(3)</enum><text>by adding at the
end the following new paragraph:</text>
<quoted-block id="H47C30E9833B349A78A8AF4F9DE933249" style="OLC">
<paragraph id="H8B8CD603EC064AEBA3623CDE60892615" indent="up1"><enum>(2)</enum><header>Treatment of loans held by smaller
creditors</header><text>The Board shall, by regulation, exempt from the
requirements of subsection (a) any loan secured by a first lien on a consumer’s
principle dwelling, if such loan is held by a creditor with assets of
$10,000,000,000 or
less.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section id="H545D3FA6EF4241729D1F44DC694DC832"><enum>202.</enum><header>Exception to
annual privacy notice requirement under the Gramm-Leach-Bliley
Act</header><text display-inline="no-display-inline">Section 503 of the
Gramm-Leach-Bliley Act (15 U.S.C. 6803) is amended by adding the following new
subsections:</text>
<quoted-block id="HB018B426FB284FC091F5535812D93D10" style="OLC">
<subsection id="H45551D9CBE464CF185685DF012367880"><enum>(f)</enum><header>Exception to
annual notice requirement</header><text>A financial institution that—</text>
<paragraph id="H19F89C9484174AEC91A17EE26AB26438"><enum>(1)</enum><text>provides nonpublic
personal information only in accordance with the provisions of subsection
(b)(2) or (e) of section 502 or regulations prescribed under section
504(b),</text>
</paragraph><paragraph id="H43C143BA4CE44FD7897F7D8520A828BD"><enum>(2)</enum><text>does not share
information with affiliates under section 603(d)(2)(A) of the Fair Credit
Reporting Act, and</text>
</paragraph><paragraph id="HFA4AC444BCD94D70B3FAEA4702FA82EF"><enum>(3)</enum><text>has not changed
its policies and practices with regard to disclosing nonpublic personal
information from the policies and practices that were disclosed in the most
recent disclosure sent to consumers in accordance with this subsection,</text>
</paragraph><continuation-text continuation-text-level="subsection">shall not
be required to provide an annual disclosure under this subsection until such
time as the financial institution fails to comply with any criteria described
in paragraph (1), (2), or (3).</continuation-text></subsection><subsection id="HBA7014B548B046D5B2803C5E448706B9"><enum>(g)</enum><header>Exception to
notice requirement</header><text>A financial institution shall not be required
to provide any disclosure under this section if—</text>
<paragraph id="H6C7B327C50164FCA928E960B1E5D5D45"><enum>(1)</enum><text>the financial
institution is licensed by a State and is subject to existing regulation of
consumer confidentiality that prohibits disclosure of nonpublic personal
information without knowing and expressed consent of the consumer in the form
of laws, rules, or regulation of professional conduct or ethics promulgated
either by the court of highest appellate authority or by the principal
legislative body or regulatory agency or body of any State of the United
States, the District of Columbia, or any territory of the United States;
or</text>
</paragraph><paragraph id="HDEB82118D7FB4BEDAE4C7384B80C12B8"><enum>(2)</enum><text>the financial
institution is licensed by a State and becomes subject to future regulation of
consumer confidentiality that prohibits disclosure of nonpublic personal
information without knowing and expressed consent of the consumer in the form
of laws, rules, or regulation of professional conduct or ethics promulgated
either by the court of highest appellate authority or by the principal
legislative body or regulatory agency or body of any State of the United
States, the District of Columbia, any territory of the United
States.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="H7B65CBD7D2B941E1B91B3D54ED3F939C"><enum>203.</enum><header>Agriculture
loan guarantees</header>
<subsection id="H82763DC78BF145AA92C80725789D0F96"><enum>(a)</enum><header>Fees</header><text display-inline="yes-display-inline">Section 310B(g)(5) of the Consolidated Farm
and Rural Development Act (7 U.S.C. 1932(g)(5)) is amended by inserting before
the period the following: <quote>, except that for loans under $5,000,000, the
Secretary may assess a 1-time fee of 1 percent or less of the guaranteed
principal portion of the loan</quote>.</text>
</subsection><subsection id="H00D79BF2E14B4662AEEA5A89B0332931"><enum>(b)</enum><header>Guarantee
amounts</header><text display-inline="yes-display-inline">Section 364 of the
Consolidated Farm and Rural Development Act (7 U.S.C. 2006f) is amended—</text>
<paragraph id="H4DA898C8466A4DC7BF36353104BE0A42"><enum>(1)</enum><text>in subsection
(a)—</text>
<subparagraph id="H4833CE20C68E49F6B83AC58CB812A04C"><enum>(A)</enum><text>in paragraph
(3)—</text>
<clause id="HC8930BE100814C2BB8AC7FD1F3A52AA6"><enum>(i)</enum><text>by
striking <quote>may</quote> and inserting <quote>shall</quote>; and</text>
</clause><clause id="HB103A224B89A48CF94EB6D4EE7212B54"><enum>(ii)</enum><text>by
striking <quote>standards that are not less stringent than</quote>;</text>
</clause></subparagraph><subparagraph id="H385234DC439C4543AB4CFB184B0F0084"><enum>(B)</enum><text>in paragraph (4),
by inserting before the period the following: <quote>except that the Secretary
may guarantee not more than 90 percent of a loan made by a certified lender if
such loan is in an amount of less than $5,000,000</quote>; and</text>
</subparagraph><subparagraph id="H692210F3033F4376A841E0749E8F07A5"><enum>(C)</enum><text>in paragraph (6);
