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. Increase in shareholder
registration threshold.
Sec. 105. FSOC review of Bureau regulations.
Sec. 106. 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. Agriculture loan guarantees.
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 adding at the end the following:</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—</text>
<clause id="id48FA4B672ECA40F0AF4C6AD79A06A23F"><enum>(i)</enum><text>section
10(d)(4)(A) shall be applied by substituting <quote>$10,000,000,000</quote> for
<quote>$500,000,000</quote>; and</text>
</clause><clause id="idA418D27FCC184364A9453181C7ECE859"><enum>(ii)</enum><text>section
10(d)(4)(C) shall be applied by substituting <quote>$1,000,000,000</quote> for
<quote>$100,000,000</quote>.</text>
</clause></subparagraph><subparagraph id="HEA4482E113C34AB6AEC5B5FF815AAF7C"><enum>(C)</enum><header>Short form
defined</header><text>In this paragraph, the term <term>short form</term> means
a report of condition required under paragraph (3) that is 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 otherwise
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 section 7(a)(12) of the Federal Deposit
Insurance Act, as added by subsection (a), shall be published in final form not
later than 6 months after the date of 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 at the end the following:</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 and the rules prescribed under 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>Not later than 6 months after the date of enactment of
this Act, the Board of Governors of the Federal Reserve System shall publish in
the Federal Register proposed revisions to appendix C to part 225 of title 12,
Code of Federal Regulations (commonly referred to as the <quote>Small Bank
Holding Company Policy Statement on Assessment of Financial and Managerial
Factors</quote>) that provide that the requirements of such appendix C shall
apply to a bank holding company that has pro forma consolidated assets of less
than $1,000,000,000.</text>
</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—the maximum dollar amount of pro forma consolidated assets required to
qualify as a small bank holding company under appendix C to part 225 of title
12, Code of Federal Regulations, 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 enactment of this Act, the Board
of Governors of the Federal Reserve System shall publish in the Federal
Register proposed revisions to appendix C to part 225 of title 12, Code of
Federal Regulations (commonly referred to as the <quote>Small Bank Holding
Company Policy Statement on Assessment of Financial and Managerial
Factors</quote>) to increase 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 part 225 of
title 12, Code of Federal Regulations (commonly referred to as
<quote>Regulation Y</quote>) from 1:1 to 3:1.</text>
</subsection></section><section commented="no" id="id0D31E9A1E08042B893ADC2C2F397F983"><enum>104.</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 that term is defined in section 2 of the
Bank Holding Company Act of 1956 (12 U.S.C. 1841), within 120 days after the
last day of its first fiscal year on which the issuer has a class of equity
security (other than an exempted security) held of record by 2,000 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, not later than 120 days after the last day of its
first fiscal year on which the issuer has a class of equity securities (other
than an exempted security) held of record by 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 that 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 that
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>105.</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 (12 U.S.C. 5513(a)) is
amended by striking <quote>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 inserting the following: <quote>is inconsistent
with the safe and sound operation of United States financial
institutions.</quote>.</text>
</section><section id="HD4CE4EF5CD1B46258F5A16A5D68C5631"><enum>106.</enum><header>Federal Reserve
examination authority</header><text display-inline="no-display-inline">Section
1012(c) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5492(c)) 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) through (5) as paragraphs (1) through (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 (15 U.S.C. 1639d(c)), as added by section 1461 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111–203;
124 Stat. 2178) 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),
respectively, and moving the margins 2 ems to the right;</text>
</paragraph><paragraph id="HC8712D8F6C9B42A4BC16617663F7D491"><enum>(2)</enum><text>by striking
<quote>The Bureau</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
Bureau</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:</text>
<quoted-block display-inline="no-display-inline" id="H47C30E9833B349A78A8AF4F9DE933249" style="OLC">
<paragraph id="idE5435E434D7442E89F6C6437820E42B2"><enum>(2)</enum><header>Treatment of
loans held by smaller institutions</header><text>The Bureau shall, by
regulation, exempt from the requirements of subsection (a) any loan secured by
a first lien on the principal dwelling of a consumer, if such loan is held by
an insured depository institution having 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 at the end the
following:</text>
<quoted-block id="HB018B426FB284FC091F5535812D93D10" style="OLC">
<subsection commented="no" id="H45551D9CBE464CF185685DF012367880"><enum>(f)</enum><header>Exception to
annual notice requirement</header><text>A financial institution shall not be
required to provide an annual disclosure under this section until such time as
the financial institution—</text>
<paragraph commented="no" id="H19F89C9484174AEC91A17EE26AB26438"><enum>(1)</enum><text>fails to provide
nonpublic personal information in accordance with the provisions of subsection
(b)(2) or (e) of section 502 or regulations prescribed under section
504(b);</text>
</paragraph><paragraph commented="no" id="H43C143BA4CE44FD7897F7D8520A828BD"><enum>(2)</enum><text>shares information
with affiliates described in section 603(d)(2)(A) of the Fair Credit Reporting
Act; or</text>
