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.
26 U.S. Code § 591. Deduction for dividends paid on deposits
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(a) In general
(b) Mutual savings bank to include certain banks with capital stockFor purposes of this part, the term “mutual savings bank” includes any bank—
which has capital stock represented by shares, and
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.
Effective Date of 1981 Amendment