and</text>
</subparagraph></paragraph><paragraph id="H31293305FEB64E53A1B6024B3CF8E2F2"><enum>(2)</enum><text>in subsection
(b)—</text>
<subparagraph id="H5ED21DE9978C4C7B861FF5950F19603F"><enum>(A)</enum><text>by amending
paragraph (1) to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HF498D4A29A40425D8B9C72F192B786AC" style="OLC">
<paragraph id="H50534FCF328446A687EE7A0B7A851624"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The Secretary may
establish a preferred certified lender’s program for lenders who—</text>
<subparagraph id="H9B6D35602B0945E6A8AD156A66EBE491"><enum>(A)</enum><text>establish
their—</text>
<clause id="HE21036B2CA4E41E5B984A5308EB490AE"><enum>(i)</enum><text display-inline="yes-display-inline">knowledge of, and experience under, the
program established under subsection (a);</text>
</clause><clause id="HAB29537ECE3948CF9FBE37C9715ADCD0"><enum>(ii)</enum><text>knowledge of the
regulations concerning the particular guaranteed loan program; and</text>
</clause><clause id="H6EA44B769FA24D7EABC0721EBA74949C"><enum>(iii)</enum><text>proficiency
related to the certified lender program requirement; or</text>
</clause></subparagraph><subparagraph id="H6B3AE7DF7863404BA73A9BB704D490E4"><enum>(B)</enum><text>in the absence of
a demand for or experience with guaranteed loans having been made under a rural
development program, establish their proven experience in having made small
business loans.</text>
</subparagraph></paragraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H4D1D88B9EF7A45DD9DE4BA4155644886"><enum>(B)</enum><text display-inline="yes-display-inline">in paragraph (5)(A), by inserting before
the semicolon the following: <quote>except that the Secretary may guarantee not
more than 90 percent of a loan made by a certified lender if such loan is in an
amount of less than $5,000,000</quote>.</text>
</subparagraph></paragraph></subsection></section><section id="H7CD78ABD48C6480BBFA0A95DB8E48491"><enum>204.</enum><header>Reimbursement
for production of mandated records</header>
<subsection id="H9F78E9CE84ED4DA7AB984D0D36B0CA76"><enum>(a)</enum><header>Corporate
records</header><text>Section 1101(4) of the Right to Financial Privacy Act of
1978 (12 U.S.C. 3401(4)) is amended by inserting before the semicolon the
following: <quote>, except that, for purposes of section 1115, such term
includes any entity</quote>.</text>
</subsection><subsection commented="no" id="HFFAE27E72AF44DC48F6F5C591B3BD582"><enum>(b)</enum><header>Clarification of
scope</header><text>Section 1115 of the Right to Financial Privacy Act of 1978
(12 U.S.C. 3415) is amended by adding at the end the following new
subsection:</text>
<quoted-block id="HAE9FAEBD51FC42759ECF39D8CFC4E088" style="OLC">
<subsection commented="no" id="HEF34DD306F3044E18CDF4DF9AA05DF19"><enum>(c)</enum><header>Clarification of
scope</header><text>Notwithstanding subsection (a), the fee for reimbursement
described under such subsection shall by paid by a Government authority for all
records required to be assembled or provided for any Federal law enforcement or
investigative purpose by any financial institution with total assets of
$10,000,000,000 or
less.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="HC6D9A241DEEF4A4881D3C24111690ABD"><enum>205.</enum><header>Loan
amortization</header>
<subsection id="HB4E1904FDA884ED3BBB70465FF930A77"><enum>(a)</enum><header>In
general</header><text>For purposes of capital calculation under the Financial
Institutions Examination Council’s Consolidated Reports of Condition, an
eligible institution may choose to amortize any loss or write-down, on a
quarterly straight-line basis over the 10-year period beginning with the month
in which such loss or write-down occurs, resulting from the application of FASB
Statement 114 or 144 to—</text>
<paragraph id="H7A3C6DA5398C4D48BD50EE4D793743EC"><enum>(1)</enum><text>other real estate
owned (as defined under section 34.81 of title 12, Code of Federal
Regulations); or</text>
</paragraph><paragraph id="H9CD0C7229A064AC7B617860FC0F9C80F"><enum>(2)</enum><text>an impaired loan
secured by real estate, provided that the institution discloses the difference
in the amount of the institution’s capital, when calculated taking into account
the temporary amortization, from the amount of the institution’s capital when
calculated without taking into account the temporary amortization on the
Financial Institutions Examination Council’s Consolidated Reports of
Condition.</text>
</paragraph></subsection><subsection id="HE40DE4915C584CFFBED33D6F40C914D7"><enum>(b)</enum><header>Eligible
institution defined</header><text>For purposes of this section, the term
<term>eligible institution</term> has the meaning given such term under section
4102(11) of the Small Business Jobs Act of 2010.</text>
</subsection><subsection id="HC9CA9815B4FD4942A79EB442D5D3A16B"><enum>(c)</enum><header>Effective
date</header><text>The provisions of this section shall apply to loan
originations that occurred on or after January 1, 2003, and before January 1,
2008.</text>
</subsection></section><section id="HA6E53E06F2194483B21BBD8440B7AA4D"><enum>206.</enum><header>Loan
appraisals</header><text display-inline="no-display-inline">For purposes of
determining capital requirements or measuring capital of an insured depository
institution under section 38 of the Federal Deposit Insurance Act (12 U.S.C.
