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 Rev. Rul. 67-32

1967-1 C.B. 52

Section 6655 -- Corporate Estimated Tax Penalties

Sec. 166

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Rev. Rul. 67-32

A production credit association organized under section 20 of the Farm Credit Act of 1933, Public Law 75, 73d Congress, 12 U.S.C. 1131d, makes short-term and intemediate-term loans to qualified farm owners and operators. These loans are represented by promissory notes which are normally secured. The association transfers most of these notes to the district Federal Intermediate Credit Bank as collateral on loans made by the bank to the association.

Held , in computing reasonable annual additions to its reserve for bad debts pursuant to section 166(c) of the Internal Revenue Code of 1954, the production credit association is not required to reduce the amount of its loans outstanding by the amounts represented by the promissory notes described above transferred as collateral on loans made to the association by the Federal Intermediate Credit Bank under a form of agreement which makes the production credit association primarily liable to the bank for the repayment of all funds lent to it by the bank.