§ 597. Treatment of transactions in which Federal financial assistance provided

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1981

   Economic Recovery Tax Act of 1981

   Pub. L. 97–34 title II § 244(a) · 95 Stat. 175

   Enacted · 26 U.S.C. § 597

   Added Pub. L. 97–34, title II, § 244(a), Aug. 13, 1981, 95 Stat. 255

   Source evidence

   Code source credit
   Added Pub. L. 97–34, title II, § 244(a), Aug. 13, 1981, 95 Stat. 255

   Enacted provision · exact public law section
   (a) In General.— Part II of subchapter H of subtitle A of chapter 1 is amended by adding at the end thereof the following new section: “SEC. 597. FSLIC FINANCIAL ASSISTANCE. “(a) Exclusion From Gross Income.— Gross income of a domestic building and loan association does not include any amount of money or other property received from the Federal Savings and Loan Insurance Corporation pursuant to section 406(f) of the National Housing Act (12 U.S.C. sec. 1729(f)), regardless of whether any note or other instrument is issued in exchange therefor. “(b) No Reduction in Basis of Assets.— No reduction in the basis of assets of a domestic building and loan association shall be made on account of money or other property received under the circumstances referred to in subsection (a).”

2. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 904(b)(1) · 100 Stat. 2085

   Repealed · 26 U.S.C. § 597

   Pub. L. 99–514, § 904(b)(1), (c)(2)(A), as amended by Pub. L. 100–647, title IV, § 4012(a)(2), which (applicable to transfers after Dec. 31, 1989, in taxable years ending after such date, with exceptions) directed repeal of this section, was repealed by Pub. L. 101–73, § 1401(b)(1), (c)(4), eff. Oct. 22, 1986, and I.R.C. of 1986 applicable as if the amendments made by such section had not been enacted

   Source evidence

   Code amendment note
   Pub. L. 99–514, § 904(b)(1), (c)(2)(A), as amended by Pub. L. 100–647, title IV, § 4012(a)(2), which (applicable to transfers after Dec. 31, 1989, in taxable years ending after such date, with exceptions) directed repeal of this section, was repealed by Pub. L. 101–73, § 1401(b)(1), (c)(4), eff. Oct. 22, 1986, and I.R.C. of 1986 applicable as if the amendments made by such section had not been enacted.

   Enacted provision · exact public law section
   (1) Section 597 (relating to FSLIC financial assistance) is hereby repealed.

3. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 § 4012(b)(2)(D)(i) · 102 Stat. 3342

   Substituted · 26 U.S.C. § 597

   Pub. L. 100–647, § 4012(b)(2)(D)(i), substituted “FSLIC or FDIC” for “FSLIC” in section catchline

   Source evidence

   Code amendment note
   Pub. L. 100–647, § 4012(b)(2)(D)(i), substituted “FSLIC or FDIC” for “FSLIC” in section catchline.

   Enacted provision · exact public law section
   (i) The heading for section 597 of the 1986 Code (as so in effect) is amended by inserting “or FDIC” after “FSLIC”.

4. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 § 4012(b)(2)(A) · 102 Stat. 3342

   Inserted · 26 U.S.C. § 597(a)

   Pub. L. 100–647, § 4012(b)(2)(A), inserted at end “Gross income of a bank does not include any amount of money or other property received from the Federal Deposit Insurance Corporation pursuant to sections 13(c), 15(c)(1), and 15(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1821(f) and 1823(c)(1) and (c)(2)), regardless of whether any note or other instrument is issued in exchange therefor.”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 100–647, § 4012(b)(2)(A), inserted at end “Gross income of a bank does not include any amount of money or other property received from the Federal Deposit Insurance Corporation pursuant to sections 13(c), 15(c)(1), and 15(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1821(f) and 1823(c)(1) and (c)(2)), regardless of whether any note or other instrument is issued in exchange therefor.”

   Enacted provision · exact public law section
   (A) Section 597(a) of the 1986 Code (as in effect before the amendments made by section 904(b) of the Reform Act) is amended by adding at the end thereof the following new sentence: “Gross income of a bank does not include any amount of money or other property received from the Federal Deposit Insurance Corporation pursuant to sections 13(c), 15(c)(1), and 15(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1821(f) and 1823 (c)(1) and (c)(2)), regardless of whether any note or other instrument is issued in exchange therefor.”

5. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 § 4012(b)(2)(C) · 102 Stat. 3342

   Substituted · 26 U.S.C. § 597(b)

   Pub. L. 100–647, § 4012(b)(2)(C), substituted “association or bank” for “association”

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 100–647, § 4012(b)(2)(C), substituted “association or bank” for “association”.

   Enacted provision · exact public law section
   (C) Section 597(b) of the 1986 Code (as so in effect) is amended by inserting “or bank” after “association”.

6. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 § 4012(c)(1) · 102 Stat. 3342

   Added · 26 U.S.C. § 597(c)

   Pub. L. 100–647, § 4012(c)(1), added subsec. (c)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 100–647, § 4012(c)(1), added subsec. (c).

   Enacted provision · exact public law section
   (1) Reduction in tax attributes.— Section 597 of the 1986 Code is amended by adding at the end thereof the following new subsection: “(c) Reduction of Tax Attributes by 50 Percent of Amounts Excludable Under Subsection (a).— “(1) In general.— 50 percent of any amount excludable under subsection (a) for any taxable year shall be applied to reduce the tax attributes of the taxpayer as provided in paragraph (2). “(2) Tax attributes reduced; order of reduction.— The reduction referred to in paragraph (1) shall be made in the following tax attributes in the following order: “(A) NOL.— Any preassistance net operating loss for the taxable year. “(B) Interest.— The amount of any interest with respect to which a deduction is allowable for the taxable year. “(C) Built-in portfolio losses.— Recognized built-in port-folio losses for the taxable year. “(3) Preassistance net operating loss.— For purposes of paragraph (2)(A)— “(A) In general.— The preassistance net operating loss shall be determined in the same manner as a prechange loss under section 382(d), except that— “(i) the applicable financial institution shall be treated as the old loss corporation, and “(ii) the determination date shall be substituted for the change date. “(B) Ordering rule.— The reduction under paragraph (2)(A) shall be made in the carryovers in the order in which carryovers are taken into account under this chapter for the taxable year. “(4) Recognized built-in portfolio losses.— For purposes of paragraph (2)(C), recognized built-in portfolio losses shall be determined in the same manner as recognized built-in losses under section 382(h), except that— “(A) the only assets taken into account shall be— “(i) the loan portfolio, “(ii) marketable securities (within the meaning of section 453(1)(2)), and “(iii) property described in section 595(a), “(B) the rules of clauses (i) and (ii) of paragraph (3)(A) shall apply, “(C) there shall be no limit on the number of years in the recognition period, and “(D) section 382(h) shall be applied without regard to paragraph (3)(B) thereof. “(5) Definitions and special rules.— For purposes of this subsection— “(A) Applicable financial institution.— The term ‘applicable financial institution’ means the domestic building and loan association or bank the financial condition of which was determined by the Federal Savings and Loan Insurance Corporation or the Federal Deposit Insurance Corporation to require the financial assistance described in subsection (a). “(B) Determination date.— The term ‘determination date’ means the date of the determination under subparagraph (A). Except as provided by the Secretary, any subsequent revision or modification of such determination shall be treated as made on the original determination date. “(C) Taxable asset acquisitions.— “(i) In general.— In the case of any acquisition of the assets of any applicable financial institution to which section 381 does not apply— “(I) paragraph (1) shall not apply to any amounts excludable under subsection (a) which are payments made at the time of the acquisition to the person acquiring such assets, and “(II) rights to receive future payments excludable under subsection (a) in connection with the acquisition shall be treated as provided in clause (ii). “(ii) Treatment of future payments.— “(I) In general.— Rights to receive future payments described in clause (i)(II) shall be treated as assets to which basis is allocated. “(II) Recovery of basis.— Any basis allocated under subclause (I) shall be recovered in such manner as the Secretary may provide, but in no event shall the amount recovered for any taxable year beginning before the taxable year in which the rights expire exceed the aggregate payments received with respect to such rights for all taxable years reduced by the amount of basis recovered with respect to such rights in preceding taxable years. “(III) Application of paragraph (i).— Paragraph (1) shall apply to payments described in subclause (I) in a taxable year only to the extent such payments exceed the amount of basis recovered in such taxable year. “(D) Treatment of repayments.— If a taxpayer repays an amount to which paragraph (1) applied in a preceding taxable year, there shall be allowed as a deduction for the taxable year of repayment an amount equal to the reduction in tax attributes under paragraph (1) attributable to the amount repaid. “(E) Carryovers.— If 50 percent of the amount excludable under subsection (a) for any taxable year exceeds the amount of the tax attributes described in paragraph (2) for such taxable year, then, for purposes of this subsection, the amount excludable under subsection (a) for the succeeding taxable year shall be increased by an amount equal to twice the amount of such excess. “(F) Regulations.— The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this subsection.”

7. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 § 4012(b)(2)(B) · 102 Stat. 3342

   Added · 26 U.S.C. § 597(d)

   Pub. L. 100–647, § 4012(b)(2)(B), which directed amendment of section 597(b), as amended by section 4012(c)(1) of Pub. L. 100–647, by adding at the end thereof subsec. (d), was executed by adding subsec. (d) at the end of section 597, as amended by section 4012(c)(1) of Pub. L. 100–647, as the probable intent of Congress

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 100–647, § 4012(b)(2)(B), which directed amendment of section 597(b), as amended by section 4012(c)(1) of Pub. L. 100–647, by adding at the end thereof subsec. (d), was executed by adding subsec. (d) at the end of section 597, as amended by section 4012(c)(1) of Pub. L. 100–647, as the probable intent of Congress.

   Enacted provision · exact public law section
   (B) Section 597(b) of the 1986 Code, as amended by subsection (c)(1), is amended by adding at the end thereof the following new subsection: “(d) Domestic Building and Loan Association.— For purposes of this section, the term ‘domestic building and loan association’ has the meaning given such term by section 7701(a)(19) without regard to subparagraph (C) thereof.”

8. 1989

   Financial Institutions Reform, Recovery, and Enforcement Act of 1989

   Pub. L. 101–73 § 1401(b)(1) · 103 Stat. 183

   Repealed · 26 U.S.C. § 597

   Pub. L. 101–73, § 1401(b)(1), repealed amendment made by Pub. L. 99–514, § 904(b)(1), see 1986 Amendment note below

   Source evidence

   Code amendment note
   Pub. L. 101–73, § 1401(b)(1), repealed amendment made by Pub. L. 99–514, § 904(b)(1), see 1986 Amendment note below.

   Enacted provision · exact public law section
   (1) Section 904 of the Tax Reform Act of 1986 (other than subsection (c)(2)(B) thereof) is hereby repealed and the Internal 26 USC 597 note. Revenue Code of 1986 shall be applied as if the amendments made by such section had not been enacted.

   Effective date note
   Pub. L. 101–239, title VII, § 7841(e)(2), Dec. 19, 1989, 103 Stat. 2429, provided that: “The amendment made by this subsection [amending this section] shall apply as if included in the amendments made by section 1401 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 [Pub. L. 101–73].” Pub. L. 101–73, title XIV, § 1401(c)(3)–(5), Aug. 9, 1989, 103 Stat. 550, provided that:

9. 1989

   Financial Institutions Reform, Recovery, and Enforcement Act of 1989

   Pub. L. 101–73 § 1401(a)(3)(A) · 103 Stat. 183

   1. Amended · 26 U.S.C. § 597

      Pub. L. 101–73, § 1401(a)(3)(A), amended section generally

   2. Substituted · 26 U.S.C. § 597

      Pub. L. 101–73, § 1401(a)(3)(A), substituting present provisions for former provisions which contained section catchline that read “FSLIC or FDIC financial assistance” and which provided: in subsec. (a) for an exclusion from gross income; in subsec. (b) for no reduction in basis of assets; in subsec. (c) for a reduction of tax attributes by 50 percent of amounts excludable under subsection (a); and in subsec. (d) for a definition of “domestic building and loan association”

   Target inherited from the preceding amendment note.

   Source evidence

   Code amendment note
   Pub. L. 101–73, § 1401(a)(3)(A), amended section generally, substituting present provisions for former provisions which contained section catchline that read “FSLIC or FDIC financial assistance” and which provided: in subsec. (a) for an exclusion from gross income; in subsec. (b) for no reduction in basis of assets; in subsec. (c) for a reduction of tax attributes by 50 percent of amounts excludable under subsection (a); and in subsec. (d) for a definition of “domestic building and loan association”.

