                                 CODE OF VIRGINIA

(EFFECTIVE JULY 1, 2025) DEDUCTIONS FROM GROSS CAPITAL (§ 58.1-1206)

A. There shall be deducted from the gross capital otherwise ascertainable under
§ 58.1-1205:

   1. The assessed value of real estate if otherwise taxed in the Commonwealth
   which is owned by such bank, or is used or occupied by such bank, if held in
   the name of a majority-owned subsidiary of the bank or of a bank holding
   company which owns a majority of the capital stock of such bank or of any
   wholly-owned subsidiary of the bank holding company which owns the majority of
   the capital stock of such bank and the assessed value, up to the amount of the
   unencumbered equity, of real estate in the nature of improvements which are
   owned by the bank, or used or occupied by the bank and held by a
   majority-owned subsidiary or a bank holding company or a wholly-owned
   subsidiary of a bank holding company, even if assessed in the name of some
   other person because of the ownership of the underlying land by such person.
   Real estate used or occupied by a subsidiary or originally conveyed as
   collateral for loans made by a subsidiary of the bank and reacquired upon
   foreclosure of mortgage loans will be deemed to be used or occupied by the
   bank. The deduction for assessed value of real estate shall be the most recent
   assessment made prior to January 1 of the current bank franchise tax year for
   real estate owned by the bank or affiliate on January 1 of the current year.
   Any locality shall provide electronic access to banks for real estate
   assessment records for such real estate referenced by this section at their
   request.

   2. The book value of tangible personal property which shall be held for lease
   and is otherwise taxed which is owned by such bank or in the name of a
   majority-owned subsidiary of the bank. If the bank does not own all the stock
   of such subsidiary, it shall be entitled to deduct only such portion of the
   assessed value of the real estate and the value of such tangible personal
   property as the common stock it owns in such subsidiary bears to the whole
   issue of common stock of such corporation.

   3. An amount which shall equal the same percentage of the gross capital
   account, defined as its capital, surplus and undivided profits as set forth in
   &#xA7; 58.1-1205 at December 31 next preceding as the obligations of the
   United States bear to the total assets of the bank. Such percentage of U.S.
   obligations shall be determined as of the four most recent (or less in case of
   a new bank) Reports of Condition and the percentage obtained shall be
   averaged. For purposes of computing such percentage, total assets shall not
   include the goodwill described in subdivision 5. The obligations of the United
   States as used herein shall include all obligations of the United States
   exempt from taxation under 31 U.S.C. &#xA7; 3124, of the United States
   Constitution or any other statute, or any instrumentality or agency of the
   United States which obligations shall be exempt from state or local taxation
   under the United States Constitution or any statute of the United States.

   4. The amount of retained earnings and surplus of subsidiaries to the extent
   included in the gross capital of the bank. In addition, any portion of the
   amount added to federal taxable income pursuant to subdivision B 9 of &#xA7;
   58.1-402 by a corporation that is for interest expenses and costs paid to the
   bank for a loan or other obligation made by the bank to such corporation shall
   be deducted from the gross capital of the bank provided that (i) at the time
   of payment of such portion to the bank, the bank was a related member of the
   corporation, and (ii) such portion has not otherwise been deducted from gross
   capital. For purposes of this subdivision, the terms &#8220;interest expenses
   and costs&#8221; and &#8220;related member&#8221; mean the same as those terms
   are defined in &#xA7; 58.1-302.

   5. Any amount equal to 90 percent of goodwill created in connection with any
   acquisition or merger occurring on or after July 1, 2001.

B. For purposes of this section, &#8220;goodwill&#8221; shall be determined
using generally accepted accounting principles.

HISTORY: Code 1950, § 58-485.08; 1980, c. 578; 1981, c. 432; 1984, c. 675;
2002, c. 667; 2004, Sp. Sess. I, c. 3; 2023, cc. 50, 51.