{"data":{"id":"us-ky/krs-136.515","jurisdiction":"us-ky","citation":"KRS 136.515","heading":"Net capital determination -- Effect of changes in identity, form, or place of","body":"organization -- Effect of combination of financial institutions.\n(1) Net capital shall be determined by adding the value determined under subsection (2)\nof this section for the current taxable and preceding four (4) calendar years and\ndividing the resulting sum by five (5). If a financial institution has not been in\nexistence for a period of five (5) calendar years, net capital shall be determined by\nadding together the value s determined under subsection (2) of this section for the\nnumber of calendar years the financial institution has been in existence and dividing\nthe resulting sum by the number of years the financial institution has been in\nexistence. For purposes of this section, a partial year shall be treated as a full year.\n(2) (a) The value of net capital for each year for purposes of subsection (1) of this\nsection shall be determined by:\n1. Adding together the book value of:\na. Capital stock paid in;\nb. Surplus;\nc. Undivided profits and capital reserves;\nd. Net unrealized holding gains or losses on available for sale\nsecurities; and\ne. Cumulative foreign currency translation adjustments; and\n2. Deducting from the total determined under subparagraph 1. of this\nsubsection an amount equal to the same percentage of the total as the\nbook value of United States obligations and Kentucky obligations bears\nto the book value of the total assets of the financial institution.\n(b) For purposes of this subsection, net capital shall in clude equity related to\ninvestment in subsidiaries.\n(c) For purposes of this subsection, except as provided in paragraphs (d) and (e)\nof this subsection, the foregoing book values and deductions for United States\nobligations and Kentucky obligations for each year shall be determined by the\nreports of condition for each quarter filed in accordance with the requirements\nof the Board of Governors of the Federal Reserve System, the Comptroller of\nthe Currency, the Federal Deposit Insurance Corporation, or other applicable\nregulatory authority. Book values shall be c alculated by averaging the\nquarterly book values as determined by the reports of condition.\n(d) For any year in which a financial institution does not file four (4) quarterly\nreports of condition, book values and deductions for United States obligations\nand Kentucky obligations shall be determined by adding together the\nrespective book values and deductions for United States obligations and\nKentucky obligations as determined by each quarterly report of condition filed\nfor the year and the respective book va lues and deductions for United States\nobligations and Kentucky obligations determined in accordance with generally\naccepted accounting principles as of the end of each of the remaining quarters\nand dividing the resulting sums by four (4).\n(e) For any calendar year in which a financial institution ceases to be in existence\nfor four (4) quarters, other than by combination with another financial\ninstitution, the book value for that year shall be determined by adding together\nthe book values and deductions for United States obligations and Kentucky\nobligations for each quarter in which the financial institution was in existence\nand dividing the sums by four (4).\n(f) In the case of a financial institution which does not file reports of condition,\nbook values shal l be determined in accordance with generally accepted\naccounting principles.\n(3) For purposes of this section:\n(a) A change in identity, form, or place of organization of one (1) financial\ninstitution shall be treated as if a single financial institution h ad been in\nexistence prior to as well as after the change;\n(b) The combination of two (2) or more financial institutions into one (1) shall be\ntreated as if the constituent financial institutions had been a single financial\ninstitution in existence prior t o as well as after the combination, and the book\nvalues and deductions for United States obligations and Kentucky obligations\nfrom the reports of condition of the constituent institutions shall be combined.\nA combination shall include any acquisition requi red to be accounted for by\nthe surviving financial institution under the pooling of interest method in\naccordance with generally -accepted accounting principles or a statutory\nmerger or consolidation; and\n(c) 1. The combination of one (1) or more financial institutions and one (1) or\nmore savings and loan associations taxable under KRS 136.300 into a\nsingle financial institution shall be treated for the taxable year in which\nthe combination occurred as if the single financial institution had been in\nexistence prior to as well as after the combination, and the book values\nand deductions for United States obligations and Kentucky obligations\nfrom the reports of condition of the financial institution and the reports\nto the federal regulatory agency which are the  equivalent of reports of\ncondition for a savings and loan association shall be combined.\n2. The conversion of a savings and loan association taxable under KRS\n136.300 into a financial institution shall be treated for the taxable year in\nwhich the conversion occurred as if the savings and loan association had\nbeen a financial institution prior to as well as after the conversion, and\nthe book values and deductions for United States obligations and\nKentucky obligations from the reports to the federal regulato ry agency\nwhich are the equivalent of reports of condition for a savings and loan\nassociation shall be used.\n3. The savings and loan association shall not be relieved of the\nresponsibilities of filing and paying tax under KRS 136.300 for taxable\nyears prior to the year of any combination or conversion.\n4. Notwithstanding any other provision of KRS 136.500 to 136.575, the\nfinancial institution resulting from a combination with or conversion of\na saving and loan association shall receive a credit on the bank franchise\ntax return equal to the amount of tax paid under KRS 136.300 for the\nassessment date occurring within the taxable year during which the\ncombination or conversion takes place for bank franchise tax purposes.","path":["KRS Chapter 136"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=28568","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:27Z","sha256":"f31e8fd1b3b35fa5dad039189bc5f4b05478673504f2d19f0bd64831705d8b98","source_id":"us-ky","stale":false,"prev":"us-ky/krs-136.510","next":"us-ky/krs-136.520"},"notice":"GroundRules: Original legal text. Not legal advice."}