Bank Taxation - Areas With Potential Concerns and Planning Opportunities

Bad debt deductions Direct charge-off method Reserve methods New banks are allowed to use a "modified" experience method	Accrual of interest on nonperforming loans Defaults on credit cards Conflict with generally accepted accounting principles (GAAP) and regulatory accounting principles (RAP)
Foreclosures on secured property Tax treatment of gain or loss on foreclosure Interest income Holding and disposing of foreclosed property	Allowable interest expense and disallowed interest expense Disallowed interest expense with respect to tax-exempt obligations Capitalized borrowing costs
Acquisitions Taxable acquisitions Tax-free reorganizations	Renegotiated (or modified) debt Deemed taxable exchanges on debt modifications Measurement of gain or loss on debt modifications
Expenses normally considered ordinary and necessary business expenses Start-up and expansion Business expansion and new product Research and development Loan origination expenditures Acquisition costs Other miscellaneous business expenditures	Accounting for interest, fee and other income Tax-exempt interest income Credit card fees Mortgage servicing fees Other income such as commitment fees and loan commissions Repurchase agreements Mortgage backed securities Hedging transactions

Accounting for points, premiums and discounts

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