A bill to amend the Internal Revenue Code of 1986 with respect to the treatment of certain short-term loans.

Amends the Internal Revenue Code to provide that certain short-term loans made in the ordinary course of business of a taxpayer bank or other financial institution that does not use an accrual method of accounting shall not be subject to requirements governing: (1) the current inclusion in gross income of the discount on such obligations; and (2) the deferral of the deduction for net direct interest expenses allocable to the accrued discount on such obligations. Applies these amendments to loans acquired after July 18, 1984.

Amends the Tax Reform Act of 1986 to apply requirements relating to the accrual of interest payments on certain short-term obligations to obligations acquired after October 22, 1986 (thus removing the retroactivity of the Act, which made these requirements applicable to obligations acquired after September 27, 1985).