SEC. 562. RULES APPLICABLE IN DETERMINING DIVIDENDS ELIGIBLE FOR DIVIDENDS PAID DEDUCTION (68A Stat. 198-199): (b) (in full) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 225(f) (3), 78 Stat. 88: "(b) DISTRIBUTIONS IN LIQUIDATION. "(1) Except in the case of a personal holding company described in section 542 or a foreign personal holding company described in section 552— "(A) in the case of amounts distributed in liquidation, the part of such distribution which is properly chargeable to earnings and profits accumulated after February 28, 1913, shall be treated as a dividend for purposes of computing the dividends paid deduction, and "(B) in the case of a complete liquidation occurring within 24 months after the adoption of a plan of liquidation, any distribution within such period pursuant to such plan shall, to the extent of the earnings and profits (computed without regard to capital losses) of the corporation for the taxable year in which such distribution is made, be treated as a dividend for purposes of computing the dividends paid deduction. "(2) In the case of a complete liquidation of a personal holding company, occurring within 24 months after the adoption of a plan of liquidation, the amount of any distribution within such period pursuant to such plan shall be treated as a dividend for purposes of computing the dividends paid deduction, to the extent that such amount is distributed to corporate distributees and represents such corporate distributees' allocable share of the undistributed personal holding company income for the taxable year of such distribution computed without regard to this paragraph and without regard to subparagraph (B) of section 316(b)(2).” Applicability: Distributions made in any taxable year of the distributing corporation beginning after December 31, 1963. (Id., § 225(1)(3), 78 Stat. 94.) CH. 1, SUBCHAPTER H-BANKING INSTITUTIONS (68A Stat. 202, ff.): NOTE: The table of parts for Subchapter H of Chapter 1 reads as follows (68A Stat. 202): "Part I. Rules of general application to banking institutions. "Part II. Mutual savings banks, etc. "Part III. Bank affiliates." This table has not been amended. 169 Subsection (b) of section 562 originally read as follows (68A Stat. 198-199): "(b) DISTRIBUTIONS IN LIQUIDATION.-In the case of amounts distributed in liquidation, the part of such distribution which is properly chargeable to earnings and profits accumulated after February 28, 1913, shall be treated as a dividend for purposes of computing the dividends paid deduction. In the case of a complete liquidation occurring within 24 months after the adoption of a plan of liquidation, any distribution within such period pursuant to such plan shall, to the extent of the earnings and profits (computed without regard to capital losses) of the corporation for the taxable year in which such distribution is made, be treated as a dividend for purposes of computing the dividends paid deduction." CH. 1, SUBCH. H, PART I-RULES OF GENERAL APPLICATION TO BANKING INSTITUTIONS (68A Stat. 202–204): NOTE: The table of sections for Part I of Subchapter H of Chapter 1 reads as follows (68A Stat. 202): "Sec. 581. Definition of bank. "Sec. 582. Bad debt and loss deduction with respect to securities held by banks. "Sec. 583. Deductions of dividends paid on certain preferred stock. "Sec. 584. Common trust funds." This table has not been amended. SEC. 581. DEFINITION OF BANK (68A Stat. 202): "section 11(k) of the Federal Reserve Act (38 Stat. 262; 12 U.S.C. and inserting in lieu thereof "authority of the Comptroller of the Currency". Effective Date: September 28, 1962-the date of enactment. SEC. 582. BAD DEBT AND LOSS DEDUCTION WITH RESPECT (c) -- (in part) SEC. 584. (a) (2) _ _ (in part) TO SECURITIES HELD BY BANKS (68A Stat. 202): Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 34, 72 Stat. 1632: Amended Sec. 582 (c) 171 by striking out "with interest coupons or in registered form,”. Applicability: Taxable years beginning after December 31, 1953, and ending after August 16, 1954. (Id., § 1(c)(1), 72 Stat. 1606.) COMMON TRUST FUNDS (68A Stat. 203-204): -- Sept. 28, 1962, H.R. 12577, P.L. 87-722, § 4, 76 Stat. 670: Amended paragraph (2) of Sec. 584 (a) 172 by inserting immediately 170 Section 581 originally read as follows (68A Stat. 202): "SEC. 581. DEFINITION OF BANK. "For purposes of sections 582 and 584, the term 'bank' means a bank or trust company incorporated and doing business under the laws of the United States (including laws relating to the District of Columbia), of any State, or of any Territory, a substantial part of the business of which consists of receiving deposits and making loans and discounts, or of exercising fiduciary powers similar to those permitted to national banks under section 11(k) of the Federal Reserve Act (38 Stat. 262; 12 U.S.C. 248 (k)), and which is subject by law to supervision and examination by State, Territorial, or Federal authority having supervision over banking institutions. Such term also means a domestic building and loan association." 