EXTENSION AND MODIFICATIONS OF PROVISIONS RELATING TO FINANCIAL INSTITUTIONS.

SEC. 4012. EXTENSION AND MODIFICATIONS OF PROVISIONS RELATING TO FINANCIAL INSTITUTIONS. (a) 1-Year Extension.— (1) Reorganizations.— Paragraph (1) of section 904(c) of the Reform Act is amended by striking out “December 31, 1988” and inserting in lieu thereof “December 31, 1989”. (2) FSLIC financial assistance.— Paragraph (2)(A) of section 904(c) of the Reform Act is amended by striking out “December 31, 1988” and inserting in lieu thereof “December 31, 1989”. (3) Net operating loss rules.— The last sentence of section 382(1)(5)(F) of the 1986 Code is amended by striking out “December 31, 1988” and inserting in lieu thereof “December 31, 1989”. (b) Application of Certain Provisions to Banks.— (1) Special rules for reorganizations and net operating losses.— (A) Section 368(a)(3)(D) of the 1986 Code (as in effect before the amendment made by section 904(a) of the Reform Act) is amended by adding at the end thereof the following new clauses: 102 STAT. 3657 “(iv) In the case of a financial institution to which section 585 applies— “(I) the term ‘title 11 or similar case’ means only a case in which the applicable authority (which shall be treated as the court in such case) makes the certification described in subclause (II), and “(II) clause (ii) shall apply to such institution, except that for purposes of clause (ii)(III), the applicable authority must certify that the grounds set forth in such clause (modified in such manner as the Secretary determines necessary because such institution is not an institution to which section 593 applies) exist with respect to such transferor or will exist in the near future in the absence of action by the applicable authority. For purposes of this clause, the term ‘applicable authority’ means the Comptroller of the Currency or the Federal Deposit Insurance Corporation, or if neither has the supervisory authority with respect to the transfer, the equivalent State authority. “(v) For purposes of this subparagraph, in applying section 593, the determination as to whether a corporation is a domestic building and loan association shall be made without regard to section 7701(a)(19)(C).” (B) Subclause (D of section 382(l)(5)(F)(iii) of the 1986 Code is amended by inserting “(as modified by section 368(a)(3)(D)(iv))” after “section 368(a)(3)(D)(ii)”. (C) (i) The amendment made by subparagraph (A) shall apply to acquisitions after the date of the enactment of this Act and before January 1, 1990. (ii) The amendment made by subparagraph (B) shall apply to any ownership change occurring after the date of the enactment of this Act and before January 1, 1990. (2) Assistance payments.— (A) Section 597(a) of the 1986 Code (as in effect before the amendments made by section 904(b) of the Reform Act) is amended by adding at the end thereof the following new sentence: “Gross income of a bank does not include any amount of money or other property received from the Federal Deposit Insurance Corporation pursuant to sections 13(c), 15(c)(1), and 15(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1821(f) and 1823 (c)(1) and (c)(2)), regardless of whether any note or other instrument is issued in exchange therefor.” (B) Section 597(b) of the 1986 Code, as amended by subsection (c)(1), is amended by adding at the end thereof the following new subsection: “(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.” (C) Section 597(b) of the 1986 Code (as so in effect) is amended by inserting “or bank” after “association”. (D) (i) The heading for section 597 of the 1986 Code (as so in effect) is amended by inserting “or FDIC” after “FSLIC”. 102 STAT. 3658 (iii) The item relating to section 597 in part II of subchapter H of chapter 1 of the 1986 Code (as so in effect) is amended by inserting “or FDIC” after “FSLIC”. (E) The amendments made by this paragraph shall apply to any transfer— (i) after the date of the enactment of this Act, and before January 1, 1990, unless such transfer is pursuant to an acquisition occurring on or before such date of enactment, and (ii) after December 31, 1989, if such transfer is pursuant to an acquisition occurring after such date of enactment and before January 1, 1990. (c) Certain Tax Attributes Reduced by 50 Percent of Financial Assistance of FSLIC and FDIC; Application of Section 265.— (1) Reduction in tax attributes.— Section 597 of the 1986 Code is amended by adding at the end thereof the following new subsection: “(c) Reduction of Tax Attributes by 50 Percent of Amounts Excludable Under Subsection (a).— “(1) In general.— 50 percent of any amount excludable under subsection (a) for any taxable year shall be applied to reduce the tax attributes of the taxpayer as provided in paragraph (2). “(2) Tax attributes reduced; order of reduction.— The reduction referred to in paragraph (1) shall be made in the following tax attributes in the following order: “(A) NOL.— Any preassistance net operating loss for the taxable year. “(B) Interest.