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contends that an institution that satisfies these tests thereby
qualifies as a domestic savings and loan association. Section
301.7701-13A(a), Proced. & Admin. Regs., adds to the list of
institutions that are domestic building and loan associations
“any other savings institution chartered and supervised as a
savings and loan or similar association under Federal or State
law which meets the * * * [three tests]”. According to
petitioner, the effect of this regulation is to allow the use of
the reserve method of accounting under section 593 by any
“similar association” that meets the three tests. Both parties
cite the evolution of the term “building and loan association” in
the Code and associated legislative history in support of their
respective positions.
The definition of a “building and loan association” under
section 101(4), I.R.C. 1939, was expanded to include “a domestic
building and loan association, a domestic savings and loan
association, and a Federal savings and loan association,
substantially all the business of which is confined to making
loans to members” by the Revenue Act of 1951, ch. 521, sec. 313,
65 Stat. 490. In that Act, Congress eliminated the exemption
from Federal income tax for domestic building and loan
associations and instead enacted generous rules for calculating
deductions for additions to bad debt reserves. Revenue Act of
1951, ch. 521, sec. 313(e), 65 Stat. 490-491. The legislative
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