1831o) or any other provision of law, an insured depository institution may
average, over a five-year period, the appraised value of any real estate
securing a loan held by the institution.</text>
</section><section id="H27492F2B809B4A3F93449E8F94C7C56F"><enum>207.</enum><header>Credit
ratings</header><text display-inline="no-display-inline">Section 939A(b) of the
Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by
striking the first sentence and inserting: <quote>Each such agency shall modify
any such regulations identified by the review conducted under subsection (a)
and require that ratings-based determinations be confirmed by an analysis of
the probability of a loss from holding such an asset, but only in circumstances
where external credit ratings present an incomplete picture of the risks
presented to an institution, or where those risks are heightened due to
concentrations in particular assets classes.</quote>.</text>
</section><section id="HB09C68BD46FC420299F35DC6D2EEFFF7"><enum>208.</enum><header>Small business
data collection exclusion</header><text display-inline="no-display-inline">Section 704B(h)(1) of the Equal Credit
Opportunity Act is amended by inserting before the period the following:
<quote>and that has assets of more than $1,000,000,000</quote>.</text>
</section><enum>III</enum><header>Tax
Relief for Bank Depositors, Rural Banks, Municipalities, Banks Organized As
Limited Liability Companies, and Young Savers</header>
<section id="H262E0C282FF4485CB3EE62331412D01C"><enum>301.</enum><header>Reduced rate
and deferral of income recognition on long-term certificates of
deposit</header>
<subsection id="H1D17665625FB479CB986F6C53D77B043"><enum>(a)</enum><header>Deferral of
income recognition</header><text>Section 451 of the Internal Revenue Code of
1986 is amended by adding at the end the following new subsection:</text>
<quoted-block id="H69688898D290465FBB5BD8E8C73CF6EE" style="OLC">
<subsection id="HB96748AA23AF48678E96EDBD954D881D"><enum>(j)</enum><header>Certificates of
deposits held by cash basis individuals</header><text>In the case of an
individual on the cash receipts and disbursements method of accounting who
holds a nonnegotiable certificate of deposit, interest income which is not made
available for withdrawal before maturity of the certificate without penalty
shall not be includible in gross income before the certificate is redeemed or
matures.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H47773209C56E4C17897A554364E5DEB7"><enum>(b)</enum><header>Interest Income
on Long-Term Certificates of Deposit</header><text display-inline="yes-display-inline">Subparagraph (A) of section 1(h)(11) of
such Code is amended by striking <quote>increased by qualified dividend
income</quote> and inserting the
following:</text>
<quoted-block display-inline="yes-display-inline" id="H178EA0EF87654B088E3EFB4666754996" style="OLC">
<text>increased
by—</text><clause id="HC5DD893461024F58A6232A5A643075DD"><enum>(i)</enum><text>qualified dividend
income, and</text>
</clause><clause id="HB2A6591F17FA40638EF650821C6828A9"><enum>(ii)</enum><text>interest income
on any nonnegotiable certificate of deposit—</text>
<subclause id="HC046A24C5F424901A885D5CABAB995B7"><enum>(I)</enum><text>with a fixed
maturity date which is 1 year or more from the date of issue, and</text>
</subclause><subclause id="H6CEE1E35566F4353B594F9CA6F54CBBD"><enum>(II)</enum><text>the interest on
which is not made available for withdrawal before maturity without
penalty.</text>
</subclause></clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H8796BFFF92D540E1B7417477A4E6A661"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section id="H3862407FF6D143798F572EC1069B72A7"><enum>302.</enum><header>Exclusion for
interest on loans secured by agricultural real property</header>
<subsection id="H7EA61901F04949F28EF6043D3685A72D"><enum>(a)</enum><header>In
general</header><text>Part III of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 is amended by inserting after section 139D the following
new section:</text>
<quoted-block id="HE7EAFA0C12384369A0DED956F1FE5566" style="OLC">
<section id="H41F42CF3834F4972BAC32C766F8AEB91"><enum>139E.</enum><header>Interest on
loans secured by agricultural real property</header>
<subsection id="H36F5BA7EE4A94BC1B0E896444BA79457"><enum>(a)</enum><header>Exclusion</header><text>Gross
income shall not include interest received by a qualified lender on any
qualified real estate loan.</text>
</subsection><subsection id="H97DB4BB6F5AE4F0089E950ECF4A3ACD6"><enum>(b)</enum><header>Definitions</header><text>For
purposes of this section—</text>
<paragraph id="H0AD5BD34322D433694452FC3322360EA"><enum>(1)</enum><header>Qualified
lender</header><text>The term <term>qualified lender</term> means any bank or
savings association the deposits of which are insured under the Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.).</text>
</paragraph><paragraph id="H03AF5DB4FA1A4C0AB2DF4E4A9CAF3168"><enum>(2)</enum><header>Qualified real
estate loan</header><text>The term <term>qualified real estate loan</term>
means any loan secured by agricultural real estate or by a leasehold mortgage
(with a status as a lien) on agricultural real estate. For purposes of the
preceding sentence, the determination of whether property securing such loan is
agricultural real estate shall be made as of the time the interest income on
such loan is accrued.</text>
