26 U.S.C. § 597 — Treatment of transactions in which Federal financial assistance provided

(a) General rule. Regulations issued by the Secretary determine how this chapter treats a transaction in which a bank or domestic building and loan association receives Federal financial assistance. (b) Rules for the regulations. (1) For an acquisition of assets to which section 381(a) does not apply, the regulations must require the institution that transferred the assets to properly account for the Federal assistance and set the proper way to divide tax basis among the acquired assets, including rights to receive assistance. (2) For other transactions, the regulations must properly treat the assistance and make appropriate adjustments to basis or other tax attributes. (3) The regulations may not allow a deduction or other tax benefit for an amount effectively reimbursed by nontaxable Federal assistance. (c) “Federal financial assistance” means money or other property provided to a domestic building and loan association by the Federal Savings and Loan Insurance Corporation or Resolution Trust Corporation under the National Housing Act or similar law, or provided to a bank or domestic building and loan association by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act or similar law, whether or not a note or other instrument is exchanged. (d) “Domestic building and loan association” has the meaning in section 7701(a)(19), without subparagraph (C).