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Virginia Administrative Code (Last Updated: January 10, 2017) |
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Title 23. Taxation |
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Agency 10. Department of Taxation |
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Chapter 330. Bank Franchise Tax |
Section 20. Computation of net capital
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A. Generally. The net capital of a bank is computed as follows:
Compute gross capital by adding the following accounts as reported on the report of condition: (1) preferred stock, (2) common stock, (3) surplus, (4) undivided profits and reserve for contingencies and other capital reserves.
Deducting from the gross capital: (1) assessed value of real estate as set forth in 23VAC10-330-30, (2) book value of certain tangible personal property as set forth in 23VAC10-330-30, (3) the pro rata share of capital attributed to U.S. government obligations as set forth in 23VAC10-330-30, (4) certain capital accounts of bank subsidiaries as set forth in 23VAC10- 330-30, (5) the total of (a) the applicable amount of any reserve for loan losses as regulated herein and (b) the applicable amount of any reserve for marketable securities valuation as regulated herein.
B. Terms used in this section. The terms used in this section, requiring further explanation, and which are not regulated elsewhere are as follows:
1. Capital stock. "Capital stock" shall include all outstanding shares of capital stock of all classes as shown on the official report of condition of the bank or trust company.
2. Surplus. "Surplus" shall be the amount as shown on the official report of condition of the bank or trust company and shall include, if any, reserves for contingencies and other capital account reserves.
3. Undivided profits. "Undivided profits" shall be the amount as shown on the official report of condition of the bank or trust company.
4. Gross capital. "Gross capital" shall be the total of capital stock, surplus, and undivided profits as regulated herein.
5. Reserve for loan losses. An established reserve for loan losses, not in excess of the amount of reserve allowable by the Internal Revenue Service for federal taxable income tax purposes, is allowable in computing the net taxable capital of a bank.
If a portion of the reserve for loan losses allowable for federal income tax purposes is included in gross capital (surplus, undivided profits or surplus reserves) on the bank's official report of condition, such portion may be deducted from total capital in computing net taxable capital.
If the amount of reserve for loan losses deducted by the bank in computing total capital accounts shown on its report of condition exceeds the amount of reserve for loan losses allowable for federal income tax purposes, such excess must be added to total capital accounts in computing net taxable capital.
The details of all reserves for loan losses and any such deduction or addition must be reflected in Schedule G of Form 64, Bank Franchise Tax Return.
6. Valuation reserve for marketable securities. For purposes of computing net taxable capital, an established reserve carried on the books of the bank for valuation of marketable securities is allowable to the extent that such valuation reserve does not decrease the carrying value of securities (gross value of securities included in report of condition less valuation reserve) below the current market value of the securities on December 31 next preceding the due date for filing the bank franchise tax return.
If any portion of such allowable reserve is included in total capital accounts on the bank's report of condition, such portion may be deducted from total capital in computing net taxable capital.
Any portion of a valuation reserve included in computing total capital accounts which is in excess of an allowable reserve must be added to total capital in computing net taxable capital.
The details of all valuation reserves for marketable securities and the details of any such deduction or addition must be reflected on Schedule A of Form 64, Bank Franchise Tax Return.
7. Official report of condition. "Official report of condition" shall be the report of condition required by the Comptroller of the Currency, Department of the Treasury, or the Bureau of Financial Institutions, State Corporation Commission.
Historical Notes
Derived from VR630-15-1205, eff. January 1, 1985.