</paragraph><paragraph id="HB927F9A2994F4C449E871983D312B843"><enum>(3)</enum><header>Agricultural
real estate</header><text>The term <term>agricultural real estate</term>
means—</text>
<subparagraph id="HDB3F70949AA84A85B638075A6EC43B51"><enum>(A)</enum><text>real property used
for the production of 1 or more agricultural products, and</text>
</subparagraph><subparagraph id="H8C3D34EFC95247FE8B507B388FC667AF"><enum>(B)</enum><text>any single family
residence—</text>
<clause id="H137A4F20A03F4820B3756704519426D5"><enum>(i)</enum><text>which is the
principal residence (within the meaning of section 121) of its occupant,</text>
</clause><clause id="HC4750B9EFB07404F832727BFEC2FA409"><enum>(ii)</enum><text>which is located
in a rural area (as determined by the Secretary of Agriculture), which is not
within a Metropolitan Statistical Area (as defined by the Office of Management
and Budget) and which has a population (determined on the basis of the most
recent decennial census for which data are available) of 2,500 or less,
and</text>
</clause><clause id="H4F8170F1BB2C43198DA8FF67DF548518"><enum>(iii)</enum><text>which is
purchased or improved with the proceeds of the qualified real estate
loan.</text>
</clause></subparagraph></paragraph></subsection><subsection id="HCC55FF938D1F489D94B1E8406059973E"><enum>(c)</enum><header>Coordination
with section 265</header><text>Qualified real estate loans shall be treated as
obligations described in section 265(a)(2) the interest on which is wholly
exempt from the taxes imposed by this
subtitle.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H1B1FB991A4904D82B7752B90B68976D5"><enum>(b)</enum><header>Clerical
amendment</header><text>The table of sections for such part III is amended by
inserting after the item relating to section 139D the following new
item:</text>
<quoted-block id="H56A3C786181244F0BB8047E486B3A1F5" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 139E. Interest on loans secured by
agricultural real
property.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H1728D43E315C4EC1A56DF20CD661FA1C"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section id="H274AE427A704492C8709038979407D5D"><enum>303.</enum><header>Update in cap
on qualified small issue bonds</header>
<subsection id="HE87A858351BA420FAA7E262A74633CA5"><enum>(a)</enum><header>In
general</header><text>Clause (i) of section 144(a)(4)(A) of the Internal
Revenue Code of 1986 is amended by striking <quote>$10,000,000</quote> and
inserting <quote>$30,000,000</quote>.</text>
</subsection><subsection id="HD4A8AD1F56FF4572B7BA90D7731405B8"><enum>(b)</enum><header>Adjustment of
cap for inflation</header><text>Subsection (a) of section 144 of such Code is
amended by redesignating paragraph (12) as paragraph (13) and by inserting
after paragraph (11) the following new paragraph:</text>
<quoted-block id="HF5E6ADDBD70D458FB44C55DC3E43EEA9" style="OLC">
<paragraph id="H1A9E5773A1E0499C84CD785C6775A502"><enum>(12)</enum><header>Inflation
adjustment</header><text>In the case of any issue issued during a calendar year
after 2011, the $30,000,000 amount contained in paragraph (4)(A)(i) shall be
increased by an amount equal to—</text>
<subparagraph id="H0A010183770F433FACC03E93436CA416"><enum>(A)</enum><text>such dollar
amount, multiplied by</text>
</subparagraph><subparagraph id="H0960B1B0D7744D75A5302D3B771554BD"><enum>(B)</enum><text>the cost-of-living
adjustment determined under section 1(f)(3) for such calendar year by
substituting <quote>calendar year 2010</quote> for <quote>calendar year
1992</quote> in subparagraph (B) thereof.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Any
increase under the preceding sentence which is not a multiple of $100,000 shall
be rounded to the next lowest multiple of
$100,000.</continuation-text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H3B710342F7FB4D3BB6159B549FDDF55E"><enum>(c)</enum><header>Conforming
amendment</header><text>The heading of paragraph (4) of section 144(a) of such
Code is amended by striking <quote><header-in-text level="paragraph" style="OLC">$10,000,000 limit</header-in-text></quote> and inserting
<quote><header-in-text level="paragraph" style="OLC">Increased
limitation</header-in-text></quote>.</text>
</subsection><subsection id="HF1C168FF3573468BAD38AF236CC2980B"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to—</text>
<paragraph id="H6617060DA8E04EEBBBF2B99D5047E3DA"><enum>(1)</enum><text>obligations issued
after the date of the enactment of this Act, and</text>
</paragraph><paragraph id="HF9C8D2C13A6048C28D1FC4E603EA9A7D"><enum>(2)</enum><text>capital
expenditures made after such date with respect to obligations issued on or
before such date.</text>
</paragraph></subsection></section><section id="H784A0B3F78DC41A6A1E1770EC9668DCF"><enum>304.</enum><header>Limited
liability company tax treatment for FDIC-insured limited liability
companies</header>
<subsection id="H60EE8025C6084EB0B552ADB8BEB2C213"><enum>(a)</enum><header>In
general</header><text>Paragraph (2) of section 7701(a) of the Internal Revenue
Code of 1986 (defining partnership and partner) is amended to read as
follows:</text>
<quoted-block id="H698268C546D24CA4B63185A7E966E3F0" style="OLC">
<paragraph id="HB4846216392641A9BC3CDBA0C331831B"><enum>(2)</enum><header>Partner and
partnership</header>
<subparagraph id="H2ED3EBEBE57143D792B6191689C98243"><enum>(A)</enum><header>In
general</header><text>The term <term>partnership</term> includes a syndicate,
