Potential benefits are substantial. A layer of tax expense has been eliminated.
Eligibility is restricted and requires care to maintain.
While no application to the banking agencies is required, the new tax structure has supervisory implications. The new tax structure has some potential draw-backs. These benefits are potentially substantial and may increase the inherent value of community banks. The most important of these requirements are that the company not use the reserve method of accounting for bad debts for tax purposes and that it have 75 or fewer eligible shareholders. To be able to receive the benefits for tax year 1997, institutions therefore may need to act quickly since changes in either of the above areas may be time consuming.