First Charter Financial Corp., Plaintiff-Appellee-Cross-Appellant v. United States of America, Defendant-Appellant-Cross-Appellee

SKOPIL, Circuit Judge:

FACTS

American Savings & Loan (“American”), a subsidiary of First Charter Financial Corporation, is a domestic building and loan association as defined in I.R.C. § 7701(a)(19). American reported its taxable income on the cash receipts method of accounting and its bad debt deduction under the reserve method. American loaned money secured, either directly or indirectly, by interests in real property. The direct security was a promissory note secured by a first lien deed of trust with a power of sale. Under the indirect financing method American bought the property and sold…