The Application of Section 291 to Subchapter S Banks—A Look at the Vainisi Decision
Author: Carol Kulish Harvey.
Source: Volume 22, Number 06, July/August 2009 , pp.47-59(13)
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Abstract:
In the U.S. Tax Court’s Vainisi decision, a strict statutory approach was relied upon to determine a bank QSub subsidiary’s taxation on normally tax-exempt interest. The Tax Court’s ruling on the application of the interest expense disallowance rules to Qualified Subchapter S Subsidiaries seems inconsistent, in some respects, with a plain reading of the Code. A legislative amendment to the Code may arise.Keywords: Section 291(a)(3); S Corporation Banks; Section 1363(b)(4)).
Affiliations:
1: Washington National Tax (WNT) Passthroughs Group of KPMG LLP.