group, pool, joint venture, or other unincorporated organization, through or by
means of which any business, financial operation, or venture is carried on, and
which is not, within the meaning of this title, a trust or estate or a
corporation; and the term <term>partner</term> includes a member in such a
syndicate, group, pool, joint venture, or organization.</text>
</subparagraph><subparagraph id="HB668972504FC4D9CBADEAEBC292E7241"><enum>(B)</enum><header>Election by
certain banks to be taxed as partnerships</header>
<clause id="H432AE6E6714A448395641463C1A3F376"><enum>(i)</enum><header>In
general</header><text>An eligible corporation may elect to be treated as a
partnership for purposes of this title.</text>
</clause><clause id="HD1BC1653ACF44E948E8292D972949C9B"><enum>(ii)</enum><header>Tax
treatment</header><text>In the case of an eligible corporation making an
election under clause (i)—</text>
<subclause id="H7A0B4B4C69A249DDA34D42F733BC9F01"><enum>(I)</enum><text>no gain or loss
shall be recognized to the corporation or the shareholders by reason of an
election under clause (i), and</text>
</subclause><subclause id="HB672E07B147E418191B993C6704D2DB7"><enum>(II)</enum><text>section 1374
shall apply to the entity after such election.</text>
</subclause></clause><clause id="H1F58486A785D475FA0A593A58525A136"><enum>(iii)</enum><header>Eligible
corporation</header><text>The term <term>eligible corporation</term> means any
entity described in clause (iv) if—</text>
<subclause id="H168FFFDBEDB34FEEBD7EFB3ED797EE63"><enum>(I)</enum><text>such entity would
(but for this subparagraph) be treated as a C corporation for purposes of this
title, and</text>
</subclause><subclause id="H9BB77D630F6C4107A1737D47FEA62A9C"><enum>(II)</enum><text>the gross assets
of such entity (determined under the rules of section 1202(d)) are
$10,000,000,000 or less.</text>
</subclause></clause><clause id="HD47DBB4ADAE044BAA17AD94F9B335995"><enum>(iv)</enum><header>Entities
described</header><text>The entities described in this clause are the
following:</text>
<subclause id="HB1782E0ABA7E47F49AB326308481DE3C"><enum>(I)</enum><text>Any bank (as
defined in section 581).</text>
</subclause><subclause id="H10F88617D6624BAF972EB6F951C0A8C3"><enum>(II)</enum><text>Any bank holding
company (as defined in section 2(a) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(a))).</text>
</subclause><subclause id="H23E63D8244D2403DB501B7917EE6C999"><enum>(III)</enum><text>Any savings
association (as defined in section 3(b) of the Federal Deposit Insurance Act
(12 U.S.C. 1813)).</text>
</subclause><subclause id="H534313FCAF8C451FA9019D120378B651"><enum>(IV)</enum><text>Any savings and
loan holding company (as defined in section 10(a)(1)(D) of the Home Owners Loan
Act).</text>
</subclause></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HFA32ABBD422349AEA6F581978C2D9CC2"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section id="HAF53BF217BFD4A2EA253D50B0CBF657B"><enum>305.</enum><header>Young savers’
accounts</header>
<subsection id="HA9FC6D30F8E64A46B404CEE56CFB22F2"><enum>(a)</enum><header>In
general</header><text>Section 408A of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block id="HA1FBC4856D224E15A4D2B28750A4C39D" style="OLC">
<subsection id="H23A0865879704521BE2F4CBF53901709"><enum>(g)</enum><header>Special rules
for Roth IRAs for children</header>
<paragraph id="HD8EC241DB6924F448D875488439BC715"><enum>(1)</enum><header>General
rule</header><text>In the case of a Roth IRA maintained for the benefit of an
individual who has not attained age 26 before the close of the taxable year,
the limitation on contributions under paragraph (2) shall apply in lieu of
paragraphs (2) and (3) of subsection (c).</text>
</paragraph><paragraph id="H929E8A3F812E434C98D8FAC926DCB0C1"><enum>(2)</enum><header>Limitation on
contributions</header><text display-inline="yes-display-inline">The aggregate
amount of contributions for any taxable year to all Roth IRAs maintained for
the benefit of an individual described in paragraph (1) with respect to such
taxable year shall not exceed the maximum amount allowable as a deduction under
subsection (b)(1) of section 219 for such taxable year (computed without regard
to subsections (b)(1)(B), (d)(1), and (g) of such
section).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H2E1F05F1F30C471E80BFF915A6547570"><enum>(b)</enum><header>Enforcement of
contribution limits</header><text>Paragraphs (1)(B) and (2)(B) of section
4973(f) of such Code are each amended by striking <quote>and (c)(3)</quote> and
inserting <quote>, (c)(3), and (g)(2)</quote>.</text>
</subsection><subsection id="H5E1A91F7BD894594A57523CCB29CDBDB"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2011.</text>
</subsection></section><enum>IV</enum><header>Tax
Relief for Community Banks and Holding Companies</header>
<section id="HB8DBE8C889894A53AAB37556D02A11A6"><enum>401.</enum><header>Limited tax
credit</header>
<subsection id="H5B1FC757E90C4E86B2E59341EDF37DF8"><enum>(a)</enum><header>C
corporations</header><text>Section 11 of the Internal Revenue Code of 1986
(relating to tax imposed) is amended by adding at the end the following new
subsection:</text>
<quoted-block id="HDE81384B623C47208443C2BDA4F62269" style="OLC">
<subsection id="H0E1188E1564D40B89FA34F35BC993CBB"><enum>(e)</enum><header>Reduction of tax
on community banks</header>
