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TITLE 26-INTERNAL REVENUE CODE AMENDMENTS 1976-Pub. L. 94-455. title XIX, § 1901(b)(20)(C), Oct. 4. 1976, 90 Stat. 1797, struck out Part III from Part analysis. PART I-RULES OF GENERAL APPLICA- TION TO BANKING INSTITUTIONS See. 581. 582. C583. 584. 585. 586. Definition of bank. Bad debts, losses, and gains with respect to secu- rities held by financial institutions. Repealed.] Common trust funds. Reserves for losses on loans of banks. Reserves for losses on loans of small business in- vestment companies, etc. AMENDMENTS 1976-Pub. L. 94-455, title XIX, § 1901(b)(18), Oct. 4, 1976, 90 Stat. 1796, struck out item 583. 1969-Pub. L. 91-172. title IV. § 431(c)(2), Dec. 30, 1989, 83 Stat. 620, substituted "Bad debts, losses, and gains with respect to securities held by financial insti- tutions", for "Bad debt and loss deduction with re- spect to securities held by banks" in item 582, and added items 585 and 586. § 581. Definition of bank For purposes of sections 582 and 584, the term "bank" means a bank or trust company in, corporated and doing business under the laws of the United States (including laws relating to the District of Columbia) or of any State, a sub- stantial part of the business of which consists of receiving deposits and making loans and dis- counts, or of exercising fiduciary powers similar to those permitted to national banks under au- thority of the Comptroller of the Currency, and which is subject by law to supervision and examination by State, Territorial, or Federal authority having supervision over banking in- stitutions. Such term also means a domestic building and loan association. (Aug. 16, 1954, ch. 736, 68A Stat. 202; Sept. 28, 1962, Pub. L. 87-722, § 5, 76 Stat. 670; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1901(c)(5), 90 Stat. 1803.) AMENDMENTS 1976-Pub. L. 94-455 substituted "or of any State" for "of any State, or of any Territory" following "Dis- trict of Columbia)" and struck out "Territorial" fol- lowing "examination by State". 1962-Pub. L. 87-722 substituted "authority of the Comptroller of the Currency" for "section 11(k) of the Federal Reserve Act (38 Stat. 262; 12 U.S.C. 248(k))". CROss R'ramcES Debts owed by political parties, etc., deduction of, see section 271 of this title. Per.onal holding company as excluding bank as de- fined in this section, see section 542 of this title. Returns of banks with respect to common trust funds, see section 6032 of this title. SECTION RMWUU~M TO IN OTHER SECTIONS This section is referred to in sections 271, 279, 401, 542, 585, 586, 593, 992, 6032. 6323, 7512, 7609 of this title. § 582. Bad debts, losses, and gains with respect to se- curities held by financial institutions (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 bank 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 and gains of financial institu- tions (1) General rule For purposes of this subtitle, in the case of a financial institution to which section 585, 586, or 593 applies, the sale or exchange of a bond, debenture, note, or certificate or other evidence of indebtedness shall not be consid- ered a sale or exchange of a capital asset. (2) Transitional rule for banks In the case of a bank, if the net long-term capital gains of the taxable year from sales or exchanges of qualifying securities exceed the net short-term capital losses of the taxable year from such sales or exchanges, such excess shall be considered as gain from the sale of a capital asset held for more than 9 months to the extent it does not exceed the net gain on sales and exchanges described in paragraph (1). (3) Special rules For purposes of this subsection- (A) The term "qualifying security" means a bond, debenture, note, or certificate or other evidence of indebtedness held by a bank on July 11, 1969. (B) The amount treated as capital gain or loss from the sale or exchange of a qualify- ing security shall be determined by multi- plying the amount of capital gain or loss from the sale or exchange of such security (determined without regard to this subsec- tion) by a fraction, the numerator of which is the number of days before July 12, 1969, that such security was held by the bank, and the denominator of which is the number of days the security was held by the bank. (4) Transitional rule for banks In the case of a corporation which would be a bank except for the fact that it is a foreign corporation, the net gain, if any, for the tax- able year on sales and exchanges described in paragraph (1) shall be considered as gain from the sale or exchange of a capital asset to the extent such net gain does not exceed the portion of any capital loss carryover to such taxable year which is attributable to capital losses on sales or exchanges described in para- graph (1) for a taxable year beginning before July 12, 1969. For purposes of the preceding sentence, the portion of a net capital loss for a taxable year which is attributable to capital losses on sales or exchanges described in para- graph (1) is the amount of the net capital loss on such sales or exchanges for such taxable year (but not in excess of the net capital loss for such taxable year). (Aug. 16, 1954, ch. 736, 68A Stat. 202; Sept. 2, 1958, Pub. L. 85-866, title I, § 34, 72 Stat. 1632; § 5s1 Page 430