2014 Kentucky Revised Statutes CHAPTER 136 - CORPORATION AND UTILITY TAXES 136.515 Net capital determination -- Effect of changes in identity, form, or place of organization -- Effect of combination of financial institutions.
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136.515 Net capital determination -- Effect of changes in identity, form, or
place of organization -- Effect of combination of financial institutions.
(1)
(2)
Net capital shall be determined by adding the value determined under
subsection (2) of this section for the current taxable and preceding four (4)
calendar years and dividing the resulting sum by five (5). If a financial
institution has not been in existence for a period of five (5) calendar years, net
capital shall be determined by adding together the values determined under
subsection (2) of this section for the number of calendar years the financial
institution has been in existence and dividing the resulting sum by the number
of years the financial institution has been in existence. For purposes of this
section, a partial year shall be treated as a full year.
(a) The value of net capital for each year for purposes of subsection (1) of
this section shall be determined by:
1.
Adding together the book value of:
a.
Capital stock paid in;
b.
Surplus;
c.
Undivided profits and capital reserves;
d.
Net unrealized holding gains or losses on available for sale
securities; and
e.
Cumulative foreign currency translation adjustments; and
2.
Deducting from the total determined under subparagraph 1. of this
subsection an amount equal to the same percentage of the total as
the book value of United States obligations and Kentucky obligations
bears to the book value of the total assets of the financial institution.
(b) For purposes of this subsection, net capital shall include equity related to
investment in subsidiaries.
(c) For purposes of this subsection, except as provided in paragraphs (d)
and (e) of this subsection, the foregoing book values and deductions for
United States obligations and Kentucky obligations for each year shall be
determined by the reports of condition for each quarter filed in accordance
with the requirements of the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, or other applicable regulatory authority. Book values shall be
calculated by averaging the quarterly book values as determined by the
reports of condition.
(d) For any year in which a financial institution does not file four (4) quarterly
reports of condition, book values and deductions for United States
obligations and Kentucky obligations shall be determined by adding
together the respective book values and deductions for United States
obligations and Kentucky obligations as determined by each quarterly
report of condition filed for the year and the respective book values and
deductions for United States obligations and Kentucky obligations
determined in accordance with generally accepted accounting principles
as of the end of each of the remaining quarters and dividing the resulting
sums by four (4).
(e)
(3)
For any calendar year in which a financial institution ceases to be in
existence for four (4) quarters, other than by combination with another
financial institution, the book value for that year shall be determined by
adding together the book values and deductions for United States
obligations and Kentucky obligations for each quarter in which the
financial institution was in existence and dividing the sums by four (4).
(f) In the case of a financial institution which does not file reports of
condition, book values shall be determined in accordance with generally
accepted accounting principles.
For purposes of this section:
(a) A change in identity, form, or place of organization of one (1) financial
institution shall be treated as if a single financial institution had been in
existence prior to as well as after the change;
(b) The combination of two (2) or more financial institutions into one (1) shall
be treated as if the constituent financial institutions had been a single
financial institution in existence prior to as well as after the combination,
and the book values and deductions for United States obligations and
Kentucky obligations from the reports of condition of the constituent
institutions shall be combined. A combination shall include any acquisition
required to be accounted for by the surviving financial institution under the
pooling of interest method in accordance with generally-accepted
accounting principles or a statutory merger or consolidation; and
(c) 1.
The combination of one (1) or more financial institutions and one (1)
or more savings and loan associations taxable under KRS 136.300
into a single financial institution shall be treated for the taxable year
in which the combination occurred as if the single financial institution
had been in existence prior to as well as after the combination, and
the book values and deductions for United States obligations and
Kentucky obligations from the reports of condition of the financial
institution and the reports to the federal regulatory agency which are
the equivalent of reports of condition for a savings and loan
association shall be combined.
2.
The conversion of a savings and loan association taxable under
KRS 136.300 into a financial institution shall be treated for the
taxable year in which the conversion occurred as if the savings and
loan association had been a financial institution prior to as well as
after the conversion, and the book values and deductions for United
States obligations and Kentucky obligations from the reports to the
federal regulatory agency which are the equivalent of reports of
condition for a savings and loan association shall be used.
3.
The savings and loan association shall not be relieved of the
responsibilities of filing and paying tax under KRS 136.300 for
taxable years prior to the year of any combination or conversion.
4.
Notwithstanding any other provision of KRS 136.500 to 136.575, the
financial institution resulting from a combination with or conversion
of a saving and loan association shall receive a credit on the bank
franchise tax return equal to the amount of tax paid under KRS
136.300 for the assessment date occurring within the taxable year
during which the combination or conversion takes place for bank
franchise tax purposes.
Effective:April 7, 1998
History: Amended 1998 Ky. Acts ch. 402, sec. 2, effective April 7, 1998. -- Created
1996 Ky. Acts ch. 254, sec. 5, effective July 15, 1996.
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