26 U.S.C. § 591

Deduction for dividends paid on deposits

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(a) In general

In the case of mutual savings banks, cooperative banks, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under Federal or State law, there shall be allowed as deductions in computing taxable income amounts paid to, or credited to the accounts of, depositors or holders of accounts as dividends or interest on their deposits or withdrawable accounts, if such amounts paid or credited are withdrawable on demand subject only to customary notice of intention to withdraw.

(b) Mutual savings bank to include certain banks with capital stockFor purposes of this part, the term “mutual savings bank” includes any bank—(1) which has capital stock represented by shares, and(2) which is subject to, and operates under, Federal or State laws relating to mutual savings bank.(Aug. 16, 1954, ch. 736, 68A Stat. 204; Pub. L. 87–834, § 6(f), Oct. 16, 1962, 76 Stat. 984; Pub. L. 97–34, title II, § 245(a), Aug. 13, 1981, 95 Stat. 255.)Editorial NotesAmendments

1981—Pub. L. 97–34 designated existing provisions as subsec. (a), inserted heading “In general”, and added subsec. (b).

1962—Pub. L. 87–834 included other savings institutions chartered and supervised as savings and loan or similar associations under Federal or State law, and authorized amounts paid as interest as a deduction.

Statutory Notes and Related SubsidiariesEffective Date of 1981 Amendment

Pub. L. 97–34, title II, § 246(d), Aug. 13, 1981, 95 Stat. 256, provided that: “The amendments made by section 245 [amending this section and section 593 of this title] shall apply with respect to taxable years ending after the date of the enactment of this Act [Aug. 13, 1981].”

Notes of Decisions

Cited in 8 cases (1 in the last 5 years), 1962–2024 · leading case: Paulsen v. Comm'r, 469 U.S. 131 (1985).

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Paulsen v. Comm'r, 469 U.S. 131 (1985). · cites it 2× “The dividends are deductible to Citizens, 26 U. S. C. § 591 , and they do not qualify for dividend exclusion by the Citizens shareholders under § 116.”

Woodruff v. Tax Comm'r, 440 A.2d 854 (Conn. 1981). · cites it 2× “26 U.S.C. § 591 (1976) ; 4 26 U.S.C. § 116 (c) (1) (1976) ; 5 26 U.”

Dist. of Columbia v. Nat'l Bank of Washington, 431 A.2d 1 (D.C. 1981). “See 26 U.S.C. § 591 (1976). The absence of a technical definition of deductible savings bank interest confirms our impression of the term’s plain meaning.”

Home Bldg. & Loan Ass'n of Helena v. Fulton, 375 P.2d 312 (Mont. 1962). “" 26 U.S.C.A. § 591 . *314 [3] Thus, it appears that our laws now provide that building and loan associations must pay a corporation license tax, but that in the computation of their tax liability the gross income shall be that recognized in the determination of the…”

Chickasha Fed. Sav. & Loan Ass'n v. Oklahoma Tax Comm'n, 528 P.2d 1384 (Okla. 1974). “This was done pursuant to 26 U.S.C. § 591 . Section 591 provides that in computing federal taxable income savings and loan associations are entitled to deduct amounts paid or credited to accounts of depositors or holders of accounts as “dividends or interest” on their deposits…”

Home Bldg. & Loan Ass'n v. Fulton, 375 P.2d 312 (Mont. 1962). “” 26 U.S.C.A. § 591 . Thus, it appears that our laws now provide that building and loan associations must pay a corporation license tax, but that in the computation of their tax liability the gross income shall be that recognized in the determination of the corporation’s federal…”

Harold T. & Marie T. Paulsen v. Comm'r of Internal Revenue, 716 F.2d 563 (9th Cir. 1983). “They were deductible to the payor, 26 U.S.C. § 591 , and did not qualify for the dividend exclusion of § 116.”

Synovus Bank v. SCDOR (S.C. Ct. App. 2024). “§ 585 (West 1996); the "Deduction[s] for dividends paid on deposits," 26 U.S.C.A. § 591 (West 1981); the "Reserves for losses on loans," 26 U.”

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