Latest News

IRS Withdraws Proposed TEFRA Rule

Nov 14, 2011

Earlier this month,  the IRS finally withdrew its proposed rule relating to the TEFRA disallowance. The rule, which dates back to August 2006, would have forced Subchapter S banks to apply the 20% TEFRA disallowance not just for the first three years after the bank’s S election, but every year thereafter in which it had interest expense attributable to certain tax-exempt municipal securities. Withdrawal of the proposed rule represents the final chapter in what became a hotly-contested dispute between the Sub S bank community and the IRS—one that ultimately went as far as the U.S. Seventh Circuit Court of Appeals in Chicago.  Read more

Federal Reserve Issues Interim Final Rule Regarding SBLF

Jun 14, 2011

On Monday, June 13, 2011, the Federal Reserve Board issued an interim final rule allowing small bank holding companies organized as S corporations to exclude debt issued to Treasury under the Small Business Lending Fund (SBLF) from the definition of “debt” under the Federal Reserve’s Small Bank Holding Company Policy Statement. In effect, SBLF debt will not be included in the debt-to-equity calculation applicable to small bank holding companies.   Read more

SBLF Term Sheet for Sub S Banks Disappoints

May 13, 2011

Late Thursday afternoon, the Treasury Department finally released a term sheet for Subchapter S banks and mutuals, allowing them to participate in the Small Business Lending Fund (SBLF). The application deadline for both S corporations and mutuals is June 6, 2011. Though many Sub S banks have been anxiously awaiting this term sheet for months now, most will be exceedingly disappointed to learn that the funds will only qualify for Tier 2 capital treatment.  Read more

Subchapter S Bank Association Quoted in Houston Business Journal

Apr 30, 2011

Few Houston-area banks classified as subchapter S corporations want into the federal government’s Small Business Lending Fund even though advocates are working to include them. Congress created the fund in September to provide up to $30 billion in capital to community banks nationwide to aid in the generation of small-business loans. For now, the government is only accepting applications from community banks that are C corporations and can issue a stock class different from common stock to the Treasury as part of the transaction. In this case, it is preferred stock, said Bruce Toppin III, a partner at San Antonio-based law firm Kennedy, Toppin & Sutherland LLP. Subchapter S corporations, which can only offer common stock, are not currently eligible. There are about 16 subchapter S corporation banks in the Houston area, the largest of which is The Woodlands-based Woodforest National Bank, with total assets of $3.2 billion, according to the San Antonio-based Subchapter S Bank Association.  Read more

IRS Acquiesces to Vainisi Decision

Dec 21, 2010

Victory for S corporation financial institutions as the Internal Revenue Service announces it's acquiescence with the Seventh Circuit Court of Appeals in TEFRA case.  Read more