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additions to reserves for bad debts for banks, as defined in
section 581, and specifically excluded organizations to which
section 593 applied. The distinction between banks and thrift
institutions for purposes of the bad debt deduction is also
evident in committee reports to the Tax Reform Act of 1986,
Pub. L. 99-514, 100 Stat. 2376, that define commercial banks to
which section 585 applies as:
a domestic or foreign corporation, a substantial
portion of whose business consists of receiving
deposits and making loans and discounts, or of
exercising fiduciary powers similar to those permitted
national banks, and who are subject by law to
supervision and examination by State or Federal
Authority having supervision over banking institutions
(sec. 581). For the purpose of determining the
deductions for bad debts, the term “commercial bank”
does not include domestic building and loan
associations, mutual savings banks or cooperative
nonprofit mutual banks (“thrift institutions”). [H.
Conf. Rept. 99-426 (1985), 1986-3 C.B. (Vol. 2) 574; H.
Conf. Rept. 99-841 (1986), 1986-3 C.B. (Vol. 4) 326;
emphasis added.]
Although, historically, thrift institutions enjoyed more
favorable tax treatment than other financial institutions,
Congress recognized in the Tax Reform Act of 1986, Pub. L.
99-514, 100 Stat. 2376, that changes in regulatory policies had
expanded the activities of thrift institutions and encouraged
other institutions to expand their activities in areas that were
traditionally serviced by the thrift industry. H. Conf. Rept.
99-426, supra, 1986-3 C.B. at 581. Acknowledging that other
financial institutions were in direct competition with thrift
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