Uniform Tax Treatment of Financial Institutions Act

Uniform Tax Treatment of Financial Institutions Act - Provides that any debt owed to a financial institution becoming worthless or partially worthless during the taxable year shall be charged to the reserve for losses on loans for purposes of business expense deductibility under the Internal Revenue Code of 1954. Redefines the term "bank" for purposes of the general rules applicable to banking institutions under the Internal Revenue Code.

Changes the rules for determination of the reserve for losses for financial institutions for each taxable year.

Provides for nonrecognition of gain or loss as a result of foreclosure on any property which was security for the payment of any indebtedness. Provides that the foreclosing party's basis in such property shall be the amount of the indebtedness for which the property was secured, plus costs of foreclosure.

Provides new rules for the treatment of distributions of stock to shareholders by domestic building and loan associations where such distribution does not qualify as a deduction for dividends paid on deposits.

Authorizes a deduction for the repayment of loans made before September 1, 1951, by the United States or any mutual fund established pursuant to the laws of any State to financial institutions as defined in this Act.

Provides for separate taxation under Subchapter L (relating to the taxation of insurance companies) of the life insurance business of a mutual savings bank where such life insurance business is conducted separately from the other business of a mutual savings bank.

Allows a deduction for dividends paid on deposits to banking organizations qualifying as such for purposes of the term "bank" as expanded by the provisions of this Act.

Redefines the terms "domestic building and loan association" and "cooperative bank" for the purposes of this Act.

Allows as a credit against its income tax 3.5 percent (1.5 percent in the case of an individual) of the amount of interest received or accrued from qualifying residential mortgage loans if at least 80 percent of the total assets of such corporate taxpayer are qualifying residential loans. Defines the term "qualifying residential mortgage loan" for the purposes of this Act. Provides that if such credit (together with other specified tax credits allowable) exceeds the income tax for such taxable year, the taxpayer will be allowed to carry such credit back to the three taxable years preceding the unused credit year; and to the seven taxable years following the unused credit year. States that in the case of estates and trusts, and in the case of small business corporations electing taxation directly to shareholders Subchapter S, the interest from qualifying residential mortgage loans shall be allocated among the parties in the same proportion as the income received by such entities is distributable to the beneficiaries or shareholders.

Makes the necessary conforming and technical amendments to bring the related provisions of the Internal Revenue Code into consonance with the provisions of this Act.