</paragraph><paragraph commented="no" id="HFA4AC444BCD94D70B3FAEA4702FA82EF"><enum>(3)</enum><text>changes 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></subsection><subsection commented="no" 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 commented="no" 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, the District of
Columbia, or any territory of the United States; or</text>
</paragraph><paragraph commented="no" 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, the District of
Columbia, or 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 a loan in an amount of less
than $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>; and</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></paragraph><paragraph id="H31293305FEB64E53A1B6024B3CF8E2F2"><enum>(2)</enum><text>in subsection
(b)—</text>
<subparagraph id="H5ED21DE9978C4C7B861FF5950F19603F"><enum>(A)</enum><text>in paragraph
(1)—</text>
<clause id="id2E8D3971DC8B4C8598B038716D321A13"><enum>(i)</enum><text>in
subparagraph (B), by striking <quote>and</quote> at the end;</text>
</clause><clause id="id5D238595A2144102B264724A095D21CA"><enum>(ii)</enum><text>in
subparagraph (C), by striking the period at the end and inserting <quote>;
and</quote>; and</text>
</clause><clause id="id493C022ECF414384B041ECCEFA5F3DE2"><enum>(iii)</enum><text>by adding at
the end the following:</text>
<quoted-block display-inline="no-display-inline" id="HF498D4A29A40425D8B9C72F192B786AC" style="OLC">
<subparagraph id="H6B3AE7DF7863404BA73A9BB704D490E4"><enum>(D)</enum><text>in the absence of
a demand for or experience with guaranteed loans made under a rural development
program, proven experience in making small business
loans.</text>
</subparagraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</clause></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 person</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 outside of the regular examination process by any
financial institution with total assets of $1,000,000,000 or
less.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="ID4fbe407c14634b68ad41870b89f2d815"><enum>205.</enum><header>Report on loan
loss amortization</header>
<subsection id="IDa95619f2ff4a4525b0c8d5d8a38d787b"><enum>(a)</enum><header>In
general</header><text>Not later than 90 days after the date of enactment of
this Act, the Federal Deposit Insurance Corporation (hereafter in this title
referred to as the <quote>Corporation</quote>) shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives, a report containing an
analysis of the costs and benefits of allowing an insured depository
institution having less than $10,000,000,000 in assets the ability to amortize
any loan loss or write-down (resulting from FASB Statement 114 or 144) over a
10-year period.</text>
</subsection><subsection id="IDb2cdcf780a6a4cbba3a63d2bf8e71b7a"><enum>(b)</enum><header>FDIC
Authority</header><text>If the Corporation concludes that the costs of an
approach described in subsection (a) outweigh the benefits thereof, the
Corporation shall also include in its report to Congress under subsection (a)
any recommended alternatives to a 10-year loan loss amortization which could
provide relief for insured depository institutions having less than
$10,000,000,000 in assets.</text>
</subsection><subsection id="ID17b90707762149c4a745edb0cf487f4d"><enum>(c)</enum><header>Consultation</header><text>In
preparing the report required by this section, the Corporation shall consult
with the other prudential banking supervisors.</text>
</subsection></section><section id="IDa190eec74db34249a64909500e19afd4"><enum>206.</enum><header>Report on loan
appraisals</header>
<subsection id="ID446f110cafab4598850017068c8ba259"><enum>(a)</enum><header> In
general</header><text>Not later than 90 days after the date of enactment of
this Act, the Corporation shall submit to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services of the
House of Representatives, a report containing the feasibility, costs, and
benefits of allowing an insured depository institution having less than
$10,000,000,000 in assets to use a 5-year average of the appraised value of any
real estate securing a loan held by the institution, for purposes determining
capital levels.</text>
</subsection><subsection id="IDdda783d3167e4e0c8722e042b96ef120"><enum>(b)</enum><header>Consultation</header><text>In
preparing the report required by this section, the Corporation shall consult
with the other prudential banking supervisors.</text>
</subsection></section><section commented="no" 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 (15 U.S.C. 78o–7
note) is amended—</text>
<paragraph commented="no" id="idE5F6C6A8A1CF46CDA4D74EE7C0BE60F2"><enum>(1)</enum><text display-inline="yes-display-inline">by striking <quote>to remove</quote> and
all that follows through the first period and inserting the following:
<quote>to specify appropriate levels of due diligence for regulated entities to
use for purposes of evaluating the creditworthiness of the obligor or assets
underlying a rated security or instrument based on the characteristics of such
obligor or assets.</quote>; and</text>
</paragraph><paragraph commented="no" id="idA27BB82C8A89418BB170713FE2CA47A2"><enum>(2)</enum><text display-inline="yes-display-inline">in the second sentence—</text>
<subparagraph commented="no" id="idEEA79DE63568470B8A6FE5DF04486E00"><enum>(A)</enum><text display-inline="yes-display-inline">by striking <quote>credit-worthiness for
use</quote> and inserting <quote>due diligence for use</quote>; and</text>
</subparagraph><subparagraph commented="no" id="id1F838D7D13514EFA86B1D4E7B0602D03"><enum>(B)</enum><text display-inline="yes-display-inline">by striking <quote>such standards</quote>
and inserting <quote>such evaluations</quote>.</text>
</subparagraph></paragraph></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 (15 U.S.C. 1691c–2(h)(1)) 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 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 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 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 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 an 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 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 carry forward 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 the Treasury, or the designee thereof,
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 an
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 enactment of this clause</quote>.</text>
</section>