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| ## Comptroller of the Currency                                        |
|                                                                       |
| > Administrator of National Banks                                     |
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Washington, DC 20219

January 21, 1993 **Interpretive Letter #1042**

#### December 2005

#### 12 USC 29

Dear **\[ \]**:

Your letter to Randall M. Ryskamp, Senior Attorney, Securities,
Investments, and Fiduciary Practices Division has been referred to me
for response. You inquired whether the bank's retention of a
condominium, which was contributed to the bank by its now-dissolved
holding company and is used for bank purposes only, is permissible under
12 U.S.C. § 29. Subject to the conditions discussed below, I believe the
bank may legally retain the condominium for business use.

**\[ \]** ("Bank") is becoming once again a free-standing national bank
by virtue of the dissolution of its holding company. As part of that
dissolution, the holding company contributed at no cost, and the Bank
accepted, a certain condominium, which has been used exclusively for
purposes of the Bank's business. At certain times of the year, **\[ \]**
is so crowded that commercial accommodations are not available for the
Bank's auditors, consultants and certain off-island customers or
potential customers. The Bank wishes to continue its past practice of
using the condominium property exclusively for the accommodation of such
parties as necessary for the business purposes of the Bank. The Bank
intends to carry the condominium on its books at no more than \$1.00 and
will claim the condominium fee, which includes virtually all amounts
necessary for upkeep, as a business deduction on its tax return.

A national may purchase, hold and convey real estate only for purposes
specified in 12 U.S.C. § 29. One such purposes is "\[s\]uch as shall be
necessary for its accommodation in the transaction of its business." 12
U.S.C. § 29 (First). Real estate necessary to the accommodation of the
bank's business includes real estate other than that upon which bank
buildings are located. [See]{.underline} 12 C.F.R. § 7.3005. Because
providing accommodations for outside consultants, auditors and customers
especially when other commercial lodging is not readily available, is a
legitimate business concern of the Bank, the property in this case would
fall within the meaning contemplated by the statute.

In light of the foregoing, I would pose no legal objection to retaining
the condominium for business purposes. Please not, however, that this
position is subject to the following conditions. If at any time the
Revenue Service disallows as a deductible business expense to the Bank
any expense incurred in connection with the condominium on the ground
that the property was not used exclusively for bank purposes, the total
amount of such expenses should be reimburses by any Bank personnel whose
personal use of the property was a cause of the disallowance. In
addition, if the Bank discontinues using the condominium for business
purposes, it must dispose of the property in a manner consistent with 12
C.F.R. § 7.3025.

I trust this letter is responsive to your inquiry.

Sincerely,

/s/ William B. Glidden

William B. Glidden

Assistant Director

Bank Operations and Assets Division