100 STAT. 2376
PUBLIC LAW 99-514—OCT. 22, 1986 (2) RESERVE DEDUCTION NOT AVAILABLE FOR LARGE BANKS.—
Section 585 is amended by adding at the end thereof the following new subsection: "(c) SECTION NOT TO APPLY TO LARGE BANKS.—
"(1) IN GENERAL.—In the case of a large bank, this section shall not apply (and no deduction shall be allowed under any other provision of this subtitle for any addition to a reserve for bad debts). "(2) LARGE BANKS.—For purposes of this subsection, a bank is a large bank if, for the taxable year (or for any preceding taxable year beginning after December 31, 1986)— "(A) the average adjusted bases of all assets of such bank exceeded $500,000,000, or "(B) such bank was a member of a parent-subsidiary controlled group and the average adjusted bases of all assets of such group exceeded $500,000,000. "(3) 4-YEAR SPREAD OF ADJUSTMENTS.—
"(A) IN GENERAL.—Except as provided in paragraph (4), in the case of any bank which for its last taxable year before the disqualification year maintained a reserve for bad debts— "(i) the provisions of this subsection shall be treated as a change in the method of accounting of such bank for the disqualification year, "(ii) such change shall be treated as having been made with the consent of the Secretary, and "(iii) the net amount of adjustments required by section 481(a) to be taken into account by the taxpayer shall be taken into account in each of the 4 taxable years beginning with the disqualification year with— "(I) the amount taken into account for the 1st of such taxable years being the greater of 10 percent of such net amount or such greater amount as the taxpayer may designate, and "(II) the amount taken into account in each of the 3 succeeding taxable years being equal to the applicable fraction (determined in accordance with the following table for the taxable year involved) of the portion of such net amount not taken into account under subclause (I). The applicable fraction is— % Vs %.
If the case of the— 1st succeeding year 2nd succeeding year 3rd succeeding year "(B)
SUSPENSION
OF RECAPTURE
FOR TAXABLE
Y E A R FOR
WHICH B A N K IS F I N A N C I A L L Y TROUBLED.—
"(i) IN GENERAL.—In the case of a bank which is a financially troubled bank for any taxable year— "(I) no adjustment shall be taken into account under subparagraph (A) for such taxable year, and "(II) such taxable year shall be disregarded in determining whether any other taxable year is a taxable year for which an adjustment is required to be taken into account under subparagraph (A) or the amount of such adjustment.
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