Treatment of certain losses in insolvent financial institutions
(1) In general If— (A) as of the close of the taxable year, it can reasonably be estimated that there is a loss on a qualified individual’s deposit in a qualified financial institution, and (B) such loss is on account of the bankruptcy or insolvency of such institution, then the taxpayer may elect to treat the amount so estimated as a loss described in subsection (c)(3) incurred during the taxable year.
(2) Qualified individual defined For purposes of this subsection, the term “qualified individual” means any individual, except an individual— (A) who owns at least 1 percent in value of the outstanding stock of the qualified financial institution, (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 to treat as ordinary loss (A) In general In lieu of any election under paragraph (1), the taxpayer may elect to treat the amount referred to in paragraph (1) for the taxable year as an ordinary loss described in subsection (c)(2) incurred during the taxable year. (B) Limitations (i) Deposit may not be federally insured No election may be made under subparagraph (A) with respect to any loss on a deposit in a qualified financial institution if part or all of such deposit is insured under Federal law. (ii) Dollar limitation With respect to each financial institution, the aggregate amount of losses attributable to deposits in such financial institution to which an election under subparagraph (A) may be made by the taxpayer for any taxable year shall not exceed $20,000 ($10,000 in the case of a separate return by a married individual). The limitation of the preceding sentence shall be reduced by the amount of any insurance proceeds under any State law which can reasonably be expected to be received with respect to losses on deposits in such institution.
(6) Election Any election by the taxpayer under this subsection for any taxable year— (A) shall apply to all losses for such taxable year of the taxpayer on deposits in the institution with respect to which such election was made, and (B) may be revoked only with the consent of the Secretary.
(7) Coordination with section 166 Section 166 shall not apply to any loss to which an election under this subsection applies.
(1)In general#
If—
(A) as of the close of the taxable year, it can reasonably be estimated that there is a loss on a qualified individual’s deposit in a qualified financial institution, and
(B) such loss is on account of the bankruptcy or insolvency of such institution,
then the taxpayer may elect to treat the amount so estimated as a loss described in subsection (c)(3) incurred during the taxable year.
(1)(A)#
as of the close of the taxable year, it can reasonably be estimated that there is a loss on a qualified individual’s deposit in a qualified financial institution, and
(1)(B)#
such loss is on account of the bankruptcy or insolvency of such institution,
(2)Qualified individual defined#
For purposes of this subsection, the term “qualified individual” means any individual, except an individual—
(A) who owns at least 1 percent in value of the outstanding stock of the qualified financial institution,
(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).
(2)(A)#
who owns at least 1 percent in value of the outstanding stock of the qualified financial institution,
(2)(B)#
who is an officer of the qualified financial institution,
(2)(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
(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.
(3)(A)#
any bank (as defined in section 581),
(3)(B)#
any institution described in section 591,
(3)(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
(3)(D)
(4)Deposit#
For purposes of this subsection, the term “deposit” means any deposit, withdrawable account, or withdrawable or repurchasable share.
(5)Election to treat as ordinary loss#
(A) In general In lieu of any election under paragraph (1), the taxpayer may elect to treat the amount referred to in paragraph (1) for the taxable year as an ordinary loss described in subsection (c)(2) incurred during the taxable year.
(B) Limitations (i) Deposit may not be federally insured No election may be made under subparagraph (A) with respect to any loss on a deposit in a qualified financial institution if part or all of such deposit is insured under Federal law. (ii) Dollar limitation With respect to each financial institution, the aggregate amount of losses attributable to deposits in such financial institution to which an election under subparagraph (A) may be made by the taxpayer for any taxable year shall not exceed $20,000 ($10,000 in the case of a separate return by a married individual). The limitation of the preceding sentence shall be reduced by the amount of any insurance proceeds under any State law which can reasonably be expected to be received with respect to losses on deposits in such institution.
(5)(A)In general#
In lieu of any election under paragraph (1), the taxpayer may elect to treat the amount referred to in paragraph (1) for the taxable year as an ordinary loss described in subsection (c)(2) incurred during the taxable year.
(5)(B)Limitations#
(i) Deposit may not be federally insured No election may be made under subparagraph (A) with respect to any loss on a deposit in a qualified financial institution if part or all of such deposit is insured under Federal law.
(ii) Dollar limitation With respect to each financial institution, the aggregate amount of losses attributable to deposits in such financial institution to which an election under subparagraph (A) may be made by the taxpayer for any taxable year shall not exceed $20,000 ($10,000 in the case of a separate return by a married individual). The limitation of the preceding sentence shall be reduced by the amount of any insurance proceeds under any State law which can reasonably be expected to be received with respect to losses on deposits in such institution.
(6)Election#
Any election by the taxpayer under this subsection for any taxable year—
(A) shall apply to all losses for such taxable year of the taxpayer on deposits in the institution with respect to which such election was made, and
(B) may be revoked only with the consent of the Secretary.
(6)(A)#
shall apply to all losses for such taxable year of the taxpayer on deposits in the institution with respect to which such election was made, and
(6)(B)#
may be revoked only with the consent of the Secretary.
(7)Coordination with section 166#
Section 166 shall not apply to any loss to which an election under this subsection applies.