{"data":{"id":"us-ky/krs-136.530","jurisdiction":"us-ky","citation":"KRS 136.530","heading":"Calculation of receipts factor.","body":"(1) The receipts factor is a fraction, the numerator of which is the receipts of the\nfinancial institution in this Commonwealth during the taxable year as determined by\nsubsection (2) of this section and the denominator of which is the receipts of the\nfinancial institution within and without this Commonwealth during the taxable year.\nReceipts shall include the following:\n(a) Receipts from the lease or rental of real property owned by the financial\ninstitution;\n(b) Receipts from the lease or rental of tangible p ersonal property owned by the\nfinancial institution;\n(c) Interest and fees or penalties in the nature of interest from loans secured by\nreal property;\n(d) Interest and fees or penalties in the nature of interest from loans not secured\nby real property;\n(e) Net gains from the sale of loans. Net gains from the sale of loans includes\nincome recorded under the coupon stripping rules of Section 1286 of the\nInternal Revenue Code;\n(f) Interest and fees or penalties in the nature of interest from credit card\nreceivables and receipts from fees charged to card holders, such as annual\nfees;\n(g) Net gains, but not less than zero (0), from the sale of credit card receivables;\n(h) All credit card issuer's reimbursement fees;\n(i) Receipts from merchant discount. Receipts f rom merchant discount shall be\ncomputed net of any cardholder charge backs, but shall not be reduced by any\ninterchange transaction fees or by any issuer's reimbursement fees paid to\nanother for charges made by its card holders;\n(j) Loan servicing fees derived from loans secured by real property;\n(k) Loan servicing fees derived from loans not secured by real property;\n(l) Interest, dividends, net gains, but not less than zero (0), and other income\nfrom investment assets and activities and from trading asset s and activities.\nInvestment assets and activities and trading assets and activities include but\nare not limited to investment securities, trading account assets, federal funds,\nsecurities purchased and sold under agreements to resell or repurchase,\noptions, futures contracts, forward contracts, notional principal contracts such\nas swaps, equities, and foreign currency transactions. The receipts factor shall\ninclude the following amounts:\n1. The amount by which interest from federal funds sold and securitie s\npurchased under resale agreements exceeds interest expense on federal\nfunds purchased and securities sold under repurchase agreements; and\n2. The amount by which interest,  dividends, gains, and other income from\ntrading assets and activities, including but not limited to assets and\nactivities in the matched book, in the arbitrage book, and foreign\ncurrency transactions, exceed amounts paid in lieu of interest, amounts\npaid in lieu of dividends, and losses from these assets and activities;\n(m) All receipts derived from sales that would be included in the factor established\nby KRS 141.901; and\n(n) Receipts from services not otherwise specifically listed.\n(2) A determination of  whether receipts should be included in the numerator of the\nfraction shall be made as follows:\n(a) Receipts from the lease or rental of real property owned by the financial\ninstitution shall be included in the numerator if the property is located within\nthis Commonwealth or receipts from the sublease of real property if the\nproperty is located within this Commonwealth.\n(b) 1. Except as described in subparagraph 2. of this paragraph, receipts from\nthe lease or rental of tangible personal property owned by t he financial\ninstitution shall be included in the numerator if the property is located\nwithin this Commonwealth when it is first placed in service by the\nlessee.\n2. Receipts from the lease or rental of transportation property owned by the\nfinancial institution are included in the numerator of the receipts factor\nto the extent that the property is used in this Commonwealth. The extent\nan aircraft will be deemed to be used in this Commonwealth and the\namount of receipts that is to be included in the numerator  of this\nCommonwealth's receipts factor is determined by multiplying all the\nreceipts from the lease or rental of the aircraft by a fraction, the\nnumerator of which is the number of landings of the aircraft in this\nCommonwealth and the denominator of which  is the total number of\nlandings of the aircraft. If the extent of the use of any transportation\nproperty within this Commonwealth cannot be determined, then the\nproperty shall be deemed to be used wholly in the state in which the\nproperty has its principa l base of operations. A motor vehicle shall be\ndeemed to be used wholly in the state in which it is registered.\n(c) 1. Interest and fees or penalties in the nature of interest from loans secured\nby real property shall be included in the numerator if the pr operty is\nlocated within this Commonwealth. If the property is located both within\nthis Commonwealth and one (1) or more other states, receipts shall be\nincluded if more than fifty percent (50%) of the fair market value of the\nreal property is located with in this Commonwealth. If more than fifty\npercent (50%) of the fair market value of the real property is not located\nwithin any one (1) state, then the receipts described in this subparagraph\nshall be included in the numerator if the borrower is located in this\nCommonwealth.\n2. The determination of whether the real property securing a loan is located\nwithin this Commonwealth shall be made as of the time the original\nagreement was made, and any subsequent substitutions of collateral shall\nbe disregarded.\n(d) Interest and fees or penalties in the nature of interest from loans not secured\nby real property shall be included in the numerator if the borrower is located\nin this Commonwealth.\n(e) Net gains from the sale of loans shall be included in the numerator as provided\nin subparagraphs 1. and 2. of this paragraph. Net gains from the sale of loans\nincludes income recorded under the coupon stripping rules of Section 1286 of\nthe Internal Revenue Code.