REPEAL OF SPECIAL TREATMENT OF INTEREST ON CERTAIN FOREIGN LOANS.

SEC. 7104. REPEAL OF SPECIAL TREATMENT OF INTEREST ON CERTAIN FOREIGN LOANS. (a) General Rule.—Paragraph (2) of section 1201(e) of the Tax Reform Act of 1986 is hereby repealed. (b) Effective Date.—The repeal made by subsection (a) shall apply to taxable years beginning after December 31, 1989. (c) Exception for Certain Taxpayers With Substantial Loan Loss Reserves.— (1) In general.—The repeal made by subsection (a) shall not apply to any taxpayer if, on any financial statement filed by such taxpayer for regulatory purposes with respect to any quarter ending during the period beginning on March 31, 1989, and ending on December 31, 1989, such taxpayer showed loss reserves against its qualified loans equal to at least 25 percent of the amount of such loans. (2) Definitions and special rules.—For purposes of this subsection— (A) Qualified loan.—The term “qualified loan” has the meaning given such term by section 1201(e)(2)(H) of the Tax Reform Act of 1986 (as in effect before its repeal by subsection (a)). (B) Parent-subsidiary controlled groups.—In the case of any taxpayer which is a member of a parent-subsidiary controlled group (as defined in section 585(c)(5)(A)), this subsection shall be applied by treating all members of such group as 1 taxpayer.