DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX-EXEMPT INTEREST EXPENSE OF FINANCIAL INSTITUTIONS.

SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX-EXEMPT INTEREST EXPENSE OF FINANCIAL INSTITUTIONS.(a) In General.—Subsection (b) of section 265 is amended by adding at the end the following new paragraph:“(7) De minimis exception for bonds issued during 2009 or 2010.—“(A) In general.—In applying paragraph (2)(A), there shall not be taken into account tax-exempt obligations issued during 2009 or 2010.“(B) Limitation.—The amount of tax-exempt obligations not taken into account by reason of subparagraph (A) shall not exceed 2 percent of the amount determined under paragraph (2)(B).“(C) Refundings.—For purposes of this paragraph, a refunding bond (whether a current or advance refunding) shall be treated as issued on the date of the issuance of the refunded bond (or in the case of a series of refundings, the original bond).”.(b) Treatment as Financial Institution Preference Item.—Clause (iv) of section 291(e)(1)(B) is amended by adding at the end the following: “That portion of any obligation not taken into account under paragraph (2)(A) of section 265(b) by reason of paragraph (7) of such section shall be treated for purposes of this section as having been acquired on August 7, 1986.”.(c) Effective Date.—The amendments made by this section shall apply to obligations issued after December 31, 2008.