§237-24.8 - Amounts not taxable for financial institutions.

[§237-24.8] Amounts not taxable forfinancial institutions. (a) In addition to the amounts not taxable undersection 237-24, this chapter shall not apply to amounts received by:

(1) Financial institutions from:

(A) Interest, discount, points, commitmentfees, loan fees, loan origination charges, and finance charges which are partof the computed annual percentage rate of interest and which are contracted andreceived for the use of money;

(B) Leasing of personal property;

(D) Gains resulting from changes in foreigncurrency exchange rates but not including commissions or compensation derivedfrom the purchase or sale of foreign currency or numismatic currency whetherlegal tender or not;

(E) The servicing and sale of loans contractedfor and received by the financial institution; and

(F) Interest received from the investment ofdeposits received by the financial institution from financial or debtinstruments;

(2) Trust companies or trust departments of financialinstitutions from:

(A) Trust agreements and retirement planswhere the trust companies or trust departments are acting as fiduciaries;

(B) Custodial agreements; and

(C) Activities relating to the generalservicing of fiduciary/custodial accounts held by the trust companies or trustdepartments; and

(3) Financial corporations acting as interbankbrokers as defined by chapter 241 from brokerage services.

(b) As used in this section:

"Activities relating to the generalservicing of fiduciary/custodial accounts" means those activitiesperformed by trust companies which are directly or indirectly performed withinthe fiduciary/custodial relationship between the trust company or trustdepartment of a financial institution and its client and which are not offeredto any person outside of the fiduciary/custodial relationship.

"Annual percentage rate" and"finance charge" have the same meaning as defined in the federalTruth in Lending Act (15 U.S.C. sections 1605(a) to (c) and 1606).

"Deposit" means:

(1) Money or its equivalent received or held by afinancial institution in the usual course of business and for which it hasgiven or is obligated to give credit to:

(A) A commercial (including public deposits),checking, savings, time, or thrift account;

(B) A check or draft drawn against a depositaccount and certified by the financial institution;

(D) A traveler's check, on which the financialinstitution is primarily liable;

(2) Trust funds received or held by a financialinstitution, whether held in the trust department or held or deposited in anyother department of the financial institution;

(3) Money received or held by a financialinstitution, or the credit given for money or its equivalent received or heldby a financial institution in the usual course of business for a special orspecific purpose, regardless of the legal relationship thereby established,including, without being limited to, escrow funds, funds held as security foran obligation due the financial institution or others (including funds held asdealers' reserves) or for securities loaned by the financial institution, fundsdeposited by a debtor to meet maturing obligations, funds deposited as advancepayment on subscriptions to United States government securities, funds held fordistribution or purchase of securities, funds held to meet the financialinstitution's acceptances or letters of credit, and withheld taxes;

(4) Outstanding drafts, cashier's checks, money orders,or other officer's checks issued in the usual course of business for anypurpose; or

(5) Money or its equivalent held as a credit balanceby a financial institution on behalf of its customer if the financialinstitution is engaged in soliciting and holding the balances in the regularcourse of its business.

"Financial institution" means banks,building and loan associations, development companies, financial corporations,financial services loan companies, small business investment companies,financial holding companies, mortgage loan companies, and trust companies allas defined in chapter 241.

"Leasing of personal property" occursif:

(1) The lease is to serve as the functionalequivalent of an extension of credit to the lessee of the property;

(2) The property to be leased is acquiredspecifically for the leasing transaction under consideration, or was acquiredspecifically for an earlier leasing transaction;

(3) The lease is on a nonoperating basis, i.e., thefinancial institution may not, directly or indirectly:

(A) Provide for the maintenance, repair,replacement, or servicing of the leased property during the lease term;

(B) Purchase parts and accessories in bulk orfor an individual property after the lessee has taken delivery of the property;or

(4) At the inception of the lease the effect of thetransaction will yield a return that will compensate the lessor financialinstitution for not less than the lessor's full investment in the property plusthe estimated total cost of financing the property over the term of the lease,from:

(A) Rentals;

(B) Estimated tax benefits (capital goodsexcise tax credit, net economic gain from tax deferral from accelerateddepreciation, and other tax benefits with a substantially similar effect); and

(5) The maximum lease term during which the lessorfinancial institution must recover the lessor's full investment in theproperty, plus the estimated total cost of financing the property, shall beforty years; and

(6) At the expiration of the lease (including anyrenewals or extensions with the same lessee), all interest in the propertyshall be either liquidated or leased again on a nonoperating basis as soon aspracticable (in no event later than two years from the expiration of thelease), but in no case shall the lessor retain any interest in the propertybeyond fifty years after the lessor's acquisition of the property. [L 1992, c106, §4]