Partial Retention of Reserve Deduction Would Cut $400 Million from New Tax

Naylor, Bartlett, American Banker

Partial Retention of Reserve Deduction Would Cut $400 Million from New Tax

Lobbying by the banking industry to rescue the tax deduction for loan-loss reserves is expected to shave only about $400 million off the $4 billion or more that bankers will owe as part of the reform initiative nearing final congressional approval.

On Monday, Sen. Bob Packwood, R-Ore., chairman of the tax-writing Senate Finance Committee, unveiled details of a new plan to terminate the current deduction.

The new plan works like this:

Banks with less than $500 million in assets would operate under current law, meaning that 0.6% of loans can be kept in a tax-deductible loan-loss reserve. There are about 450 banks in the U.S. within this category

Banks with more …

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Publication information: Article title: Partial Retention of Reserve Deduction Would Cut $400 Million from New Tax. Contributors: Naylor, Bartlett - Author. Magazine title: American Banker. Volume: 151. Publication date: August 12, 1986. Page number: 1+. © 2009 SourceMedia, Inc. COPYRIGHT 1986 Gale Group.

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