Capital; Capital Adequacy Guidelines — 1994-12-22 [94-31441]

The Board of Governors of the Federal Reserve System (Board or Federal Reserve) is revising its capital adequacy guidelines for state member banks and bank holding companies to establish a limitation on the amount of certain deferred tax assets that may be included in (that is, not deducted from) Tier 1 capital for risk-based and leverage capital purposes. The capital rule was developed in response to the Financial Accounting Standards Board's (FASB) issuance of Statement No. 109, ``Accounting for Income Taxes'' (FAS 109). Under the final rule, deferred tax assets that can only be realized if an institution earns taxable income in the future are limited for regulatory capital purposes to the amount that the institution expects to realize within one year of the quarter-end report date--based on its projection of taxable income--or 10 percent of Tier 1 capital, whichever is less.