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 Rev. Rul. 65-88

1965-1 C.B. 112

Sec. 166

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Rev. Rul. 65-88

Revenue Ruling 64-48, C.B. 1964-1 (Part 1), 104, which provides that for a limited period small business investment companies (SBIC) are allowed bad debt reserve ceilings equal to 10 percent of their outstanding loans as reasonable reserves under section 166(c) of the Internal Revenue Code of 1954, was not intended to place a 10-percent ceiling on the amount of bad debt reserves which will be allowed as a deduction for Federal income tax purposes.

Revenue Ruling 64-48 is, therefore, clarified to indicate that an SBIC may establish reserves for bad debts in excess of 10 percent of its outstanding loans, where the additional amount is reasonable in light of all the facts and circumstances existing at the close of the taxable year of the proposed additions taking into account existing reserves.