2006 Code of Virginia § 58.1-1206 - Deductions from gross capital

58.1-1206. Deductions from gross capital.

A. There shall be deducted from the gross capital otherwise ascertainableunder 58.1-1205:

1. The assessed value of real estate if otherwise taxed in this Commonwealthwhich is owned by such bank, or is used or occupied by such bank, if held inthe name of a majority-owned subsidiary of the bank or of a bank holdingcompany which owns a majority of the capital stock of such bank or of anywholly-owned subsidiary of the bank holding company which owns the majorityof the capital stock of such bank and the assessed value, up to the amount ofthe unencumbered equity, of real estate in the nature of improvements whichare owned by the bank, or used or occupied by the bank and held by amajority-owned subsidiary or a bank holding company or a wholly-ownedsubsidiary of a bank holding company, even if assessed in the name of someother person because of the ownership of the underlying land by such person.Real estate used or occupied by a subsidiary or originally conveyed ascollateral for loans made by a subsidiary of the bank and reacquired uponforeclosure of mortgage loans will be deemed to be used or occupied by thebank. The deduction for assessed value of real estate shall be the mostrecent assessment made prior to January 1 of the current bank franchise taxyear for real estate owned by the bank or affiliate on January 1 of thecurrent year.

2. The book value of tangible personal property which shall be held for leaseand is otherwise taxed which is owned by such bank or in the name of amajority-owned subsidiary of the bank. If the bank does not own all the stockof such subsidiary, it shall be entitled to deduct only such portion of theassessed value of the real estate and the value of such tangible personalproperty as the common stock it owns in such subsidiary bears to the wholeissue of common stock of such corporation.

3. An amount which shall equal the same percentage of the gross capitalaccount, defined as its capital, surplus and undivided profits as set forthin 58.1-1205 at December 31 next preceding as the obligations of the UnitedStates bear to the total assets of the bank. Such percentage of U.S.obligations shall be determined as of the four most recent (or less in caseof a new bank) Reports of Condition and the percentage obtained shall beaveraged. For purposes of computing such percentage, total assets shall notinclude the goodwill described in subdivision 5. The obligations of theUnited States as used herein shall include all obligations of the UnitedStates exempt from taxation under 31 U.S.C. 3124, of the United StatesConstitution or any other statute, or any instrumentality or agency of theUnited States which obligations shall be exempt from state or local taxationunder the United States Constitution or any statute of the United States.

4. The amount of retained earnings and surplus of subsidiaries to the extentincluded in the gross capital of the bank. In addition, any portion of theamount added to federal taxable income pursuant to subdivision B 9 of 58.1-402 by a corporation that is for interest expenses and costs paid to thebank for a loan or other obligation made by the bank to such corporationshall be deducted from the gross capital of the bank provided that (i) at thetime of payment of such portion to the bank, the bank was a related member ofthe corporation, and (ii) such portion has not otherwise been deducted fromgross capital. For purposes of this subdivision, the terms "interestexpenses and costs" and "related member" mean the same as those terms aredefined in 58.1-302.

5. Any amount equal to 90 percent of goodwill created in connection with anyacquisition or merger occurring on or after July 1, 2001.

B. For purposes of this section, "goodwill" shall be determined usinggenerally accepted accounting principles.

(Code 1950, 58-485.08; 1980, c. 578; 1981, c. 432; 1984, c. 675; 2002, c.667; 2004, Sp. Sess. I, c. 3.)