1. Short title This Act may be cited as the Capital Access for Small Business Banks Act . 2. S corporation banks permitted to have 500 shareholders (a) In general Section 1361(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (7) Bank shareholder limit In the case of a bank (as defined in section 581) or a depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act ( 12 U.S.C. 1813(w)(1) )), subsection (b)(1)(A) shall be applied by substituting 500 shareholders for 100 shareholders . . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2017. 3. Bank issuance of preferred stock permitted (a) In General Section 1361 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (h) Treatment of Qualified Preferred Bank Stock (1) In general Qualified preferred bank stock shall not be taken into account as outstanding stock of the S corporation for purposes of this subchapter (other than subsection (b)(1)(A) and section 1368(g)). (2) Qualified preferred bank stock For purposes of this subsection, the term qualified preferred bank stock means stock which— (A) is issued by a bank (as defined in section 581) or a depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act ( 12 U.S.C. 1813(w)(1) )), (B) is not held by a person ineligible under subsection (b)(1) to be a shareholder of a small business corporation, and (C) meets the requirements of subparagraphs (A), (B), and (C) of section 1504(a)(4). . (b) Distributions includible in shareholder gross income and deductible by S corporation Section 1368 of such Code is amended by adding at the end the following new subsection: (g) Qualified preferred bank stock If a shareholder receives a distribution (not in part or full payment in exchange for stock) from an S corporation with respect to any qualified preferred bank stock (as