171 Subsection (c) of section 582 originally read as follows (68A Stat. 202): "(c) BOND, ETC., LOSSES OF BANKS.-For purposes of this subtitle, in the case of a bank, if the losses of the taxable year from sales or exchanges of bonds, debentures, notes, or certificates, or other evidences of indebtedness, issued by any corporation (including one issued by a government or political subdivision thereof), with interest coupons or in registered form, exceed the gains of the taxable year from such sales or exchanges, no such sale or exchange shall be considered a sale or exchange of a capital asset." 172 Subsection (a) of section 584 originally read as follows (68A Stat. 203): "(a) DEFINITIONS.-For purposes of this subtitle, the term 'common trust fund' means a fund maintained by a bank "(1) exclusively for the collective investment and reinvestment of moneys contributed thereto by the bank in its capacity as a trustee, executor, administrator, or guardian; and "(2) in conformity with the rules and regulations, prevailing from time to time, of the Board of Governors of the Federal Reserve System pertaining to the collective investment of trust funds by national banks." SEC. 584-Continued (a) (2) (amended 1962)-Continued (c) (2) (in part) after "the Board of Governors of the Federal Reserve System" the following "or the Comptroller of the Currency". Effective Date: September 28, 1962-the date of enactment. Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 201(d) (5), 78 Stat. 32: "section 34 or". Applicability: Dividends received after December 31, 1964, in taxable years ending after such date. (Id., § 201(e), 78 Stat. 33.) CH. 1, SUBCH. H, PART II-MUTUAL SAVINGS BANKS, ETC. (68A Stat. 204, ff.): Table.... (item amended, item added) Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 6(d)(1), (2), 76 Stat. 984: (1) by striking out the third item, which read: "Sec. 593. Additions to reserve for bad debts", and inserting in lieu thereof "Sec. 593. Reserves for losses on loans."; and (2) by adding at the end thereof, after "Sec. 594", the following new item: "Sec. 595. Foreclosure on property securing loans." Effective Date: October 16, 1962, the date of enactment. SEC. 591. DEDUCTION FOR DIVIDENDS PAID ON DEPOSITS (68A Stat. 204): In part _ _ _ Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 6(f) (1), (2), 76 Stat. 984: 173 Paragraph (2) of section 584 (c) (relating to items to be included in computing taxable income of participants in a common trust fund) originally read as follows (68A Stat. 203–204): "(2) DIVIDENDS AND PARTIALLY TAX EXEMPT INTEREST.-The proportionate share of each participant in the amount of dividends to which section 34 or section 116 applies, and in the amount of partially tax exempt interest on obligations described in section 35 or section 242, received by the common trust fund shall be considered for purposes of such sections as having been received by such participant. If the common trust fund elects under section 171 (relating to amortizable bond premium) to amortize the premium on such obligations, for purposes of the preceding sentence the proportionate share of the participant of such interest received by the common trust fund shall be his proportionate share of such interest (determined without regard to this sentence) reduced by so much of the deduction under section 171 as is attributable to such share." 174 The table of sections for Part II of Subchapter H of Chapter 1 originally read as follows (68A Stat. 204): "Sec. 591. Deduction for dividends paid on deposits. "Sec. 594. Alternative tax for mutual savings banks conducting life insurance business." 175 Section 591 originally read as follows (68A Stat. 204); 'SEC. 591. DEDUCTION FOR DIVIDENDS PAID ON DEPOSITS. "In the case of mutual savings banks, cooperative banks, and domestic building and loan associations, there shall be allowed as deductions in computing taxable income amounts paid to, or credited to the accounts of, depositors or holders of accounts as dividends on their deposits or withdrawable accounts, if such amounts paid or credited are withdrawable on demand subject only to customary notice of intention to withdraw." SEC. 591 (amended 1962)-Continued (1) by striking out "and domestic building and loan associations" and inserting in lieu thereof "domestic building and loan associations, and other savings institutions chartered and supervised as savngs and loan or similar associations under Federal or State law"; and (2) by inserting after "dividends" the following: "or interest". Effective Date: October 16, 1962, the date of enactment. SEC. 593. RESERVES FOR LOSSES ON LOANS (Revised 196276 Stat. 977-982): In full.. Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 6(a), 76 Stat. 977-982: "SEC. 593. RESERVES FOR LOSSES ON LOANS. "(a) ORGANIZATIONS TO WHICH SECTION APPLIES.