A bill to amend the Internal Revenue Code of 1986 to allow institutions for the Farm Credit System to deduct amounts added to a reserve for bad debts under rules applicable to the deduction of such amounts by small banks.

Amends the Internal Revenue Code to permit institutions of the Farm Credit System an income tax deduction for any reasonable addition to reserves for bad debts. Applies this deduction in lieu of the deduction generally applicable to worthless debts.