EARLY TERMINATION OF SPECIAL REORGANIZATION RULES FOR FINANCIAL INSTITUTIONS.

SEC. 1401. EARLY TERMINATION OF SPECIAL REORGANIZATION RULES FOR FINANCIAL INSTITUTIONS. (a) General Rule.— (1) Reorganizations.—Subparagraph (D) of section 368(a)(3) of the Internal Revenue Code of 1986 (as amended by section 4012 of the Technical and Miscellaneous Revenue Act of 1988) is amended to read as follows: “(D) Agency receivership proceedings which involve financial institutions.—For purposes of subparagraphs (A) and (B), in the case of a receivership, foreclosure, or similar proceeding before a Federal or State agency involving a financial institution referred to in section 581 or 591, the agency shall be treated as a court.” (2) Net operating loss rules.—The last sentence of section 382(1)(5)(F) of such Code (as so amended) is amended by striking “after December 31, 1989” and inserting “on or after May 10, 1989”. (3) Financial assistance.— (A) Section 597 of such Code (as so amended) is amended to read as follows: “SEC. 597. TREATMENT OF TRANSACTIONS IN WHICH FEDERAL FINANCIAL ASSISTANCE PROVIDED. “(a) General Rule.—The treatment for purposes of this chapter of any transaction in which Federal financial assistance is provided with respect to a bank or domestic building and loan association shall be determined under regulations prescribed by the Secretary. 103 STAT. 549 “(b) Principles Used in Prescribing Regulations.— “(1) Treatment of taxable asset acquisitions.—In the case of any acquisition of assets to which section 381(a) does not apply, the regulations prescribed under subsection (a) shall— “(A) provide that Federal financial assistance shall be properly taken into account by the institution from which the assets were acquired, and “(B) provide the proper method of allocating basis among the assets so acquired (including rights to receive Federal financial assistance). “(2) Other transactions.—In the case of any transaction not described in paragraph (1), the regulations prescribed under subsection (a) shall provide for the proper treatment of Federal financial assistance and appropriate adjustments to basis or other tax attributes to reflect such treatment. “(3) Denial of double benefit.—No regulations prescribed under this section shall permit the utilization of any deduction (or other tax benefit) if such amount was in effect reimbursed by nontaxable Federal financial assistance. “(c) Federal Financial Assistance.—The purposes of this section, the term ‘Federal financial assistance’ means— “(1) any money or other property provided with respect to a domestic building and loan association by the Federal Savings and Loan Insurance Corporation or the Resolution Trust Corporation pursuant to section 406(f) of the National Housing Act or section 21A of the Federal Home Loan Bank Act (or under any other similar provision of law), and “(2) any money or other property provided with respect to a bank or domestic building and loan association by the Federal Deposit Insurance Corporation pursuant to section 11(f) or 13(c) of the Federal Deposit Insurance Act (or under any other similar provision of law), regardless of whether any note or other instrument is issued in exchange therefor. “(d) Domestic Building and Loan Association.—For purposes of this section, the term ‘domestic building and loan association’ has the meaning given such term by section 7701(a)(19) without regard to subparagraph (C) thereof.” (B) Subparagraph (B) of section 904(c)(2) of the Tax Reform Act of 1986 is hereby repealed. (C) The table of sections for part II of subchapter H of chapter 1 of such Code is amended by striking the item relating to section 597 and inserting the following: “Sec. 597. Treatment of transactions in which Federal financial assistance provided.” (b) Technical Amendments.— (1) Section 904 of the Tax Reform Act of 1986 (other than subsection (c)(2)(B) thereof) is hereby repealed and the Internal Revenue Code of 1986 shall be applied as if the amendments made by such section had not been enacted. (2) The last sentence of paragraph (3) of section 4012(c) of the Technical and Miscellaneous Revenue Act of 1988 is amended to read as follows: “In the case of any bank or any institution treated as a domestic building and loan association for purposes of section 597 of the 1986 Code by reason of the amendment made by subsection (b)(2)(B), the amendments made by this subsection shall also 103 STAT. 550pply to any transfer before January 1, 1989, to which the amendments made by subsection (b)(2) apply.” (3) The last sentence of section 593(e)(1) of such Code is amended to read as follows: “This paragraph shall not apply to any transaction to which section 381 applies, or to any distribution to the Federal Savings and Loan Insurance Corporation (or any successor thereof) or the Federal Deposit Insurance Corporation in redemption of an interest in an association, if such interest was originally received by any such entity in exchange for assistance provided under a provision of law referred to in section 597(c).”. (c) Effective Dates.— (1) Subsection (a)(1).—The amendment made by subsection (a)(1) shall apply to acquisitions on or after May 10, 1989. (2) Subsection (a)(2).—The amendment made by subsection (a)(2) shall apply to transactions on or after May 10, 1989. (3) Subsection (a)(3).— (A) In general.—The amendments made by subsection (a)(3) shall apply to any amount received or accrued by the financial institution on or after May 10, 1989, except that such amendments shall not apply to transfers on or after such date pursuant to an acquisition to which the amendment made by subsection (a)(1) does not apply. (B) Interim rule.—In the case of any payment pursuant to a transaction on or after May 10, 1989, and before the date on which the Secretary of the Treasury (or his delegate) takes action in exercise of his regulatory authority under section 597 of the Internal Revenue Code of 1986 (as amended by subsection (a)(3)), the taxpayer may rely on the legislative history for the amendments made by subsection (a)(3) in determining the proper treatment of such payment. (4) Subsection (b)(1).—The provisions of subsection (b)(1) shall take effect on the date of the enactment of the Tax Reform Act of 1986. (5) Subsection (b)(2).—The amendment made by subsection (b)(2) shall take effect on the date of the enactment of the Technical and Miscellaneous Revenue Act of 1988. (6) Subsection (b)(3).—The amendment made by subsection (b)(3) shall take effect on the date of the enactment of this Act. (7) Clarification of prior law.—Any reference to the Federal Savings and Loan Insurance Corporation in section 597 of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act) shall be treated as including a reference to the Resolution Trust Corporation and the FSLIC Resolution Fund.