KRS § 136.530 — KY Code / Title XI / Chapter 136 / Section 136.530
136.530 Calculation of receipts factor
Status: in_force

136.530 Calculation of receipts factor.

(1) The receipts factor is a fraction, the numerator of which is the receipts of the

financial institution in this Commonwealth during the taxable year as determined by

subsection (2) of this section and the denominator of which is the receipts of the

financial institution within and without this Commonwealth during the taxable year.

Receipts shall include the following:

(a) Receipts from the lease or rental of real property owned by the financial

institution;

(b) Receipts from the lease or rental of tangible personal property owned by the

financial institution;

(c) Interest and fees or penalties in the nature of interest from loans secured by

real property;

(d) Interest and fees or penalties in the nature of interest from loans not secured

by real property;

(e) Net gains from the sale of loans. Net gains from the sale of loans includes

income recorded under the coupon stripping rules of Section 1286 of the

Internal Revenue Code;

(f) Interest and fees or penalties in the nature of interest from credit card

receivables and receipts from fees charged to card holders, such as annual

fees;

(g) Net gains, but not less than zero (0), from the sale of credit card receivables;

(h) All credit card issuer's reimbursement fees;

(i) Receipts from merchant discount. Receipts from merchant discount shall be

computed net of any cardholder charge backs, but shall not be reduced by any

interchange transaction fees or by any issuer's reimbursement fees paid to

another for charges made by its card holders;

(j) Loan servicing fees derived from loans secured by real property;

(k) Loan servicing fees derived from loans not secured by real property;

(l) Interest, dividends, net gains, but not less than zero (0), and other income

from investment assets and activities and from trading assets and activities.

Investment assets and activities and trading assets and activities include but

are not limited to investment securities, trading account assets, federal funds,

securities purchased and sold under agreements to resell or repurchase,

options, futures contracts, forward contracts, notional principal contracts such

as swaps, equities, and foreign currency transactions. The receipts factor shall

include the following amounts:

1. The amount by which interest from federal funds sold and securities

purchased under resale agreements exceeds interest expense on federal

funds purchased and securities sold under repurchase agreements; and

2. The amount by which interest, dividends, gains, and other income from

trading assets and activities, including but not limited to assets and

activities in the matched book, in the arbitrage book, and foreign

currency transactions, exceed amounts paid in lieu of interest, amounts

paid in lieu of dividends, and losses from these assets and activities;

(m) All receipts derived from sales that would be included in the factor established

by KRS 141.901; and

(n) Receipts from services not otherwise specifically listed.

(2) A determination of whether receipts should be included in the numerator of the

fraction shall be made as follows:

(a) Receipts from the lease or rental of real property owned by the financial

institution shall be included in the numerator if the property is located within

this Commonwealth or receipts from the sublease of real property if the

property is located within this Commonwealth.

(b) 1. Except as described in subparagraph 2. of this paragraph, receipts from

the lease or rental of tangible personal property owned by the financial

institution shall be included in the numerator if the property is located

within this Commonwealth when it is first placed in service by the

lessee.

2. Receipts from the lease or rental of transportation property owned by the

financial institution are included in the numerator of the receipts factor

to the extent that the property is used in this Commonwealth. The extent

an aircraft will be deemed to be used in this Commonwealth and the

amount of receipts that is to be included in the numerator of this

Commonwealth's receipts factor is determined by multiplying all the

receipts from the lease or rental of the aircraft by a fraction, the

numerator of which is the number of landings of the aircraft in this

Commonwealth and the denominator of which is the total number of

landings of the aircraft. If the extent of the use of any transportation

property within this Commonwealth cannot be determined, then the

property shall be deemed to be used wholly in the state in which the

property has its principal base of operations. A motor vehicle shall be

deemed to be used wholly in the state in which it is registered.

(c) 1. Interest and fees or penalties in the nature of interest from loans secured

by real property shall be included in the numerator if the property is

located within this Commonwealth. If the property is located both within

this Commonwealth and one (1) or more other states, receipts shall be

included if more than fifty percent (50%) of the fair market value of the

real property is located within this Commonwealth. If more than fifty

percent (50%) of the fair market value of the real property is not located

within any one (1) state, then the receipts described in this subparagraph

shall be included in the numerator if the borrower is located in this

Commonwealth.

2. The determination of whether the real property securing a loan is located

within this Commonwealth shall be made as of the time the original

agreement was made, and any subsequent substitutions of collateral shall

be disregarded.

