2019 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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