83 STAT. ]
PUBLIC LAW 91-172-DEC. 30, 1969
619
" (B) the lower of— " (i) the balance of the reserve at the close of the base year, or " (ii) if the amount of loans outstanding at the close of the taxable year is less than the amount of loans outstanding at the close of the base year, the amount which bears the same ratio to loans outstanding at the close of the taxable year as the balance of the reserve at the close of the base year bears to the amount of loans outstanding at the close of the base year. For purposes of this.subparagraph, the term 'base year' means the last taxable year beginning on or before July 11, 1969. " (2) N E W FINANCIAL INSTITUTIONS.—In the case of any taxable year beginning not more than 10 years after the day before the first day on which a financial institution (or any predecessor) was authorized to do business as a financial institution described in subsection (a), the reasonable addition to the reserve for bad debts of such financial institution shall not exceed the larger of the amount determined under paragraph (1) or the amount necessary to increase the balance of the reserve for bad debts at the close of the taxable year to the amount which bears the same ratio (as determined by the Secretary or his delegate) to loans outstanding at the close of the taxable year as (i) the total bad debts sustained by all institutions described in the applicable paragraph of subsection (a) during the 6 preceding taxable years (adjusted for recoveries of bad debts during such period), bears to (ii) the sum of the loans by all such institutions outstanding at the close of such taxable years." (b) 10-YEAR N E T OPERATING Loss CARRYBACK.—Section 172(b)(1) j^l^J^f^g^^' (relating to net operating loss deduction) is amended by striking out gi stat! 732! in subparagraph (A)(i) thereof "and (E) " and inserting in lieu 26 USC 172. thereof " (E), (F), and (G) ", and by adding at the end thereof the following new subparagraphs: " (F) I n the case of a financial institution to which section " 585, 586, or 593 applies, a net operating loss for any taxable J^'^^^- p^^ie^ year beginning after December 31, 19T5, shall be a net oper- 622°^' ating loss carryback to each of the 10 taxable years preceding the taxable year of such loss and shall be a net operating loss carryover to each of the 5 taxable years following the taxable year of such loss. " (G) I n the case of a Bank for Cooperatives (organized and chartered pursuant to section 2 of the F a r m Credit Act of 1933 (12 U.S.C. 1134)), a net operating loss for any tax70 Stat. 664. able year beginning after December 31, 1969, shall be a net operating loss carryback to each of the 10 taxable years preceding the taxable year of such loss and shall be a net operating loss carryover to each of the 5 taxable years following the taxable year of such loss." (c) TECHNICAL AND CLERICAL AMENDMENTS.—
(1) Subsection (h) of section 166 (relating to bad debts) is amended by adding at the end thereof the following new paragraph: "(4) For special rule for bad debt reserves of banks, small business investment companies, etc., see sections 585 and 586."
26 USC 166.
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