<paragraph id="HAE82F4A8E44E4B4D975275D1394D36B4"><enum>(1)</enum><header>In
general</header><text>In the case of a C corporation which is a community bank,
the aggregate tax imposed by this section, section 55, and section 1201 shall
be 80 percent of the aggregate tax which would (but for this subsection) be
imposed by such sections.</text>
</paragraph><paragraph id="HEB7A4C3401C24DFEA15D79A8E3F7BB3F"><enum>(2)</enum><header>Maximum
reduction</header><text>The reduction in tax by reason of this subsection shall
not exceed $250,000. Corporations treated as 1 corporation under section
1202(d)(3) shall be so treated under this subsection, and the limitation under
the preceding sentence shall be allocated among such corporations in such
manner as the Secretary shall prescribe.</text>
</paragraph><paragraph id="HF1060F30C8C64FB7BD971C97EC13D215"><enum>(3)</enum><header>Increased
benefit for banks operating in distressed areas, etc</header>
<subparagraph id="HD8F1451CE9994487B5BF58F456650F64"><enum>(A)</enum><header>In
general</header><text>In the case of a bank operating in an area referred to in
subparagraph (B)—</text>
<clause id="H63F2BAED2D1C4DBEA12D8B4D5FE30BCB"><enum>(i)</enum><text>paragraph (1)
shall be applied by substituting <quote>50 percent</quote> for <quote>80
percent</quote>, and</text>
</clause><clause id="HA4E734B6F1DF45D3BCCFCCA552AFFC11"><enum>(ii)</enum><text>paragraph (2)
shall be applied by substituting <quote>$500,000</quote> for
<quote>$250,000</quote>.</text>
</clause></subparagraph><subparagraph id="H5505147D139048EEAA1212391B35EB2B"><enum>(B)</enum><header>Areas
described</header><text>The areas referred to in this subparagraph are—</text>
<clause id="H44E93342014D410B94B2B48F493DECD5"><enum>(i)</enum><text>empowerment zones
and enterprise communities designated under section 1391,</text>
</clause><clause id="HA6C16AB403784145A7907F650BB40F35"><enum>(ii)</enum><text>renewal
communities designated under section 1400E,</text>
</clause><clause id="H737D104D48A44875914CA867EEBDC582"><enum>(iii)</enum><text>low-income
communities (as defined in section 45D(e)), and</text>
</clause><clause id="H65995D3CF5BD48688022D219D9BB446C"><enum>(iv)</enum><text>distressed
communities (within the meaning of section 233 of the Bank Enterprise Act of
1991 (12 U.S.C. 1834a(b)).</text>
</clause></subparagraph></paragraph><paragraph id="H604BD882142C468BB5E7CD4B08B55C36"><enum>(4)</enum><header>Community
bank</header><text>For purposes of this section, the term <term>community
bank</term> means any of the following entities the gross assets of which
(determined under the rules of section 1202(d)) are $10,000,000,000 or
less:</text>
<subparagraph id="H5BA3FA81A11045CA83921FF759A46483"><enum>(A)</enum><text>Any bank (as
defined in section 581).</text>
</subparagraph><subparagraph id="H6C8F4246E846401A866D6E32E9D9C7EA"><enum>(B)</enum><text>Any bank holding
company (as defined in section 2(a) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(a))).</text>
</subparagraph><subparagraph id="HABAFA2BF63F24F2DB0C3A88D1C30CE23"><enum>(C)</enum><text>Any savings
association (as defined in section 3(b) of the Federal Deposit Insurance Act
(12 U.S.C. 1813)).</text>
</subparagraph><subparagraph id="HCB1E137D7F8E4C188D6B537E92AC3F3E"><enum>(D)</enum><text>Any savings and
loan holding company (as defined in section 10(a)(1)(D) of the Home Owners Loan
Act).</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H564082AEB89F4B409FBC93144AC27BF8"><enum>(b)</enum><header>S
corporations</header><text>Subsection (a) of section 1366 of such Code is
amended by adding at the end the following new paragraph:</text>
<quoted-block id="H3C2719560EBA4F179CBFD319198470E3" style="OLC">
<paragraph id="H20AE6B1200D64FD591A1885795F10A0A"><enum>(3)</enum><header>Reduction of tax
on community banks</header>
<subparagraph id="H20167E21AAAA483DB8785D192D78C742"><enum>(A)</enum><header>In
general</header><text>In the case of a S corporation which is a community bank
(as defined in section 11(e)(4)), the net amount required to be taken into
account by shareholders (without regard to this paragraph) shall be reduced by
the lesser of—</text>
<clause id="H3964DAF3241548FE8278247657CD7CF5"><enum>(i)</enum><text>20
percent of such net amount, or</text>
</clause><clause id="HAB3F85F2DBDA4B86A6BBDF2E039F904F"><enum>(ii)</enum><text display-inline="yes-display-inline">$1,250,000.</text>
</clause></subparagraph><subparagraph id="H986472A16719441CA52E5642BEF29068"><enum>(B)</enum><header>Increased
benefit for banks operating in distressed areas, etc</header><text>In the case
of a bank operating in an area referred to in section 11(e)(3)(B)—</text>
<clause id="H75964DC132B44B819D71368994E5C271"><enum>(i)</enum><text>subparagraph
(A)(i) shall be applied by substituting <quote>50 percent</quote> for <quote>20
percent</quote>, and</text>
</clause><clause id="H3A5C630807B342D1B65289C7434EFDFA"><enum>(ii)</enum><text>subparagraph
(A)(ii) shall be applied by substituting <quote>$2,500,000</quote> for
<quote>$1,250,000</quote>.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HA549E56200FF494B87AC1CE9D27AA6CB"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section id="HA1984301FCE34B7FA99BA046999C2F5D"><enum>402.</enum><header>Qualifying
investments in small bank issuers</header>
<subsection id="HF41F7FAFCD95458B93EBC20D6F9EAF2E"><enum>(a)</enum><header>Generally</header><text>The
principles of Internal Revenue Service Notice 2010–2 shall apply to any
