LIMITATION ON DEDUCTION FOR DIVIDENDS RECEIVED BY MUTUAL SAVINGS BANKS, ETC.

SEC. 434. LIMITATION ON DEDUCTION FOR DIVIDENDS RECEIVED BY MUTUAL SAVINGS BANKS, ETC. (a) Special Limitation.—Part II of subchapter H of chapter 1 is amended by adding at the end thereof the following new section: “SEC. 596. LIMITATION ON DIVIDENDS RECEIVED DEDUCTION. “In the case of an organization to which section 593 applies and which computes additions to the reserve for losses on loans for the taxable year under section 593(b)(2), the total amount allowed under sections 243, 244, and 245 (determined without regard to this section) for the taxable year as a deduction with respect to dividends received shall be reduced by an amount equal to the applicable percentage for such year (determined under subparagraphs (A) and (B) of section 593(b)(2)) of such total amount.” 83 Stat. 625 (b) Technical and Clerical Amendments.— (1) Section 246 (relating to rules applying to deductions for dividends received) is amended by adding at the end thereof the following new subsection: “(d) Cross Reference.— “For special rule relating to mutual savings banks, etc., to which section 593 applies, see section 596.” (2) The table of sections for part II of subchapter H of chapter 1 is amended by adding at the end thereof: “Sec. 596. Limitation on dividends received deduction.” (c) Effective Date.—The amendments made by this section shall apply to taxable years beginning after July 11, 1969.