PUBLIC LAW 91-172-DEC. 30, 1969
(iii) preferred stock which is convertible into stock whpli meets the requirements of subparagraph (A) (iii) at a fix d conversion ratio which takes account of all stock dividend and stock splits with respect to the stock into which such con vertible stock is convertible. (D) For purposes of this paragraph, the term "stock" include, rights to acquire such stock. (3) In cases to which Treasury Decision 6990 (promulgated January 10, 1969) would not have applied, in applying paragraphs iivv (1) and (2) April 22, 1969, shall be substituted for Januarv 10 1969. ^ ' (4) Section 305(b)(4) of the Internal Revenue Code of 1954 (as added by subsection (a)) shall not apply to any distribution (or deemed distribution) with respect to preferred stock (including any increase in the conversion ratio of convertible stock) made before January 1, 1991, pursuant to the terms relating to the
- issuance of such stock which were in effect on January 10, 1969.
'• (5) With respect to distributions made or considered as made after January 10, 1969, in taxable years ending after such date to the extent that the amendment made by subsection (a) does not apply by reason of paragraph (2), (3), or (4) of this subsection, section 305 of the Internal Revenue Code of 1954 (as in effect before the amendment made by subsection (a)) shall continue to apply. Subtitle D—Financial Institutions
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SEC. 431. RESERVE FOR LOSSES ON LOANS; NET OPERATING LOSS CARRYBACKS. (a)
26 USC 581. Posf. pp. 620,
subchapter H of chapter 1 (relating to rules of general application to banking institutions) is amended by adding at the end thereof the following new sections: "SEC. 585. RESERVES FOR LOSSES ON LOANS OF BANKS. " (a) INSTITUTIONS TO W H I C H SECTION APPLIES.—This section shall apply to the following financial institutions: «(]^) any bank (as defined in section 581) other than an organization to which section 593 applies, and "(2) any corporation to which paragraph (1) would apply except for the fact that it is a foreign corporation, and in the case of any such foreign corporation this section shall apply only with respect to loans outstanding the interest on which is effectively connected with the conduct of a banking business within the United States. " (b)
68A Stat. 50.
BAD DEBT DEDUCTIONS OF FINANCIAL INSTITUTIONS.—Part I of
ADDITION TO RESERVES FOR BAD DEBTS.— «^1) GENERAL RULE.—For purposes of section
166(c), the reasonable addition to the reserve for bad debts of any financial institution to which this section applies shall be an amount determined by the taxpayer which shall not exceed the greater of— " (A) for taxable years beginning before 1988 the addition to the reserve for losses on loans determined under the per• • centage method as provided in paragraph (2), or " (B) the addition to the reserve for losses on loans deter'* •' -' mined under the experience method as provided in paragraph (3). "(2) PERCENTAGE METHOD.—The amount determined under this fi paragraph for a taxable year shall be the amount necessary to increase the balance of the reserve for losses on loans (at the close