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

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

(1) Financial institutions from:

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

(B) Leasing of personal property;

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

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

(F) Interest received from the investment of
deposits received by the financial institution from financial or debt
instruments;

(2) Trust companies or trust departments of financial
institutions from:

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

(B) Custodial agreements; and

(C) Activities relating to the general
servicing of fiduciary/custodial accounts held by the trust companies or trust
departments; and

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

(b) As used in this section:

"Activities relating to the general
servicing of fiduciary/custodial accounts" means those activities
performed by trust companies which are directly or indirectly performed within
the fiduciary/custodial relationship between the trust company or trust
department of a financial institution and its client and which are not offered
to any person outside of the fiduciary/custodial relationship.

"Annual percentage rate" and
"finance charge" have the same meaning as defined in the federal
Truth 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 a
financial institution in the usual course of business and for which it has
given 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 deposit
account and certified by the financial institution;

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

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

(3) Money received or held by a financial
institution, or the credit given for money or its equivalent received or held
by a financial institution in the usual course of business for a special or
specific purpose, regardless of the legal relationship thereby established,
including, without being limited to, escrow funds, funds held as security for
an obligation due the financial institution or others (including funds held as
dealers' reserves) or for securities loaned by the financial institution, funds
deposited by a debtor to meet maturing obligations, funds deposited as advance
payment on subscriptions to United States government securities, funds held for
distribution or purchase of securities, funds held to meet the financial
institution'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 any
purpose; or

(5) Money or its equivalent held as a credit balance
by a financial institution on behalf of its customer if the financial
institution is engaged in soliciting and holding the balances in the regular
course 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 all
as defined in chapter 241.

"Leasing of personal property" occurs
if:

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

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

(3) The lease is on a nonoperating basis, i.e., the
financial 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 or
for an individual property after the lessee has taken delivery of the property;
or

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

(A) Rentals;

(B) Estimated tax benefits (capital goods
excise tax credit, net economic gain from tax deferral from accelerated
depreciation, and other tax benefits with a substantially similar effect); and

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

(6) At the expiration of the lease (including any
renewals or extensions with the same lessee), all interest in the property
shall be either liquidated or leased again on a nonoperating basis as soon as
practicable (in no event later than two years from the expiration of the
lease), but in no case shall the lessor retain any interest in the property
beyond fifty years after the lessor's acquisition of the property. [L 1992, c
106, §4]