(d) Interest and fees or penalties in the nature of interest from loans not secured

by real property shall be included in the numerator if the borrower is located

in this Commonwealth.

(e) Net gains from the sale of loans shall be included in the numerator as provided

in subparagraphs 1. and 2. of this paragraph. Net gains from the sale of loans

includes income recorded under the coupon stripping rules of Section 1286 of

the Internal Revenue Code.

1. The amount of net gains, but not less than zero (0), from the sale of

loans secured by real property included in the numerator is determined

by multiplying net gains by a fraction the numerator of which is the

amount included in the numerator of the receipts factor pursuant to

paragraph (c) of this subsection and the denominator of which is the

total amount of interest and fees or penalties in the nature of interest

from loans secured by real property.

2. The amount of net gains, but not less than zero (0), from the sale of

loans not secured by real property included in the numerator is

determined by multiplying net gains by a fraction the numerator of

which is the amount included in the numerator of the receipts factor

pursuant to paragraph (d) of this subsection and the denominator of

which is the total amount of interest and fees or penalties in the nature of

interest from loans not secured by real property.

(f) Interest and fees or penalties in the nature of interest from credit card

receivables and receipts from fees charged to card holders, such as annual

fees, shall be included in the numerator if the billing address of the card

holder is in this Commonwealth.

(g) Net gains, but not less than zero (0), from the sale of credit card receivables to

be included in the numerator shall be determined by multiplying the amount

established in paragraph (g) of subsection (1) of this section by a fraction the

numerator of which is the amount included in the numerator of the receipts

factor pursuant to paragraph (f) of this subsection and the denominator of

which is the financial institution's total amount of interest and fees or penalties

in the nature of interest from credit card receivables and fees charged to card

holders.

(h) Credit card issuer's reimbursement fees to be included in the numerator shall

be determined by multiplying the amount established in paragraph (h) of

subsection (1) of this section by a fraction the numerator of which is the

amount included in the numerator of the receipts factor pursuant to paragraph

(f) of this subsection and the denominator of which is the financial

institution's total amount of interest and fees or penalties in the nature of

interest from credit card receivables and fees charged to card holders.

(i) Receipts from merchant discount shall be included in the numerator if the

commercial domicile of the merchant is in this Commonwealth. Receipts from

merchant discount shall be computed net of any cardholder charge backs but

shall not be reduced by any interchange transaction fees or by any issuer's

reimbursement fees paid to another for charges made by its card holders.

(j) 1. a. Loan servicing fees derived from loans secured by real property to

be included in the numerator shall be determined by multiplying

the amount determined under paragraph (j) of subsection (1) of this

section by a fraction the numerator of which is the amount

included in the numerator of the receipts factor pursuant to

paragraph (c) of this subsection and the denominator of which is

the total amount of interest and fees or penalties in the nature of

interest from loans secured by real property.

b. Loan servicing fees derived from loans not secured by real

property to be included in the numerator shall be determined by

multiplying the amount determined under paragraph (k) of

subsection (1) of this section by a fraction the numerator of which

is the amount included in the numerator of the receipts factor

pursuant to paragraph (d) of this subsection and the denominator

of which is the total amount of interest and fees or penalties in the

nature of interest from loans not secured by real property.

2. In circumstances in which the financial institution receives loan

servicing fees for servicing either the secured or the unsecured loans of

another, the numerator of the receipts factor shall include the fees if the

borrower is located in this Commonwealth.

(k) Receipts from services not otherwise apportioned under this section shall be

included in the numerator if the service is performed in this Commonwealth.

If the service is performed both within and without this Commonwealth, the

numerator of the receipts factor includes receipts from services not otherwise

apportioned under this section, if a greater proportion of the income-

producing activity is performed in this Commonwealth based on cost of

performance.

(l) 1. The numerator of the receipts factor includes interest, dividends, net

gains, but not less than zero (0), and other income from investment

assets and activities and from trading assets and activities described in

paragraph (l) of subsection (1) of this section that are attributable to this

Commonwealth.

a. The amount of interest, dividends, net gains, but not less than zero

(0), and other income from investment assets and activities in the

investment account to be attributed to this Commonwealth and

included in the numerator is determined by multiplying all income

from the assets and activities by a fraction the numerator of which

is the average value of the assets that are properly assigned to a

regular place of business of the financial institution within this

Commonwealth and the denominator of which is the average value

of all the assets.