\n1. The amount of net gains, but not less than zero (0), from the  sale of\nloans secured by real property included in the numerator is determined\nby multiplying net gains by a fraction the numerator of which is the\namount included in the numerator of the receipts factor pursuant to\nparagraph (c) of this subsection and th e denominator of which is the\ntotal amount of interest and fees or penalties in the nature of interest\nfrom loans secured by real property.\n2. The amount of net gains, but not less than zero (0), from the sale of\nloans not secured by real property included  in the numerator is\ndetermined by multiplying net gains by a fraction the numerator of\nwhich is the amount included in the numerator of the receipts factor\npursuant to paragraph (d) of this subsection and the denominator of\nwhich is the total amount of interest and fees or penalties in the nature of\ninterest from loans not secured by real property.\n(f) Interest and fees or penalties in the nature of interest from credit card\nreceivables and receipts from fees charged to card holders, such as annual\nfees, s hall be included in the numerator if the billing address of the card\nholder is in this Commonwealth.\n(g) Net gains, but not less than zero (0), from the sale of credit card receivables to\nbe included in the numerator shall be determined by multiplying the amount\nestablished in paragraph (g) of subsection (1) of this section by a fraction the\nnumerator of which is the amount included in the numerator of the receipts\nfactor pursuant to paragraph (f) of this subsection and the denominator of\nwhich is the financial institution's total amount of interest and fees or penalties\nin the nature of interest from credit card receivables and fees charged to card\nholders.\n(h) Credit card issuer's reimbursement fees to be included in the numerator shall\nbe determined by mu ltiplying the amount established in paragraph (h) of\nsubsection (1) of this section by a fraction the numerator of which is the\namount included in the numerator of the receipts factor pursuant to paragraph\n(f) of this subsection and the denominator of whic h is the financial\ninstitution's total amount of interest and fees or penalties in the nature of\ninterest from credit card receivables and fees charged to card holders.\n(i) Receipts from merchant discount shall be included in the numerator if the\ncommercial domicile of the merchant is in this Commonwealth. Receipts from\nmerchant discount shall be computed net of any cardholder charge backs but\nshall not be reduced by any interchange transaction fees or by any issuer's\nreimbursement fees paid to another for charges made by its card holders.\n(j) 1. a. Loan servicing fees derived from loans secured by real property to\nbe included in the numerator shall be determined by multiplying\nthe amount determined under paragraph (j) of subsection (1) of this\nsection by a fraction the numerator of which is the amount\nincluded in the numerator of the receipts factor pursuant to\nparagraph (c) of this subsection and the denominator of which is\nthe total amount of interest and fees or penalties in the nature of\ninterest from loans secured by real property.\nb. Loan servicing fees derived from loans not secured by real\nproperty to be included in the numerator shall be determined by\nmultiplying the amount determined under paragraph (k) of\nsubsection (1) of this section by a fractio n the numerator of which\nis the amount included in the numerator of the receipts factor\npursuant to paragraph (d) of this subsection and the denominator\nof which is the total amount of interest and fees or penalties in the\nnature of interest from loans not secured by real property.\n2. In circumstances in which the financial institution receives loan\nservicing fees for servicing either the secured or the unsecured loans of\nanother, the numerator of the receipts factor shall include the fees if the\nborrower is located in this Commonwealth.\n(k) Receipts from services not otherwise apportioned under this section shall be\nincluded in the numerator if the service is performed in this Commonwealth.\nIf the service is performed both within and without this Commonweal th, the\nnumerator of the receipts factor includes receipts from services not otherwise\napportioned under this section, if a greater proportion of the income -\nproducing activity is performed in this Commonwealth based on cost of\nperformance.\n(l) 1. The numer ator of the receipts factor includes interest, dividends, net\ngains, but not less than zero (0), and other income from investment\nassets and activities and from trading assets and activities described in\nparagraph (l) of subsection (1) of this section that  are attributable to this\nCommonwealth.\na. The amount of interest, dividends, net gains, but not less than zero\n(0), and other income from investment assets and activities in the\ninvestment account to be attributed to this Commonwealth and\nincluded in the numerator is determined by multiplying all income\nfrom the assets and activities by a fraction the numerator of which\nis the average value of the assets that are properly assigned to a\nregular place of business of the financial institution within this\nCommonwealth and the denominator of which is the average value\nof all the assets.\nb. The amount of interest from federal funds sold and purchased and\nfrom securities purchased under resale agreements and securities\nsold under repurchase agreements attributable  to this\nCommonwealth and included in the numerator is determined by\nmultiplying the amount described in subparagraph 1. of paragraph\n(l) of subsection (1) of this section from funds and securities by a\nfraction the numerator of which is the average value of federal\nfunds sold and securities purchased under agreements to resell\nwhich are properly assigned to a regular place of business of the\nfinancial institution within this Commonwealth and the\ndenominator of which is the average value of all funds and\nsecurities.