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or lending powers, and, as relevant here, does not qualify as
either a “bank” or a “financial institution” for Federal income
tax purposes. For other purposes, Investments is considered to
be a financial institution subject to Federal and State
supervision.
Peoples organized Investments to consolidate and improve the
efficiency of managing, safekeeping, and operating the securities
investment portfolio then held by Peoples and to reduce Peoples’
State tax liability. Nevada has neither a corporate income tax
nor a corporate franchise tax. Wisconsin has a corporate
franchise tax of 7.9 percent of a corporation’s net income. For
purposes of the Wisconsin tax, Wisconsin considers “income” to
include interest income from federally tax-exempt obligations. A
wholly owned subsidiary of a Wisconsin corporation with no nexus
to the State is not subject to Wisconsin’s corporate franchise
tax. Investments was organized without a nexus to Wisconsin so
as not to be subject to Wisconsin’s corporate franchise tax.
From on or about April 23, 1992, through December 1, 2002,
Peoples transferred to Investments cash, tax-exempt obligations,
taxable securities, and loan participations (fractional interests
in loans originated by Peoples), including substantially all of
Peoples’ long-term investments. The cash totaled $18,460 and was
transferred to Investments upon its organization in exchange for
all of its common stock. The tax-exempt obligations and taxable
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Last modified: March 27, 2008