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TITLE 26-INTERNAL REVENUE CODE SECTION REFERRE- TO IN OTHER SECTIONS This section is referred to in sections 166, 172, 582 of this title. PART II-MUTUAL SAVINGS BANKS, ETC. Sec. 591. Deduction for dividends paid on deposits. [592. Repealed.] 593. Reserves for losses on loans. 594. Alternative tax for mutual savings banks con- ducting life insurance business. 595. Foreclosure on property securing loans. 596. Limitation on dividends received deduction. AMENDMENTS 1976-Pub. L. 94-455, title XIX, § 1901(b)(19), Oct. 4. 1976, 90 Stat. 1796, struck out item 592. 1969-Pub. L. 91-172, title IV, § 434(b)(2), Dec, 30, 1969, 83 Stat. 625, added item 596. 1962-Pub. L. 87-834, § 6(d), Oct. 16, 1962, 76 Stat. 984, substituted "Reserves for losses on loans" for "Additions to reserve for bad debts" in item 593, and added item 595. § 591. Deduction for dividends paid on deposits In the case of mutual savings banks, cooperat- ive banks, and domestic building and loan asso- ciations and other savings institutions char- tered and supervised as savings and loan or similar associations under Federal or State law, there shall be allowed as deductions in comput- ing taxable income amounts paid to, or credited to the accounts of, depositors or holders of ac- counts as dividends or interest on their deposits or withdrawable accounts, if such amounts paid or credited are withdrawable on demand sub- ject only to customary notice of intention to withdraw. (Aug. 16, 1954, ch. 736, 68A Stat. 204; Oct. 16, 1962, Pub. L. 87-834, § 6(f), 76 Stat. 984.) AMENDMENTS 1962-Pub. L. 87-834 included other savings institu- tions chartered and supervised as savings and loan or similar associations under Federal or State law, and authorized amounts paid as interest as a deduction. CRoss REFERENCES Partial exclusion of dividends received by individ- uals, see section 116 of this title. Special deduction for dividends received by corpora- tion, see section 243 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 116, 243, 593, 861, 6323 of this title. [§ 592. Repealed. Pub. L. 94-455, title XIX, § 1901(a)(83), Oct. 4, 1976, 90 Stat. 1778] Section, act Aug. 16, 1954, ch. 736, 68A Stat. 205, au- thorized a deduction by mutual savings banks for re- payment of loans made before Sept. 1, 1951, by the United States or any agency or instrumentality there- of, or any mutual fund established under the author- ity of the laws of any State. EFFECTIVE DArE OF REPEAL Repeal of section effective with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. § 593. Reserves for losses on loans (a) Organizations to which section applies This section shall apply to any mutual sav- ings bank not having capital stock represented by shares, domestic building and loan associ- ation, or cooperative bank without capital stock organized and operated for mutual purposes and without profit. (b) Addition to reserves for bad debts (1) In general For purposes of section 166(c), the reason- able addition for the taxable year to the re- serve for bad debts of any taxpayer described in subsection (a) shall be an amount equal to the sum of- (A) the amount determined to be a rea- sonable addition to the reserve for losses on nonqualifying loans, computed in the same manner as is provided with respect to addi- tions to the reserves for losses on loans of banks under section 585(b)(3), plus (B) the amount determined by the tax- payer to be a retoonable addition to the re- serve for losses c.., qualifying real property loans, but such amount shall not exceed the amount determined under paragraph (2), (3), or (4), whichever amount is the largest, but the amount determined under this sub- paragraph shall in no case be greater than the larger of- (I) the amount determined under para- graph (4), or (ii) the amount which, when added to the amount determined under subpara- graph (A), equals the amount by which 12 percent of the total deposits or withdrawable accounts of depositors of the taxpayer at the close of such year ex- ceeds the sum of its surplus, undivided profits, and reserves at the beginning of such year (taking into account any por- tion thereof attributable to the period before the first taxable year beginning after December 31, 1951). (2) Percentage of taxable income method (A) In general Subject to subparagraphs (B), (C), and (D), the amount determined under this paragraph for the taxable year shall be an amount equal to the applicable percentage of the taxable income for such year (deter- mined under the following table): For a taxable year beginning in- 1976 ..................................................... 1977 ........................................... 1978 ..................................................... 1979 or thereafter ............................. The applicable percentage under this paragraph shall be- 43 percent. 42 percent. 41 percent. 40 percent. (B) Reduction of applicable percentage in certain cases If, for the taxable year, the percentage of the assets of a taxpayer described in subsec- tion (a), which are assets described in sec- tion 7701(a)(19)(C), is less than- (i) 82 percent of the total assets in the case of a taxpayer other than a mutual savings bank, the applicable percentage Page 435