100 STAT. 2386
PUBLIC LAW 99-514—OCT. 22, 1986
"(B) who is an officer of the qualified financial institution, "(C) who is a sibling (whether by the whole or half blood), spouse, aunt, uncle, nephew, niece, ancestor, or lineal descendant of an individual described in subparagraph (A) or (B), or "(D) who otherwise is a related person (as defined in section 267(b)) with respect to an individual described in subparagraph (A) or (B). "(3) QUALIFIED FINANCIAL INSTITUTION.—For purposes of this subsection, the term 'qualified financial institution' means— "(A) any bank (as defined in section 581), "(B) any institution described in section 591, "(C) any credit union the deposits or accounts in which are insured under Federal or State law or are protected or guaranteed under State law, or "(D) any similar institution chartered and supervised under Federal or State law, "(4) DEPOSIT.—For purposes of this subsection, the term 'deposit' means any deposit, withdrawable account, or withdrawable or repurchasable share. "(5) ELECTION.—Any election by the taxpayer under this subsection may be revoked only with the consent of the Secretary and shall apply to all losses of the taxpayer on deposits in the institution with respect to which such election was made. "(6) COORDINATION WITH SECTION 166.—Section 166 shall not apply to any loss to which an election under this subsection applies." (b) INTEREST ON FROZEN DEPOSITS.—Section 451 (relating to general rule for taxable year of inclusion) is amended by adding at the end thereof the following new subsection: "(f) TREATMENT OF INTEREST ON FROZEN DEPOSITS IN CERTAIN FINANCIAL INSTITUTIONS.—
"(1) IN GENERAL.—In the case of interest credited during any calendar year on a frozen deposit in a qualified financial institution, the amount of such interest includible in the gross income of a qualified individual shall not exceed the sum of— "(A) the net amount withdrawn by such individual from such deposit during such calendar year, and "(B) the amount of such deposit which is withdrawable as of the close of the taxable year (determined without regard to any penalty for premature withdrawals of a time deposit). "(2) INTEREST TESTED EACH YEAR.—Any interest not included
in gross income by reason of paragraph (1) shall be treated as credited in the next calendar year. "(3) DEFERRAL OF INTEREST DEDUCTION.—No deduction shall be allowed to any qualified financial institution for interest not includible in gross income under paragraph (1) until such interest is includible in gross income. "(4) FROZEN DEPOSIT.—For purposes of this subsection, the term 'frozen deposit' means any deposit if, as of the close of the calendar year, any portion of such deposit may not be withdrawn because of— "(A) the bankruptcy or insolvency of the qualified financial institution (or threat thereof), or
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