qualifying investment by any person in a small bank issuer in the same manner
as if such investment had been made by the Treasury Department pursuant to any
of the Programs (as defined in Notice 2010–2).</text>
</subsection><subsection id="H506702E4A906461198CBECF9BA7593B0"><enum>(b)</enum><header>Definitions</header><text>For
purposes of this section—</text>
<paragraph id="H21B1B44777F8487EBA13866CF868433F"><enum>(1)</enum><text>The term
<term>qualifying investment</term> means any investment in the equity of a
small bank issuer that otherwise would have constituted an ownership change
under section 382(g) of the Internal Revenue Code of 1986 (relating to
limitations on net operating loss carryforwards and certain built-in losses
following an ownership change).</text>
</paragraph><paragraph id="H2970F632E6A4478B8F526DC7C4C13066"><enum>(2)</enum><text>The term
<term>small bank issuer</term> means any insured depository institution as
defined in section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1813(c)(2)) which—</text>
<subparagraph id="HDE2E7B73A7BD4F3ABE2B0FB853AF86BE"><enum>(A)</enum><text>was required under
a Prompt Corrective Action order issued pursuant to section 38 of the Federal
Deposit Insurance Act (12 U.S.C. 1831o), or a formal or informal enforcement
order, to raise capital as a result of an examination that took place during
calendar years 2008 through 2012 by the Board of Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency, the Office of
Thrift Supervision, or the Federal Deposit Insurance Corporation, and</text>
</subparagraph><subparagraph id="H7FEABA8E9D8C4EEABD7DEAA1A7FF88DA"><enum>(B)</enum><text>at the time of the
order referred to in subparagraph (A), had total consolidated assets of
$10,000,000,000 or less.</text>
</subparagraph></paragraph></subsection></section><section id="HC5599499724540779CD5BEFD7A9E2965"><enum>403.</enum><header>5-year NOL
carryback for certain banks</header>
<subsection id="HF664C9427CFA454A9707B6B5EDA8EEDF"><enum>(a)</enum><header>In
general</header><text>Subparagraph (H) of section 172(b)(1) of the Internal
Revenue Code of 1986 is amended to read as follows:</text>
<quoted-block id="H0A3112EFEE854621B4EB1D876AF47120" style="OLC">
<subparagraph id="HB58316311AB34F6DB4F1FD136C1ED263"><enum>(H)</enum><header>Carryback for
2010 and 2011 net operating losses of certain banks</header>
<clause id="HD41EA292263C45D89D0DD0C1815F29FA"><enum>(i)</enum><header>In
general</header><text>In the case of an applicable 2010 or 2011 net operating
loss of a specified bank with respect to which the taxpayer has elected the
application of this subparagraph—</text>
<subclause id="HBA54AA3F55704BEFBAD4D7A96C842226"><enum>(I)</enum><text>subparagraph
(A)(i) shall be applied by substituting any whole number elected by the
taxpayer which is more than 2 and less than 6 for <quote>2</quote>,</text>
</subclause><subclause id="H04E2E3C58EB948F4AFAA6B376BF3F1AC"><enum>(II)</enum><text>subparagraph
(E)(ii) shall be applied by substituting the whole number which is one less
than the whole number substituted under subclause (I) for <quote>2</quote>,
and</text>
</subclause><subclause id="HD02E3620383A4E4792E0F6A439E3DD51"><enum>(III)</enum><text>subparagraph (F)
shall not apply.</text>
</subclause></clause><clause id="HE8E65CAB082041859F6562E0BB489917"><enum>(ii)</enum><header>Applicable 2010
or 2011 net operating loss</header><text>For purposes of this subparagraph, the
term <term>applicable 2010 or 2011 net operating loss</term> means—</text>
<subclause id="H5A7DFFB152C2482A870A54811F75BC2E"><enum>(I)</enum><text>the specified
bank’s net operating loss for any taxable year ending in 2010 or 2011,
or</text>
</subclause><subclause id="HFF9DE438CF2D4B979892FD00C09EAC0D"><enum>(II)</enum><text>if the specified
bank elects to have this subclause apply in lieu of subclause (I), the
specified bank’s net operating loss for any taxable year beginning in 2010 or
2011.</text>
</subclause></clause><clause id="HB75C4C35D1B34E9FACDA32C1198AFE00"><enum>(iii)</enum><header>Specified
bank</header><text>For purposes of this subparagraph, the term <term>specified
bank</term> means a community bank (as defined in section 11(e)(4)) and any
entity which would be a community bank (as so defined) if section 11(e)(4) were
applied by substituting <quote>$15,000,000,000</quote> for
<quote>$10,000,000,000</quote>.</text>
</clause><clause id="H8B9069EE797A43DD847FD8EE5EDE2EBC"><enum>(iv)</enum><header>Election</header><text>Any
election under this subparagraph shall be made in such manner as may be
prescribed by the Secretary, and shall be made by the due date (including
extension of time) for filing the taxpayer’s return for the taxable year of the
net operating loss. Any such election, once made, shall be
irrevocable.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB807F9AA3BF04358B747E85F4A0D6A69"><enum>(b)</enum><header>Anti-Abuse
rules</header><text>The Secretary of Treasury or the Secretary’s designee shall
prescribe such rules as are necessary to prevent the abuse of the purposes of
the amendments made by this section, including anti-stuffing rules,
antichurning rules (including rules relating to sale-leasebacks), and rules
similar to the rules under section 1091 of the Internal Revenue Code of 1986
relating to losses from wash sales.</text>
</subsection><subsection id="H3B9827008FBF4EA7BA85E338DB490574"><enum>(c)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to net operating losses arising in taxable years