   Enacted provision · exact public law section
   (A) Section 597 of such Code (as so amended) is amended to read as follows: “SEC. 597. TREATMENT OF TRANSACTIONS IN WHICH FEDERAL FINANCIAL ASSISTANCE PROVIDED. “(a) General Rule.— The treatment for purposes of this chapter of any transaction in which Federal financial assistance is provided with respect to a bank or domestic building and loan association shall be determined under regulations prescribed by the Secretary. “(b) Principles Used in Prescribing Regulations.— “(1) Treatment of taxable asset acquisitions.— In the case of any acquisition of assets to which section 381(a) does not apply, the regulations prescribed under subsection (a) shall— “(A) provide that Federal financial assistance shall be properly taken into account by the institution from which the assets were acquired, and “(B) provide the proper method of allocating basis among the assets so acquired (including rights to receive Federal financial assistance). “(2) Other transactions.— In the case of any transaction not described in paragraph (1), the regulations prescribed under subsection (a) shall provide for the proper treatment of Federal financial assistance and appropriate adjustments to basis or other tax attributes to reflect such treatment. “(3) Denial of double benefit.— No regulations prescribed under this section shall permit the utilization of any deduction (or other tax benefit) if such amount was in effect reimbursed by nontaxable Federal financial assistance. “(c) Federal Financial Assistance.— The purposes of this section, the term ‘Federal financial assistance’ means— “(1) any money or other property provided with respect to a domestic building and loan association by the Federal Savings and Loan Insurance Corporation or the Resolution Trust Corporation pursuant to section 406(f) of the National Housing Act or section 21A of the Federal Home Loan Bank Act (or under any other similar provision of law), and “(2) any money or other property provided with respect to a bank or domestic building and loan association by the Federal Deposit Insurance Corporation pursuant to section 11(f) or 13(c) of the Federal Deposit Insurance Act (or under any other similar provision of law), regardless of whether any note or other instrument is issued in exchange therefor. “(d) Domestic Building and Loan Association.— For purposes of this section, the term ‘domestic building and loan association’ has the meaning given such term by section 7701(a)(19) without regard to subparagraph (C) thereof.”

   Effective date note
   Pub. L. 101–239, title VII, § 7841(e)(2), Dec. 19, 1989, 103 Stat. 2429, provided that: “The amendment made by this subsection [amending this section] shall apply as if included in the amendments made by section 1401 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 [Pub. L. 101–73].” Pub. L. 101–73, title XIV, § 1401(c)(3)–(5), Aug. 9, 1989, 103 Stat. 550, provided that:

10. 1989

    Revenue Reconciliation Act of 1989

    Pub. L. 101–239 title VII § 7841(e)(1) · 103 Stat. 2106

    Substituted · 26 U.S.C. § 597(b)(2)

    Pub. L. 101–239 substituted “in connection with such assistance” for “to reflect such treatment”

    Source evidence

    Code amendment note
    Subsec. (b)(2). Pub. L. 101–239 substituted “in connection with such assistance” for “to reflect such treatment”.

    Enacted provision · exact public law section
    (1) Section 597(b)(2) is amended by striking “to reflect such treatment” and inserting “in connection with such assistance”.

    Effective date note
    Pub. L. 101–239, title VII, § 7841(e)(2), Dec. 19, 1989, 103 Stat. 2429, provided that: “The amendment made by this subsection [amending this section] shall apply as if included in the amendments made by section 1401 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 [Pub. L. 101–73].” Pub. L. 101–73, title XIV, § 1401(c)(3)–(5), Aug. 9, 1989, 103 Stat. 550, provided that:

11. 1990

    Revenue Reconciliation Act of 1990

    Pub. L. 101–508 title XI § 11704(a)(7) · 104 Stat. 1388

    Substituted · 26 U.S.C. § 597(c)

    Pub. L. 101–508 substituted “For purposes of” for “The purposes of”

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 101–508 substituted “For purposes of” for “The purposes of”.

    Enacted provision · exact public law section
    (7) Subsection (c) of section 597 is amended by striking “The purposes of” and inserting “For purposes of”.

12. 2018

    Energy and Water Development and Related Agencies Appropriations Act, 2018

    Pub. L. 115–141 div. U title IV § 401(b)(25) · 132 Stat. 348

    Struck · 26 U.S.C. § 597(c)(1)

    Pub. L. 115–141 struck out “or section 21A of the Federal Home Loan Bank Act” after “National Housing Act”

    Source evidence

    Code amendment note
    Subsec. (c)(1). Pub. L. 115–141 struck out “or section 21A of the Federal Home Loan Bank Act” after “National Housing Act”.

    Enacted provision · exact public law section
    Sec. 401. The Nuclear Regulatory Commission shall comply with the July 5, 2011, version of Chapter VI of its Internal Commission Procedures when responding to Congressional requests for information.

13 of 13 references resolved to an enrolled provision