b. The amount of interest from federal funds sold and purchased and

from securities purchased under resale agreements and securities

sold under repurchase agreements attributable to this

Commonwealth and included in the numerator is determined by

multiplying the amount described in subparagraph 1. of paragraph

(l) of subsection (1) of this section from funds and securities by a

fraction the numerator of which is the average value of federal

funds sold and securities purchased under agreements to resell

which are properly assigned to a regular place of business of the

financial institution within this Commonwealth and the

denominator of which is the average value of all funds and

securities.

c. The amount of interest, dividends, gains, and other income from

trading assets and activities, including but not limited to assets and

activities in the matched book, in the arbitrage book, and foreign

currency transactions, but excluding amounts described in

subdivisions a. and b. of this subparagraph, attributable to this

Commonwealth and included in the numerator is determined by

multiplying the amount described in subparagraph 2. of paragraph

(l) of subsection (1) of this section by a fraction the numerator of

which is the average value of trading assets which are properly

assigned to a regular place of business of the financial institution

within this Commonwealth and the denominator of which is the

average value of all assets.

d. For purposes of this subparagraph, average value shall be

determined using the rules for determining the average value of

tangible personal property set forth in KRS 136.535(3) and (4).

2. In lieu of using the method set forth in subparagraph 1. of this

paragraph, the financial institution may elect, or the department may

require in order to fairly represent the business activity of the financial

institution in this Commonwealth, the use of the method set forth in this

subparagraph.

a. The amount of interest, dividends, net gains, but not less than zero

(0), and other income from investment assets and activities in the

investment account to be attributed to this Commonwealth and

included in the numerator is determined by multiplying all income

from assets and activities by a fraction the numerator of which is

the gross income from assets and activities which are properly

assigned to a regular place of business of the financial institution

within this Commonwealth and the denominator of which is the

gross income from all assets and activities.

b. The amount of interest from federal funds sold and purchased and

from securities purchased under resale agreements and securities

sold under repurchase agreements attributable to this

Commonwealth and included in the numerator is determined by

multiplying the amount described in subparagraph 1. of paragraph

(l) of subsection (1) of this section from funds and securities by a

fraction the numerator of which is the gross income from funds

and securities which are properly assigned to a regular place of

business of the financial institution within this Commonwealth and

the denominator of which is the gross income from all funds and

securities.

c. The amount of interest, dividends, gains, and other income from

trading assets and activities, including but not limited to assets and

activities in the matched book, in the arbitrage book and foreign

currency transactions, but excluding amounts described in

subdivisions a. and b. of this subparagraph, attributable to this

Commonwealth and included in the numerator is determined by

multiplying the amount described in subparagraph 2. of paragraph

(l) of subsection (1) of this section by a fraction the numerator of

which is the gross income from trading assets and activities which

are properly assigned to a regular place of business of the financial

institution within this Commonwealth and the denominator of

which is the gross income from all assets and activities.

3. If the financial institution elects or is required by the department to use

the method set forth in subparagraph 2. of this paragraph, it shall use this

method on all subsequent returns unless the financial institution receives

prior permission from the department to use, or the department requires,

a different method.

4. The financial institution shall have the burden of proving that an

investment asset or activity or trading asset or activity was properly

assigned to a regular place of business outside this Commonwealth by

demonstrating that the day-to-day decisions regarding the asset or

activity occurred at a regular place of business outside this

Commonwealth. Where the day-to-day decisions regarding an

investment asset or activity or trading asset or activity occur at more

than one (1) regular place of business and one (1) regular place of

business is in this Commonwealth and one (1) regular place of business

is outside this Commonwealth, the asset or activity shall be considered

to be located at the regular place of business of the financial institution

where the investment or trading policies or guidelines with respect to the

asset or activity are established. Unless the financial institution

demonstrates to the contrary, the policies and guidelines shall be

presumed to be established at the commercial domicile of the financial

institution.

(m) The numerator of the receipts factor includes all other receipts derived from

sales as determined in KRS 141.901.

(n) 1. All receipts that would be assigned under this section to a state in which

the financial institution is not taxable shall be included in the numerator

of the receipts factor, if the financial institution's commercial domicile is

in this Commonwealth.

2. For purposes of subparagraph 1. of this paragraph, "taxable" means

either:

a. That a financial institution is subject in another state to a net

income tax, a franchise tax measured by net income, a franchise

tax for the privilege of doing business, a corporate stock tax

including a bank shares tax, a single business tax, an earned

surplus tax, or any tax which is imposed upon or measured by net

income; or

b. That another state has statutory authority to subject the financial

institution to any of the taxes in subdivision a. of this

subparagraph, whether in fact the state does or does not impose the

tax.