\nc. The amount of interest, dividends, gains, and other income from\ntrading assets and activities, including but not limited to assets and\nactivities in the matched book, in the arbitrage book, and foreign\ncurrency transactions, but excluding amounts described  in\nsubdivisions a. and b. of this subparagraph, attributable to this\nCommonwealth and included in the numerator is determined by\nmultiplying the amount described in subparagraph 2. of paragraph\n(l) of subsection (1) of this section by a fraction the numer ator of\nwhich is the average value of trading assets which are properly\nassigned to a regular place of business of the financial institution\nwithin this Commonwealth and the denominator of which is the\naverage value of all assets.\nd. For purposes of this s ubparagraph, average value shall be\ndetermined using the rules for determining the average value of\ntangible personal property set forth in KRS 136.535(3) and (4).\n2. In lieu of using the method set forth in subparagraph 1. of this\nparagraph, the financial  institution may elect, or the department may\nrequire in order to fairly represent the business activity of the financial\ninstitution in this Commonwealth, the use of the method set forth in this\nsubparagraph.\na. The amount of interest, dividends, net gain s, but not less than zero\n(0), and other income from investment assets and activities in the\ninvestment account to be attributed to this Commonwealth and\nincluded in the numerator is determined by multiplying all income\nfrom assets and activities by a frac tion the numerator of which is\nthe gross income from assets and activities which are properly\nassigned to a regular place of business of the financial institution\nwithin this Commonwealth and the denominator of which is the\ngross income from all assets and activities.\nb. The amount of interest from federal funds sold and purchased and\nfrom securities purchased under resale agreements and securities\nsold under repurchase agreements attributable to this\nCommonwealth and included in the numerator is determined  by\nmultiplying the amount described in subparagraph 1. of paragraph\n(l) of subsection (1) of this section from funds and securities by a\nfraction the numerator of which is the gross income from funds\nand securities which are properly assigned to a regular  place of\nbusiness of the financial institution within this Commonwealth and\nthe denominator of which is the gross income from all funds and\nsecurities.\nc. The amount of interest, dividends, gains, and other income from\ntrading assets and activities, including but not limited to assets and\nactivities in the matched book, in the arbitrage book and foreign\ncurrency transactions, but excluding amounts described in\nsubdivisions a. and b. of this subparagraph, attributable to this\nCommonwealth and included in th e numerator is determined by\nmultiplying the amount described in subparagraph 2. of paragraph\n(l) of subsection (1) of this section by a fraction the numerator of\nwhich is the gross income from trading assets and activities which\nare properly assigned to a regular place of business of the financial\ninstitution within this Commonwealth and the denominator of\nwhich is the gross income from all assets and activities.\n3. If the financial institution elects or is required by the department to use\nthe method set forth in subparagraph 2. of this paragraph, it shall use this\nmethod on all subsequent returns unless the financial institution receives\nprior permission from the department to use, or the department requires,\na different method.\n4. The financial instituti on shall have the burden of proving that an\ninvestment asset or activity or trading asset or activity was properly\nassigned to a regular place of business outside this Commonwealth by\ndemonstrating that the day -to-day decisions regarding the asset or\nactivity occurred at a regular place of business outside this\nCommonwealth. Where the day -to-day decisions regarding an\ninvestment asset or activity or trading asset or activity occur at more\nthan one (1) regular place of business and one (1) regular place of\nbusiness is in this Commonwealth and one (1) regular place of business\nis outside this Commonwealth, the asset or activity shall be considered\nto be located at the regular place of business of the financial institution\nwhere the investment or trading policies or guidelines with respect to the\nasset or activity are established. Unless the financial institution\ndemonstrates to the contrary, the policies and guidelines shall be\npresumed to be established at the commercial domicile of the financial\ninstitution.\n(m) The numerator of the receipts factor includes all other receipts derived from\nsales as determined in KRS 141.901.\n(n) 1. All receipts that would be assigned under this section to a state in which\nthe financial institution is not taxable shall be includ ed in the numerator\nof the receipts factor, if the financial institution's commercial domicile is\nin this Commonwealth.\n2. For purposes of subparagraph 1. of this paragraph, \"taxable\" means\neither:\na. That a financial institution is subject in another stat e to a net\nincome tax, a franchise tax measured by net income, a franchise\ntax for the privilege of doing business, a corporate stock tax\nincluding a bank shares tax, a single business tax, an earned\nsurplus tax, or any tax which is imposed upon or measure d by net\nincome; or\nb. That another state has statutory authority to subject the financial\ninstitution to any of the taxes in subdivision a. of this\nsubparagraph, whether in fact the state does or does not impose the\ntax.","path":["KRS Chapter 136"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=47382","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:27Z","sha256":"acc7ba39000a0d2473bea7e9e9ce9cc24a445db792993053f3c9687bd312b9a8","source_id":"us-ky","stale":false,"prev":"us-ky/krs-136.525","next":"us-ky/krs-136.535"},"notice":"GroundRules: Original legal text. Not legal advice."}