I 

114TH CONGRESS 

1ST SESSION H. R. 2789 

To amend the Internal Revenue Code of 1986 to modify S corporation 

shareholder and preferred stock rules with respect to banks. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 16, 2015 

Mr. MARCHANT (for himself, Mrs. BLACK, and Mr. SMITH of Texas) introduced the following bill; which was referred to the Committee on Ways 

and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

S corporation shareholder and preferred stock rules with 

respect to banks. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Capital Access for 

5 Small Business Banks Act’’. 


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1 SEC. 2. S CORPORATION BANKS PERMITTED TO HAVE 500 

2 SHAREHOLDERS. 

3 (a) IN GENERAL.—Section 1361(c) of the Internal 

4 Revenue Code of 1986 is amended by adding at the end 

5 the following new paragraph: 

6 ‘‘(7) BANK SHAREHOLDER LIMIT.—In the case 

7 of a bank (as defined in section 581) or a depository 

8 institution holding company (as defined in section 

9 3(w)(1) of the Federal Deposit Insurance Act (12 

10 U.S.C. 1813(w)(1))), subsection (b)(1)(A) shall be 

11 applied by substituting ‘500 shareholders’ for ‘100 

12 shareholders’.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2015. 

16 SEC. 3. BANK ISSUANCE OF PREFERRED STOCK PER17 MITTED. 

18 (a) IN GENERAL.—Section 1361 of the Internal Rev19 enue Code of 1986 is amended by adding at the end the 

20 following new subsection: 

21 ‘‘(h) TREATMENT OF QUALIFIED PREFERRED BANK

22 STOCK.— 

23 ‘‘(1) IN GENERAL.—Qualified preferred bank 

24 stock shall not be taken into account as outstanding 

25 stock of the S corporation for purposes of this sub26 chapter (other than section 1368(g)). 


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1 ‘‘(2) QUALIFIED PREFERRED BANK STOCK.— 

2 For purposes of this subsection, the term ‘qualified 

3 preferred bank stock’ means stock which— 

4 ‘‘(A) is issued by a bank (as defined in sec5 tion 581) or a depository institution holding 

6 company (as defined in section 3(w)(1) of the 

7 Federal Deposit Insurance Act (12 U.S.C. 

8 1813(w)(1))), and 

9 ‘‘(B) meets the requirements of subpara10 graphs (A), (B), and (C) of section 

11 1504(a)(4).’’. 

12 (b) DISTRIBUTIONS INCLUDIBLE IN SHAREHOLDER

13 GROSS INCOME AND DEDUCTIBLE BY S CORPORATION.— 

14 Section 1368 of such Code is amended by adding at the 

15 end the following new subsection: 

16 ‘‘(g) QUALIFIED PREFERRED BANK STOCK.—If a 

17 shareholder receives a distribution (not in part or full pay18 ment in exchange for stock) from an S corporation with 

19 respect to any qualified preferred bank stock (as defined 

20 in section 1361(h)), the amount of such distribution— 

21 ‘‘(1) shall be includible in gross income of the 

22 shareholder, and 

23 ‘‘(2) shall be deductible by the corporation for 

24 the taxable year of such corporation in which or with 


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1 which ends the taxable year in which such amount 

2 is included in the gross income of the shareholder.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2015. 

Æ 


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