§ 1.597-8 Transitional rules for Federal financial assistance.

(a) Scope. This section provides transitional rules for the tax consequences of Federal financial assistance received or accrued on or after May 10, 1989, if the assistance payment relates to an acquisition that occurred before that date. (b) Transitional rules. The tax consequences of any payment of Federal financial assistance received or accrued on or after May 10, 1989, are governed by the applicable provisions of section 597 that were in effect prior to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) if either— (1) The payment— (i) Is pursuant to an acquisition of a bank or domestic building and loan association before May 10, 1989, (ii) Is provided pursuant to an assistance agreement executed before May 10, 1989, (iii) Is provided to a party to that agreement or to such other party as the Commissioner may determine appropriate by letter ruling or other written guidance, and (iv) Would, if provided before May 10, 1989, have been governed by applicable provisions of section 597 that were in effect prior to FIRREA; or (2) The payment— (i) Represents a prepayment of (or a payment in lieu of) a fixed or contingent right to Federal financial assistance that would have satisfied the conditions of paragraphs (b)(1)(i), (ii) and (iv) of this section, and (ii) Is provided to a party described in paragraph (b)(1)(iii) of this section (c) Definition of Federal financial assistance. Federal financial assistance for purposes of this section has the meaning prescribed by section 597(c) as amended by FIRREA. (d) Examples. The following examples illustrate the provisions of this section: (e) Effective date. This section is effective April 23, 1992 for assistance received or accrued on or after May 10, 1989 in connection with acquisitions before that date.