— The amount of any interest with respect to which a deduction is allowable for the taxable year. “(C) Built-in portfolio losses.—Recognized built-in port-folio losses for the taxable year. “(3) Preassistance net operating loss.— For purposes of paragraph (2)(A)— “(A) In general.— The preassistance net operating loss shall be determined in the same manner as a prechange loss under section 382(d), except that— “(i) the applicable financial institution shall be treated as the old loss corporation, and “(ii) the determination date shall be substituted for the change date. “(B) Ordering rule.— The reduction under paragraph (2)(A) shall be made in the carryovers in the order in which carryovers are taken into account under this chapter for the taxable year. “(4) Recognized built-in portfolio losses.— For purposes of paragraph (2)(C), recognized built-in portfolio losses shall be determined in the same manner as recognized built-in losses under section 382(h), except that— “(A) the only assets taken into account shall be— “(i) the loan portfolio, “(ii) marketable securities (within the meaning of section 453(1)(2)), and “(iii) property described in section 595(a), “(B) the rules of clauses (i) and (ii) of paragraph (3)(A) shall apply, 102 STAT. 3659 “(C) there shall be no limit on the number of years in the recognition period, and “(D) section 382(h) shall be applied without regard to paragraph (3)(B) thereof. “(5) Definitions and special rules.— For purposes of this subsection— “(A) Applicable financial institution.— The term ‘applicable financial institution’ means the domestic building and loan association or bank the financial condition of which was determined by the Federal Savings and Loan Insurance Corporation or the Federal Deposit Insurance Corporation to require the financial assistance described in subsection (a). “(B) Determination date.— The term ‘determination date’ means the date of the determination under subparagraph (A). Except as provided by the Secretary, any subsequent revision or modification of such determination shall be treated as made on the original determination date. “(C) Taxable asset acquisitions.— “(i) In general.— In the case of any acquisition of the assets of any applicable financial institution to which section 381 does not apply— “(I) paragraph (1) shall not apply to any amounts excludable under subsection (a) which are payments made at the time of the acquisition to the person acquiring such assets, and “(II) rights to receive future payments excludable under subsection (a) in connection with the acquisition shall be treated as provided in clause (ii). “(ii) Treatment of future payments.— “(I) In general.— Rights to receive future payments described in clause (i)(II) shall be treated as assets to which basis is allocated. “(II) Recovery of basis.— Any basis allocated under subclause (I) shall be recovered in such manner as the Secretary may provide, but in no event shall the amount recovered for any taxable year beginning before the taxable year in which the rights expire exceed the aggregate payments received with respect to such rights for all taxable years reduced by the amount of basis recovered with respect to such rights in preceding taxable years. “(III) Application of paragraph (i).—Paragraph (1) shall apply to payments described in subclause (I) in a taxable year only to the extent such payments exceed the amount of basis recovered in such taxable year. “(D) Treatment of repayments.— If a taxpayer repays an amount to which paragraph (1) applied in a preceding taxable year, there shall be allowed as a deduction for the taxable year of repayment an amount equal to the reduction in tax attributes under paragraph (1) attributable to the amount repaid. “(E) Carryovers.— If 50 percent of the amount excludable under subsection (a) for any taxable year exceeds the102 STAT. 3660 amount of the tax attributes described in paragraph (2) for such taxable year, then, for purposes of this subsection, the amount excludable under subsection (a) for the succeeding taxable year shall be increased by an amount equal to twice the amount of such excess. “(F) Regulations.— The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this subsection.” (2) Application of section 265.— Subparagraph (B) of section 904(c)(2) of the Reform Act is amended by striking out “Section 265(a)(1)” and inserting in lieu thereof “Section 265”. (3) Effective date.— The amendments made by this subsection shall apply to any transfer— (A) after December 31, 1988, and before January 1, 1990, unless such transfer is pursuant to an acquisition occurring before January 1, 1989, and (B) after December 31, 1989, if such transfer is pursuant to an acquisition occurring after December 31, 1988, and before January 1, 1990. In the case of a taxpayer to which the amendments made by subsection (b)(1) apply, subparagraphs (A) and (B) shall be applied by substituting “the date of the enactment of this Act” for “December 31, 1988”