Page:United States Statutes at Large Volume 68A.djvu/242

 202

INTERNAL REVENUE CODE OF 1954

Subchapter H—Banking Institutions Part I. Rules of general application to banking institutions. Part II. Mutual savings banks, etc. Part III. Bank affiliates.

PART I—RULES OF GENERAL APPLICATION TO BANKING INSTITUTIONS Sec. 581. Definition of bank. Sec. 582. Bad debt and loss deduction with respect to securities held by banks. Sec. 583. Deductions of dividends paid on certain preferred stock. Sec. 684. Common trust funds. SEC. 581. DEFINITION OF BANK.

For purposes of sections 582 and 584, the term " b a n k " means a bank or trust company incorporated and doing business under the laws of the United States (including laws relating to the District of Columbia), of any State, or of any Territory, a substantial part of the business of which consists of receiving deposits and making loans and discounts, or of exercising fiduciary powers similar to those permitted to national banks under section 11(k) of the Federal Keserve Act (38 Stat. 262; 12 U.S.C. 248 (k)), and which is subject by law to supervision and examination by State, Territorial, or Federal authority having supervision over banking institutions. Such term also means a domestic building and loan association. SEC. 582. BAD DEBT AND LOSS DEDUCTION WITH RESPECT TO SECURITIES HELD BY BANKS.

(a) SECURITIES.—Notwithstanding sections 165(g)(1) and 166 (e), subsections (a), (b), and (c) of section 166 (relating to allowance of deduction for bad debts) shall apply in the case of a bank to a debt which is evidenced by a security as defined in section 165(g)(2)(C). (b) WORTHLESS STOCK IN AFFILIATED B A N K, — For purposes of section 165(g)(1), where the taxpayer is a bank and owns directly at least 80 percent of each class of stock of another bank, stock in such other bank shall not be treated as a capital asset. (c) BOND, ETC.. LOSSES OF B A N K S. — For purposes of this subtitle, in the case of a bank, if the losses of the taxable year from sales or exchanges of bonds, debentures, notes, or certificates, or other evidences of indebtedness, issued by any corporation (including one issued by a government or political subdivision thereof), with interest coupons or in registered form, exceed the gains of the taxable year from such sales or exchanges, no such sale or exchange shall be considered a sale or exchange of a capital asset. SEC. 583. DEDUCTIONS OF DIVIDENDS PAID ON CERTAIN PREFERRED STOCK.

In computing the taxable income of any national banking association, or of any bank or trust company organized under the laws of § 581