-This section shall apply to any mutual savings bank not having capital stock represented by shares, domestic building and loan association, 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 reasonable addition for the taxable year to the reserve for bad debts of any taxpayer described in subsection (a) shall be an amount equal to the sum of "(A) the amount determined under section 166 (c) to be a reasonable addition to the reserve for losses on nonqualifying loans, plus "(B) the amount determined by the taxpayer to be a reasonable addition to the reserve for losses on 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 subparagraph shall in no case be greater than the larger of "(i) the amount determined under paragraph (4), or "(ii) the amount which, when added to the amount determined under subparagraph (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 176 Section 593 originally read as follows (68A Stat. 205): "SEC. 593. ADDITIONS TO RESERVE FOR BAD DEBTS. "In the case of a mutual savings bank not having capital stock represented by shares, a domestic building and loan association, and a cooperative bank without capital stock organized and operated for mutual purposes and without profit, the reasonable addition to a reserve for bad debts under section 166(c) shall be determined with due regard to the amount of the taxpayer's surplus or bad debt reserves existing at the close of December 31, 1951. In the case of a taxpayer described in the preceding sentence, the reasonable addition to a reserve for bad debts for any taxable year shall in no case be less than the amount determined by the taxpayer as the reasonable addition for such year; except that the amount determined by the taxpayer under this sentence shall not be greater than the lesser of "(1) the amount of its taxable income for the taxable year, computed without regard to this section, or "(2) the amount by which 12 percent of the total deposits or withdrawable accounts of its depositors at the close of such year exceeds the sum of its surplus, undivided profits, and reserves at the beginning of the taxable year.' SEC. 593 (revised 1962)-Continued year exceeds the sum of its surplus, undivided profits, and reserves at the beginning of such year (taking into account any portion thereof attributable to the period before the first taxable year beginning after December 31, 1951). "(2) PERCENTAGE OF TAXABLE INCOME METHOD.-The amount determined under this paragraph for the taxable year shall be the excess of "(A) an amount equal to 60 percent of the taxable income for such year, over "(B) the amount referred to in paragraph (1)(A) for such year, but the amount determined under this paragraph shall not exceed the amount necessary to increase the balance (as of the close of the taxable year) of the reserve for losses on qualifying real property loans to 6 percent of such loans outstanding at such time. For purposes of this paragraph, taxable income shall be computed (i) by excluding from gross income any amount included therein by reason of subsection (f), and (ii) without regard to any deduction allowable for any addition to the reserve for bad debts. "(3) PERCENTAGE OF REAL PROPERTY LOANS METHOD.-The amount determined under this paragraph for the taxable year shall be an amount equal to the amount necessary to increase the balance (as of the close of the taxable year) of the reserve for losses on qualifying real property loans to an amount equal to— "(A) 3 percent of such loans outstanding at such time plus, "(B) in the case of a taxpayer which is a new company and which does not have capital stock with respect to which distributions of property (as defined in section 317(a)) are not allowable as a deduction under section 591, an amount equal to "(i) 2 percent of so much of the amount of such loans outstanding at such time as does not exceed $4,000,000, reduced (but not below zero) by "(ii) the amount, if any, of the balance (as of the close of such taxable year) of the taxpayer's supplemental reserve for losses on loans. For purposes of subparagraph (B), a taxpayer is a new company for any taxable year only if such taxable year begins not more than 10 years after the first day on which it (or any predecessor) was authorized to do business as an organization described in subsection (a). "(4) EXPERIENCE METHOD.-The amount determined under this paragraph for the taxable year shall be an amount equal to the amount determined under section 166 (c) (without regard to this subsection) to be a reasonable addition to the reserve for losses on qualifying real property loans. "(5) LIMITATION IN CASE OF CERTAIN DOMESTIC BUILDING AND LOAN ASSOCIATIONS.-If the percentage of the assets of a domestic building and loan association which are not assets described in section 7701 (a) (19) (D) (ii) exceeds 36 percent for the taxable year (as determined for purposes of section 7701 (a) (19) for such year), the amount determined under paragraph (2), and the amount determined under paragraph (3), shall in each case be the amount (determined without regard to this paragraph but with regard to the limits contained in paragraphs (2), (3), and |