26 U.S.C. § 582 : US Code - Section 582: Bad debts, losses, and gains with respect to securities held by financial institutions

Search 26 U.S.C. § 582 : US Code - Section 582: Bad debts, losses, and gains with respect to securities held by financial institutions

(a) Securities
Notwithstanding sections 165(g)(1) and 166(e), subsections (a)
and (b) 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 institutions
(1) General rule
For purposes of this subtitle, in the case of a financial
institution referred to in paragraph (2), the sale or exchange of
a bond, debenture, note, or certificate or other evidence of
indebtedness shall not be considered a sale or exchange of a
capital asset. For purposes of the preceding sentence, any
regular or residual interest in a REMIC shall be treated as an
evidence of indebtedness.
(2) Financial institutions to which paragraph (1) applies
(A) In general
For purposes of paragraph (1), the financial institutions
referred to in this paragraph are -
(i) any bank (and any corporation which would be a bank
except for the fact it is a foreign corporation),
(ii) any financial institution referred to in section 591,
(iii) any small business investment company operating under
the Small Business Investment Act of 1958, and
(iv) any business development corporation.
(B) Business development corporation
For purposes of subparagraph (A), the term "business
development corporation" means a corporation which was created
by or pursuant to an act of a State legislature for purposes of
promoting, maintaining, and assisting the economy and industry
within such State on a regional or statewide basis by making
loans to be used in trades and businesses which would generally
not be made by banks within such region or State in the
ordinary course of their business (except on the basis of a
partial participation), and which is operated primarily for
such purposes.
(C) Limitations on foreign banks
In the case of a foreign corporation referred to in
subparagraph (A)(i), paragraph (1) shall only apply to gains
and losses which are effectively connected with the conduct of
a banking business in the United States.