§237-24.8 Amounts not taxable for financial institutions. (a) In addition to the amounts not taxable under section 237-24, this chapter shall not apply to amounts received by:
(1) Financial institutions from:
(A) Interest, discount, points, commitment fees, loan fees, loan origination charges, and finance charges which are part of the computed annual percentage rate of interest and which are contracted and received for the use of money;
(B) Leasing of personal property;
(C) Fees or charges relating to the administration of deposits;
(D) Gains resulting from changes in foreign currency exchange rates but not including commissions or compensation derived from the purchase or sale of foreign currency or numismatic currency whether legal tender or not;
(E) The servicing and sale of loans contracted for and received by the financial institution; and
(F) Interest received from the investment of deposits received by the financial institution from financial or debt instruments;
(2) Trust companies or trust departments of financial institutions from:
(A) Trust agreements and retirement plans where the trust companies or trust departments are acting as fiduciaries;
(B) Custodial agreements; and
(C) Activities relating to the general servicing of fiduciary/custodial accounts held by the trust companies or trust departments; and
(3) Financial corporations acting as interbank brokers as defined by chapter 241 from brokerage services.
(b) As used in this section:
"Activities relating to the general servicing of fiduciary or custodial accounts" means those activities performed by trust companies that are directly or indirectly performed within the fiduciary or custodial relationship between the trust company or trust department of a financial institution and its client and that are not offered to any person outside of the fiduciary or custodial relationship.
"Annual percentage rate" and "finance charge" have the same meanings as defined in the federal Truth in Lending Act (15 United States Code sections 1605(a) to (c) and 1606).
"Deposit" means:
(1) Money or its equivalent received or held by a financial institution in the usual course of business and for which it has given or is obligated to give credit to:
(A) A commercial (including public deposits), checking, savings, time, or thrift account;
(B) A check or draft drawn against a deposit account and certified by the financial institution;
(C) A letter of credit; or
(D) A traveler's check, on which the financial institution is primarily liable;
(2) Trust funds received or held by a financial institution, whether held in the trust department or held or deposited in any other department of the financial institution;
(3) Money received or held by a financial institution, or the credit given for money or its equivalent received or held by a financial institution in the usual course of business for a special or specific purpose, regardless of the legal relationship thereby established, including without being limited to, escrow funds, funds held as security for an obligation due the financial institution or others (including funds held as dealers' reserves) or for securities loaned by the financial institution, funds deposited by a debtor to meet maturing obligations, funds deposited as advance payment on subscriptions to United States government securities, funds held for distribution or purchase of securities, funds held to meet the financial institution's acceptances or letters of credit, and withheld taxes;
(4) Outstanding drafts, cashier's checks, money orders, or other officer's checks issued in the usual course of business for any purpose; or
(5) Money or its equivalent held as a credit balance by a financial institution on behalf of its customer if the financial institution is engaged in soliciting and holding the balances in the regular course of its business.
"Financial institution" means banks, building and loan associations, development companies, financial corporations, financial services loan companies, small business investment companies, financial holding companies, and trust companies all as defined in chapter 241, and mortgage loan originator companies as defined in chapter 454F.
"Leasing of personal property" occurs if:
(1) The lease is to serve as the functional equivalent of an extension of credit to the lessee of the property;
(2) The property to be leased is acquired specifically for the leasing transaction under consideration, or was acquired specifically for an earlier leasing transaction;
(3) The lease is on a nonoperating basis where the financial institution may not, directly or indirectly:
(A) Provide for the maintenance, repair, replacement, or servicing of the leased property during the lease term;
(B) Purchase parts and accessories in bulk or for an individual property after the lessee has taken delivery of the property; or
(C) Purchase insurance for the lessee;
(4) At the inception of the lease, the effect of the transaction will yield a return that will compensate the lessor financial institution for not less than the lessor's full investment in the property plus the estimated total cost of financing the property over the term of the lease, from:
(A) Rentals;
(B) Estimated tax benefits, including capital goods excise tax credit, net economic gain from tax deferral from accelerated depreciation, and other tax benefits with a substantially similar effect; and
(C) The estimated residual value of the property at the expiration of the initial term of the lease;
(5) The maximum lease term during which the lessor financial institution shall recover the lessor's full investment in the property, plus the estimated total cost of financing the property, shall be forty years; and
(6) At the expiration of the lease, including any renewals or extensions with the same lessee, all interest in the property shall be either liquidated or leased again on a nonoperating basis as soon as practicable but in no event later than two years from the expiration of the lease; provided that in no case shall the lessor retain any interest in the property beyond fifty years after the lessor's acquisition of the property. [L 1992, c 106, §4; am L 2010, c 84, §5; am L 2011, c 43, §6]
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