                                                               [DO NOT PUBLISH]


                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT           FILED
                          ________________________ U.S. COURT OF APPEALS
                                                               ELEVENTH CIRCUIT
                                                                 AUGUST 8, 2005
                           Nos. 03-15055 and 03-15056
                                                                THOMAS K. KAHN
                           ________________________
                                                                    CLERK

                    U.S. Tax Court Nos. 4866-98 and 4256-98


BARNETT BANKS, INC. & SUBSIDIARIES,
                                                               Petitioner-Appellant,

                                       versus

COMMISSIONER OF INTERNAL REVENUE,
                                                              Respondent-Appellee.

                           ________________________

                          Appeals from a Decision of the
                             United States Tax Court
                          _________________________
                                (August 8, 2005)

Before EDMONDSON, Chief Judge, MARCUS and PRYOR, Circuit Judges.


PER CURIAM:

      Barnett Banks acquired two banks that had formerly held charters as savings

and loans associations. On its federal tax returns, Barnett continued to treat the

banks as “domestic building and loan associations” pursuant to Internal Revenue
Code (“IRC”) § 7701(a)(19), 26 U.S.C. § 1701(a)(19); domestic building and loan

associations are permitted to use the bad-debt-reserve method of accounting under

IRC § 593, 26 U.S.C. § 593(a).1 The Internal Revenue Service Commissioner

(“Commissioner”) challenged this treatment and issued a notice of deficiency.

Barnett filed petitions for redetermination with the Tax Court. The Tax Court

granted the Commissioner’s motion for partial summary judgment.2 We affirm.



                                          Background



           In an effort to increase its share of the residential loan market, Barnett

Banks initiated discussions to acquire United First Federal Savings and Loan

(“United”) and Home Federal Bank of Florida (“Home”) in 1986. The Federal

Reserve Board precluded a bank holding company from making a direct

acquisition of a healthy thrift institution. Therefore, to complete the acquisition --


   1
    We note that § 593(a) has been repealed for taxable years beginning after 31 December 1995.
26 U.S.C. § 593(a).
       2
     The Tax Court had two potential issues before it: 1) whether an association chartered as a
banking corporation could qualify as a “domestic building and loan association,” and 2) if so whether
the associations satisfied three additional tests under § 7701(a)(19). The Commissioner moved for
summary judgment as to the first issue only, asserting that there were material facts in dispute as to
the second. The Tax Court granted the Commissioner’s motion, concluding that an association
chartered under Florida law as a banking corporation could not qualify. Therefore, the Tax Court
did not need to reach the second issue; the resulting judgment was a final one.

                                                  2
through a multi-step process -- United and Home converted from federally

chartered financial institutions to Florida banking corporations -- United

converting to Barnett Bank of Southwest Florida (“Southwest”) and Home

becoming Barnett Bank of Pinellas County (“Pinellas”) -- before merging with a

wholly-owned subsidiary of Barnett.

        On its post-acquisition tax return for each of the taxable years 1986 through

1994, Barnett treated Southwest as a qualified “domestic building and loan

association” pursuant to § 7701(a)(19), and therefore claimed a deduction for

Southwest’s bad debts under the reserve-method of accounting under § 593.

Barnett regarded Pinellas identically for tax purposes for each of the taxable years

1987 through 1994.

        In December 1997, the Commissioner issued two notices of deficiency,

which among other adjustments, disallowed Barnett’s deductions claimed for

Southwest’s and Pinellas’s bad debt reserves and adjusted Barnett’s taxable

income to reverse Southwest and Pinellas’s bad debt reserves in the year of the

acquisitions.3 Barnett filed petitions for redetermination with the Tax Court. The


    3
     The following amounts were disallowed because the IRS concluded that Barnett failed to
establish that Southwest and Pinellas qualified as a domestic building and loan association under §
7701(a)(19):



                                                3
cases were consolidated. The parties filed cross-motions for summary judgment

on the issue of whether the two financial institutions acquired by Barnett were

entitled to use the bad-debt-reserve method of accounting pursuant to § 593. The

Tax Court denied Barnett’s motion for summary judgment and granted the

Commissioner’s motion for partial summary judgment. 84 T.C.M. (CCH) 16

(2002). We affirm the Tax Court’s decision.




 YEAR                        Pinellas                   Southwest
 12/31/86                    --                         $15,848,132
 12/31/87                    $37,408,897                ---
 12/31/88                    (1,597,859)                2,006,462
 12/31/89                    2,369,843                  934,603
 12/31/90                    (1,713,509)                20,778
 12/31/91                    2,196,073                  (192,019)
 12/31/92                    1,854,512                  1,544,816
 12/31/93                    643,535                    (914,984)
 12/31/94                    599,905                    (151,366)


                                           4
                                            Discussion



       We review de novo the Tax Court’s decision to grant summary judgment.

Roberts v. Commissioner, 329 F.3d 1224, 1227 (11th Cir. 2003).

