Banking Taxation: Implications of Proposed Revisions Governing S-Corporations on Community Banks
Studies certain rules that affect decisions by banks to elect S-corp. status for Fed. tax purposes. Banks were permitted to elect S-corp. status for the first time beginning in 1997. Banking industry rep's. have cited a number of obstacles that banks face when converting to S-Corp. status. Possible revisions to the tax rules were proposed to address these obstacles and would generally expand the banking &, in some cases, other industries' eligibility to elect S-corp. status. The objectives of this report were to (1) analyze possible revisions to the rules governing S-corp.; and (2) determine the potential impact such revisions might have, primarily on community banks. Tables.
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accounting experts told accounting for bad asset ratios bad debt reserve bank director shares bank regulators bank's Bankers and legal banking industry banks and thrifts become S-corporations built-in gains built-in losses class of stock community banks convert to S-corporation convert to Subchapter credit unions current law dividend payout elect Subchapter eligible shareholders FDIC data Federal Deposit Insurance financial institutions Gramm-Leach-Bliley Act impact income tax increasing the number individual retirement accounts Internal Revenue Code investment income rules larger banks legal and accounting liquidity purposes loan maximum number median million revenue loss number of shareholders obstacles passive income passive investment income percent performance measures proposed change proposed provisions Proposed Tax Provision qualifying recapture requirements reserve method retaining earnings return on assets revisions S-corporation banks shareholder limit small business Subchapter S conversion Subchapter S election Subchapter S status Subchapter S tax tax accounting tax purposes tax status tax treatment Taxation Thrift Supervision
Page 3 - of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision provided comments on a draft of this report,
Page 24 - V. Roth, Jr. Chairman The Honorable Daniel Patrick Moynihan Ranking Minority Member Committee on Finance United States Senate The Honorable James A. Leach Chairman The Honorable John J. LaFalce Ranking Minority Member Committee on Banking and Financial Services House of Representatives
Page 50 - income derived from royalties, rents, dividends, interest, annuities, and sales or exchanges of stock or securities (but only to the extent of gains).
Page 1 - passive investment income as gross receipts derived from royalties, rents, dividends, interest, annuities, and sales or exchanges of stock or securities.
Page 12 - a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district.
Page 38 - of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS).
Page 33 - were derived from royalties, rents, dividends, interest, annuities, and sales or exchanges of stock or securities;
Page 65 - 2000 Mr. Thomas J. McCool, Director Financial Institutions and Markets Issues US General Accounting Office Washington, DC 20548 Dear Mr. McCool: Thank you for the opportunity to comment
Page 32 - incorporation and operation of certain small businesses without the incidence of income taxation at both the corporate and the shareholder levels.