Bank Holding Company Tax Act of 1976

Bank Holding Company Tax Act - Allows bank holding companies, under the Internal Revenue Code, to make pro rata distributions of prohibited property without the surrender of stock by the shareholder or in exchange for preferred stock or securities without the shareholder or security holder recognizing any gain on the receipt of such prohibited property. Requires the Board of Governors of the Federal Reserve System to certify such prohibited property as an interest in a nonbanking organization. Allows a bank holding company to first create a second corporation to receive such prohibited property and then to distribute stock in such second corporation without the stockholder or security holder recognizing any gain on the receipt of such property.

Allows a bank holding company to distribute all or a part of the property by reason of which such corporation controls a bank or bank holding company without the shareholder or security holder recognizing any gain on the receipt of such property. Allows a bank holding company to exchange the property by reason of which it is a bank holding company for all of the stock of a second corporation created to receive such property and then to distribute the stock in such second corporation without the stockholder or security holder recognizing any gain on the receipt of such property.

Disallows the use of such provisions as a device to avoid Federal income tax on the distribution of earnings and profits of any corporation.

Establishes rules for the allocation of basis and earnings and profits following such a distribution of property or stock.

Defines the terms used in this Act.

Effectuates such definitions on October 1, 1977, with respect to distributions after July 7, 1970, in the case of qualified bank holding companies.

Permits bank holding companies to elect to have the determination of whether property is prohibited or is eligible to be distributed without recognition of gain made under the Bank Holding Company Act as if specified provisions of such Act relating to closely held bank holding companies did not exist.

Authorizes the installment payment of tax attributable to the divestiture of, instead of the distribution of, prohibited property or bank property. Effectuates such installment payment provisions on October 1, 1977 with respect to sales after July 7, 1970, in the case of qualified bank holding companies.

Makes technical and conforming amendments.

Provides that if any tax attributable to a sale which occurred before October 1, 1977, is payable in annual installments, any portion of such tax for which the due date of the installment does not occur before October 1, 1977, shall be treated as a tax overpayment.