ending after December 31, 2009.</text>
</subsection></section><enum>V</enum><header>Small
Business Subchapter S Reforms</header>
<section id="H0C970C9C348746BF88B0911ED306310D"><enum>501.</enum><header>Increasing
shareholder limit for subchapter S to 200</header>
<subsection id="HB7F8F63FEC2D4BA2A0CE005E56217724"><enum>(a)</enum><header>In
general</header><text>Subparagraph (A) of section 1361(b)(1) of the Internal
Revenue Code of 1986 is amended by striking <quote>100</quote> and inserting
<quote>200</quote>.</text>
</subsection><subsection id="H06A48C5BBCAB42C2BBD0A9DB652F8E68"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2011.</text>
</subsection></section><section id="H223C1911D8154C02B2EF301E69CB380B"><enum>502.</enum><header>Issuance of
preferred stock permitted for subchapter S corporations</header>
<subsection id="H5E9CAB5761EF4F5FB0FD658EBFD8E4B6"><enum>(a)</enum><header>In
general</header><text>Section 1361 (defining S corporation) is amended by
adding at the end the following new subsection:</text>
<quoted-block id="H34420E8A97C0452EA911CBCA112C743B" style="OLC">
<subsection id="HE853618071C24227BBA692D550613690"><enum>(h)</enum><header>Treatment of
qualified preferred stock</header>
<paragraph id="HE3744B0894DE4B209BEB0F80E2C49388"><enum>(1)</enum><header>In
general</header><text>For purposes of this subchapter—</text>
<subparagraph id="H879F13B5F0ED48D0B67C1CE0F6BE6C4C"><enum>(A)</enum><text>qualified
preferred stock shall not be treated as a second class of stock, and</text>
</subparagraph><subparagraph id="H44D1EBE1B5984637AFBD5C44BA22979E"><enum>(B)</enum><text>no person shall be
treated as a shareholder of the corporation by reason of holding qualified
preferred stock.</text>
</subparagraph></paragraph><paragraph id="H0A0AFD0EC51D487492A0752B774E9892"><enum>(2)</enum><header>Qualified
preferred stock defined</header><text>For purposes of this subsection, the term
<term>qualified preferred stock</term> means stock which meets the requirements
of subparagraphs (A), (B), and (C) of section 1504(a)(4). Stock shall not fail
to be treated as qualified preferred stock merely because it is convertible
into other stock.</text>
</paragraph><paragraph id="H8E33CD708CCC4004B2CBFA153E126A47"><enum>(3)</enum><header>Distributions</header><text>A
distribution (not in part or full payment in exchange for stock) made by the
corporation with respect to qualified preferred stock shall be includible as
ordinary income of the holder and deductible to the corporation as an expense
in computing taxable income under section 1363(b) in the year such distribution
is
received.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H73DC8B0B6C0F45919A01D7152914EAE3"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph id="HC5EDB72117D143D1857E5E0C97673CBF"><enum>(1)</enum><text>Paragraph (1) of
section 1361(b) is amended by inserting <quote>, except as provided in
subsection (f),</quote> before <quote>which does not</quote>.</text>
</paragraph><paragraph id="HCE9A1EBF576A43EDBA150469238D1EF0"><enum>(2)</enum><text>Subsection (a) of
section 1366 is amended by adding at the end the following new
paragraph:</text>
<quoted-block id="H063C35CAB4DC470D863A02DE61333ED7" style="OLC">
<paragraph id="H24CEC769F33046F8A972004BB068DD4A"><enum>(3)</enum><header>Allocation with
respect to qualified preferred stock</header><text>The holders of qualified
preferred stock (as defined in section 1361(h)) shall not, with respect to such
stock, be allocated any of the items described in paragraph
(1).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HECC1CF73AB8A45E3BC698E45D3519885"><enum>(3)</enum><text>So much of clause
(ii) of section 354(a)(2)(C) as precedes subclause (II) is amended to read as
follows:</text>
<quoted-block id="H8110684726974559BFCB591E79782E94" style="OLC">
<clause id="HCDCD9BCC35274852BC52C5CFCE66D41F"><enum>(ii)</enum><header>Recapitalization
of family-owned corporations and s corporations</header>
<subclause id="H212051CC3161493AA06ADB43DC8B23C3"><enum>(I)</enum><header>In
general</header><text>Clause (i) shall not apply in the case of a
recapitalization under section 368(a)(I)(E) of a family-owned corporation or S
corporation.</text>
</subclause></clause><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H804A5D1E03E2476789EC6A04F3C40695"><enum>(4)</enum><text>Subsection (a) of
section 1373 is amended by striking <quote>and</quote> at the end of paragraph
(1), by striking the period at the end of paragraph (2) and inserting <quote>,
and</quote>, and by adding at the end the following new paragraph:</text>
<quoted-block id="H3BCAD060D5A14F01B750FDFBF107DF44" style="OLC">
<paragraph id="H4413F74A0DA84DD8A70C8DD214F8879D"><enum>(3)</enum><text>no amount of an
expense deductible under this subchapter by reason of section 1361(h)(3) shall
be apportioned or allocated to the income referred to in such
section.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H52DA9530D641440F8CF1F8C8067AAE7D"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2011.</text>
</subsection></section><section id="HC8B2C111EE744AD2A94F3898B0218849"><enum>503.</enum><header>IRA
shareholders</header><text display-inline="no-display-inline">Clause (vi) of
section 1361(c)(2)(A) of the Internal Revenue Code of 1986 is amended by
striking <quote>as of the date of the enactment of this clause</quote>.</text>
</section>