       IRC § 593 allows a deduction for bad debt reserves for “any domestic

building and loan association” that meets the requirements of § 7701(a)(19).4 26

U.S.C. § 593. Section 7701 provides definitions, including in sub-part (a)(19),

the following definition of “domestic building and loan association” (“DBLA”),

that sets forth three tests:

       (a) When used in this title, where not otherwise distinctly expressed or

       manifestly incompatible with the intent thereof --

               (19) Domestic building and loan association.--The term “domestic

               building and loan association” means a domestic building and loan


   4
      The relevant text of § 593 reads as follows:
(a) Reserve for bad debts. --
(1) In general. -- Except as provided in paragraph (2), in the case of --
        (A) any domestic building and loan association,
        (B) any mutual savings bank, or
        (C) any cooperative bank without capital stock organized and operated for mutual purposes
        and without profit,
        there shall be allowed a deduction for a reasonable addition to a reserve for bad debts. . . .
(2) Organization must meet 60-percent asset test of section
 7701(a)(19). -- This section shall apply to an association or bank referred to in paragraph (1) only
if it meets the requirements of section 7701(a)(19)(c).
26 U.S.C. § 593.

                                                  5
             association, a domestic savings and loan association, and a Federal

             savings and loan association--

                    (A) which either (i) is an insured institution within the meaning

                    of section 401(a) of the National Housing Act . . . or (ii) is

                    subject by law to supervision and examination by State or

                    Federal authority having supervision over such associations;

                    (B) the business of which consists principally of acquiring the

                    savings of the public and investing in loans; and

                    (C) at least 60 percent of the amount of the total assets of

                    which (at the close of the taxable year) consists of -- [various

                    elements]

26 U.S.C. § 7701(a)(19).

      Barnett argues that the Tax Court erred in finding that the tax benefits

accruing to “building and loan associations” are limited to financial institutions

with that particular label. Instead, Barnett contends that financial institutions that

1) substantively perform the functions of DBLA’s, and 2) qualify under the §

7701(a)(19) tests, are eligible for tax treatment under § 593, regardless of whether

they are chartered as DBLA’s. We disagree.




                                           6
      A plain reading of § 7701(a)(19) indicates that an institution must be either

a “a domestic building and loan association, a domestic savings and loan

association, [or] a Federal savings and loan association” (and also must meet the

three tests) to qualify as a DBLA for purposes of the code. Section 7701(a)(4)’s

definition of “domestic” requires organization under state or federal law. 26

U.S.C. § 7701(a)(4) (defining “domestic” as “created or organized in the United

States or under the law of the United States or of any State”). Therefore,

“domestic building and loan association” or “domestic savings and loan

association” must mean a building (or savings) and loan association organized as

such under the law of the state of Florida (in this case) or the United States. An

association that performs similar or even identical functions to a DBLA, but that is

not organized under state or federal law as one of the statutorily delineated

associations, cannot qualify under the plain meaning of the statute. We note that

in a 1990 Revenue Ruling directly on point, the IRS concluded that an institution

chartered as a bank could not qualify as a DBLA under § 7701. Rev. Rul. 90-54,

1990-2 C.B. 270. Rejecting a functional test, the Service explained that the

introductory language of subpart (a)(19) set forth a threshold requirement:

      “[an institution must] be one of the three types listed . . . It is . . . not enough

      that substantially all of the business of the association is confined to making

                                            7
       loans to members. It must still be a domestic building and loan association,

       a domestic savings and loan association, or a Federal savings and loan

       association [to qualify as a DBLA].”



Id. (internal quotations and citations omitted). We have noted that “[a]lthough

revenue rulings do not have the force of law, they are entitled to respectful

consideration.” United States v. Howard, 855 F.2d 832, 836 (11th Cir. 1988)

(internal quotations and citations omitted). Therefore, based on a plain reading of

the statute, buttressed by the agency’s interpretation of the provisions, we

conclude that a financial institution chartered as a bank shall be allowed no

deduction for a reasonable addition to a reserve for bad debts under § 593.5

   5
     Barnett relies in part on the language of Regulation 301.7701-13A(a), defining the term DBLA
as “a domestic building and loan association, a domestic savings and loan association, a Federal
savings and loan association, and any other savings institution chartered and supervised as a savings
and loan or similar association under Federal or State law which meets the [tests described in IRC
§ 7701(a)(19)].” Treas. Reg. § 301.7701-13A(a), 26 C.F.R. § 301.7701-13A, (emphasis added). The
Regulation’s reference to “other savings institution[s] chartered . . . as a savings and loan”
acknowledges the reality that state statutes may vary in the labels given to state-chartered
institutions. The language does not indicate a willingness to accept any type of state institution,
regardless of charter attainment. The reference to “similar association” likewise provides flexibility
because some states have no statute governing the creation of savings and loan associations and
therefore other “similar associations” can apply to “fill the role served in other states by savings and
loan associations.” Priv. Ltr. Rul 98-36-030 (Sept. 4, 1998) (concluding that state chartered stock
cooperative bank that operated functionally as a DBLA and met § 7701(a)(19)’s tests was eligible
for reserve method of accounting -- even though bank not chartered as a savings and loan association
-- because state in which bank was organized had no statute governing creation of savings and loan
associations).


                                                   8
                                 Conclusion



       We conclude that § 7701(a)(19) imposes, as a threshold requirement, that an

institution attain a state or federal building (or savings) and loan association

charter to qualify for the preferential tax treatment granted to DBLA’s under §

593.

       AFFIRMED.




                                           9
