Page:United States Statutes at Large Volume 110 Part 3.djvu/124

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110 STAT. 1854 PUBLIC LAW 104-188—AUG. 20, 1996 beginning in 1995 or November 30, 1996, in the case of a taxable year beginning in 1996. SEC. 1616. REPEAL OF BAD DEBT RESERVE METHOD FOR THRIFT SAV- INGS ASSOCIATIONS. (a) IN GENERAL. —Section 593 (relating to reserves for losses on loans) is amended by adding at the end the following new subsections: " (f) TERMINATION OF RESERVE METHOD. — Subsections (a), (b), (c), and (d) shall not apply to any taxable year beginning after December 31, 1995. "(g) 6-YEAR SPREAD OF ADJUSTMENTS.— "(1) IN GENERAL.—In the case of any taxpayer who is required by reason of subsection (f) to change its method of computing reserves for bad debts— "(A) such change shall be treated as a change in a method of accounting, "(B) such change shall be treated as initiated by the taxpayer and as having been made with the consent of the Secretary, and "(C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481(a)— "(i) shall be determined by taking into account only applicable excess reserves, and "(ii) as so determined, shall be taken into account ratably over the 6-taxable year period beginning with the first taxable year beginning after December 31, 1995. "(2) APPLICABLE EXCESS RESERVES.— "(A) IN GENERAL.—For purposes of paragraph (1), the term 'applicable excess reserves' means the excess (if any) of— "(i) the balance of the reserves described in subsection (c)(1) (other than the supplemental reserve) as of the close of the taxpayer's last taxable year beginning before January 1, 1996, over "(ii) the lesser of— "(I) the balance of such reserves as of the close of the taxpayer's last taxable year beginning before January 1, 1988, or "(II) the balance of the reserves described in subclause (I), reduced in the same manner as under section 585(b)(2)(B)(ii) on the basis of the taxable years described in clause (i) and this clause. "(B) SPECLfVL RULE FOR THRIFTS WHICH BECOME SMALL BANKS. —In the case of a bank (as defined in section 581) which was not a large bank (as defined in section 585(c)(2)) for its first taxable year beginning after December 31, 1995— "(i) the balance taken into account under subparagraph (A)(ii) shall not be less than the amount which would l3e the balance of such reserves as of the close of its last taxable year beginning before such date if the additions to such reserves for all taxable years had been determined under section 585(b)(2)(A), and