Vainisi Decision: S-Corporation Banks Are Not Completely in the Clear

With the continued – albeit slow – economic recovery, many banks are returning to the tax-exempt bond markets and, in turn, generating tax-exempt interest income. While the Vainisi v. Commissioner of Internal Revenue appeals court case resulted in a favorable ruling for S-corporation banks investing in tax-exempt securities, such banks nonetheless must pay close attention to the specific type of tax-exempt securities they purchase if they are to reap the benefits.