§582 — Bad debts, losses, and gains with respect to securities held by financial institutions
12 cases·2 followed·10 cited—17% support
Statute Text — 26 U.S.C. §582
Notwithstanding sections 165(g)(1) and 166(e), subsections (a) and (b) of section 166 (relating to allowance of deduction for bad debts) shall apply in the case of a bank to a debt which is evidenced by a security as defined in section 165(g)(2)(C).
For purposes of section 165(g)(1), where the taxpayer is a bank and owns directly at least 80 percent of each class of stock of another bank, stock in such other bank shall not be treated as a capital asset.
For purposes of this subtitle, in the case of a financial institution referred to in paragraph (2), the sale or exchange of a bond, debenture, note, or certificate or other evidence of indebtedness shall not be considered a sale or exchange of a capital asset. For purposes of the preceding sentence, any regular or residual interest in a REMIC shall be treated as an evidence of indebtedness.
For purposes of paragraph (1), the financial institutions referred to in this paragraph are—
any bank (and any corporation which would be a bank except for the fact it is a foreign corporation),
any financial institution referred to in section 591,
any small business investment company operating under the Small Business Investment Act of 1958, and
any business development corporation.
For purposes of subparagraph (A), the term “business development corporation” means a corporation which was created by or pursuant to an act of a State legislature for purposes of promoting, maintaining, and assisting the economy and industry within such State on a regional or statewide basis by making loans to be used in trades and businesses which would generally not be made by banks within such region or State in the ordinary course of their business (except on the basis of a partial participation), and which is operated primarily for such purposes.
In the case of a foreign corporation referred to in subparagraph (A)(i), paragraph (1) shall only apply to gains and losses which are effectively connected with the conduct of a banking business in the United States.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.582-1 Bad debts, losses, and gains with respect to securities held by financial institutions
- Treas. Reg. §Treas. Reg. §1.582-1(a) Bad debt deduction for banks.
- Treas. Reg. §Treas. Reg. §1.582-1(b) Worthless stock in affiliated bank.
- Treas. Reg. §Treas. Reg. §1.582-1(c) Pre-1970 sales and exchanges of bonds, etc.
- Treas. Reg. §Treas. Reg. §1.582-1(d) Post-1969 sales and exchanges of securities by financial institutions.
- Treas. Reg. §Treas. Reg. §1.582-1(e) Transition rule for qualifying securities held by banks—(1) In general.
- Treas. Reg. §Treas. Reg. §1.582-1(f) Small business investment companies and business development corporations—(1) Election.
- Treas. Reg. §Treas. Reg. §1.582-1(i) A written application for consent to revoke the election, setting forth the reasons therefor, is filed with the Commissioner within 90 days after the permanent regulations relating to section 433(d)(2) of the Tax Reform Act of 1969 (83 Stat.
12 Citing Cases
850–51 (1st Cir. 1932), rev’g in part 21 B.T.A. 1001 (1930); Johnson v. Commissioner, 108 T.C. 448, 475 (1997), aff’d in part, rev’d in part on other grounds, 184 F.3d 786 (8th Cir. 1999); George Gleason Bogert, et al., Bogert’s Trusts and Trustees § 582 (2016). Consequently, we agree with respondent and find that the governing documents concerning Xavana Establishment, along with other documents in the record, show that Xavana Establishment was a trust for federal tax purposes. Now that we have
st of receiving deposits and making loans and discounts. 2. Held, further, because P was not a "bank" within the mean- ing ofI.R.C. sec. 581, it was ineligible to claim ordinary loss deduc- tions on account ofthe worthlessness ofits securities under I.R.C. sec. 582. Henry T. Miller, James A. Bruton III, James T. Fuller III, Peter J. Anthony, Richard A. Husseini, Samara L. Kline, and Jacob L. Walley, for petitioner. H. Barton Thomas, Jr., Teri L. Jackson, Randolph L. Hutter, and Reid M. Huey, for
st of receiving deposits and making loans and discounts. 2. Held, further, because P was not a "bank" within the mean- ing ofI.R.C. sec. 581, it was ineligible to claim ordinary loss deduc- tions on account ofthe worthlessness ofits securities under I.R.C. sec. 582. Henry T. Miller, James A. Bruton III, James T. Fuller III, Peter J. Anthony, Richard A. Husseini, Samara L. Kline, and Jacob L. Walley, for petitioner. H. Barton Thomas, Jr., Teri L. Jackson, Randolph L. Hutter, and Reid M. Huey, for
0-851 (1st Cir. 1932), rev'g in part 21 B.T.A. 1001 (1930); Johnson v. Commissioner, 108 T.C. 448, 475 (1997), aff'd in part, rev'd in part on other grounds, 184 F.3d 786 (8th Cir. 1999); George Gleason Bogert, et al., Bogert's Trusts and Trustees, sec. 582 (2016). -21- Indeed, ifthe plan assets were not held by a "trust," the ESOP could not qualify under ERISA. See 29 U.S.C. sec. 1103(a) (2012) ("[A]ll assets ofan em- ployee benefit plan shall be held in trust by one or more trustees."). Sectio
0-851 (1st Cir. 1932), rev'g in part 21 B.T.A. 1001 (1930); Johnson v. Commissioner, 108 T.C. 448, 475 (1997), aff'd in part, rev'd in part on other grounds, 184 F.3d 786 (8th Cir. 1999); George Gleason Bogert, et al., Bogert's Trusts and Trustees, sec. 582 (2016). -21- Indeed, ifthe plan assets were not held by a "trust," the ESOP could not qualify under ERISA. See 29 U.S.C. sec. 1103(a) (2012) ("[A]ll assets ofan em- ployee benefit plan shall be held in trust by one or more trustees."). Sectio