The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
F ederal reserve bank DALLAS, TEXAS of Dallas 75222 C i r c u l a r No. 7 3 -2 3 1 S e p te m b e r 1 2 , 1973 To t h e C h ie f E x e c u tiv e O f f i c e r o f t h e S t a t e Member Bank A d d re ss e d : We have b e e n a d v i s e d by t h e I n t e r n a l Revenue S e rv ic e t h a t Sec tio n l.l6 6 -2 (d ) o f i t s Income Tax R e g u l a ti o n s w h ich p e r t a i n s t o c h a r g e - o f f o f b a d d e b t s by a b an k h a s b e e n amended. P r i o r t o t h e amendment, t h e r e l e v a n t p o r t i o n t i o n s re a d as fo llo w s: o f t h e IRS R e g u la " S e c t i o n l . l 6 6 - 2 ( d ) —I f a b an k o r o t h e r c o r p o r a t i o n w h ich i s s u b j e c t t o s u p e r v i s i o n o f F e d e r a l a u t h o r i t i e s , o r by S t a t e a u t h o r i t i e s m a in ta in in g s u b s t a n ti a ll y e q u iv a le n t sta n d a rd s , c h a r g e s o f f a d e b t i n w hole o r i n p a r t i n o b e d ie n c e t o t h e s p e c i f i c o r d e r s o f such s u p e r v i s o r y a u t h o r i t i e s , t h e n t h e d e b t s h a l l , t o t h e e x t e n t c h a r g e d - o f f d u r in g t h e t a x a b l e y e a r , b e c o n c l u s i v e l y presum ed t o have become w o r t h l e s s , o r w o r t h l e s s o n ly i n p a r t , a s t h e c a s e may b e , d u r in g su ch t a x a b l e y e a r . . . (26 CFR l . l 6 6 - 2 ( d ) . " The amendment t o t h e R e g u l a ti o n s ad d ed a n o t h e r p r o v i s i o n t o t h e a b o v e -q u o te d s e c t i o n , and a f t e r t h e amendment, t h e s e c t i o n r e a d s : " I f a b an k o r o t h e r c o r p o r a t i o n w h ich i s s u b j e c t t o s u p e r v i s i o n o f F e d e ra l a u t h o r i t i e s , o r by S ta te a u t h o r i t i e s m a in ta in in g s u b s t a n t i a l l y e q u i v a l e n t s t a n d a r d s , c h a r g e s o f f a d e b t i n w hole or in p a r t, e ith e r — (i) I n o b e d ie n c e t o t h e s p e c i f i c o r d e r s o f su ch a u t h o r i t i e s , or (ii) I n a c c o rd a n c e w ith e s t a b l i s h e d p o l i c i e s o f su ch a u t h o r i t i e s , an d , upon t h e i r f i r s t a u d i t o f t h e b ank o r o t h e r c o r p o r a t i o n s u b s e q u e n t t o t h e c h a r g e - o f f su ch a u t h o r i t i e s c o n firm i n w r i t i n g t h a t t h e c h a r g e - o f f w ould h ave b e e n s u b j e c t t o such s p e c i f i c o r d e r s i f t h e a u d i t h ad b een made on t h e d a t e o f t h e c h a r g e - o f f , t h e n t h e d e b t s h a l l , t o t h e e x t e n t c h a r g e d - o f f d u r in g t h e t a x a b l e y e a r , be c o n c l u s i v e l y presum ed t o have become w o r t h l e s s , o r w o r th l e s s o n ly i n p a r t , a s t h e c a s e may b e , d u r in g su ch t a x a b l e y e a r . . ." E xam iners f o r t h e F e d e r a l R e s e rv e Bank o f D a l l a s have b e e n i n s t r u c t e d t o r e v ie w a t y o u r r e q u e s t a t e a c h e x a m in a tio n any v o l u n t a r y This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 2 charge-offs made by your bank since the prior examination and determine whether those loans would have been regarded as a loss if the examination had been made on the dates of the charge-offs. Examiners have also been instructed to list all such loans so determined and confirm in writing that such loans would have been classified as "loss". To assist the examiner in making an evaluation, it will be necessary for your bank to maintain complete records of the charge-offs, including the name of the borrower, unpaid balance, date of the chargeoff, length of time loan was delinquent when charged off, financial state ments and other related documents, and the reasons for making the chargeoffs . Yours very truly, P. E. Coldwell President
@FedFRASER