CHAPTER 194 SENATE BILL No. 6 An Act relating to financial institution privilege taxation; amending K.S.A. 79-1107 and 79-1108 and repealing the existing sections. Be it enacted by the Legislature of the State of Kansas:

New Section 1. (a) Any taxpayer described in K.S.A. 79-1106 and
amendments thereto which owns, capitalizes or utilizes an affiliate with
one of the affiliate's purposes being to make, hold or manage for, or on
behalf of, the taxpayer, investments in securities which the taxpayer would
be permitted to make for its own account may be required to file con-
solidated returns or combined reports for purposes of determining the
tax liability under article 11 of chapter 79 of the Kansas Statutes Anno-
tated as if such taxpayer and affiliate were one entity.

(b) (1) Any taxpayer required to file a consolidated return or com-
bined report under section 1 and amendments thereto, and required to
determine an apportionment percentage under K.S.A. 79-1129 and
amendments thereto shall not include in either the numerator or the
denominator of the receipts factor described in K.S.A. 79-1130 and
amendments thereto amounts received from or provided to an affiliate
described in subsection (a) as consideration from investment assets and
activities and trading assets and activities that represent inter-company
transactions between the taxpayer and such affiliate; and

(2) receipts as described in subsection (m) of K.S.A. 79-1130 and
amendments thereto received by an affiliate described in subsection (a)
shall be treated by a taxpayer required to file a consolidated return or
combined report under section 1 and amendments thereto as receipts of
the taxpayer.

(c) For taxpayers described in K.S.A. 79-1106 and amendments
thereto, the secretary of revenue may require returns on a consolidated
basis or combined reporting and may distribute or allocate gross income,
deductions, credits, or allowances between two or more organizations,
trades or businesses, whether or not incorporated, or organized in the
United States or Kansas or affiliated, owned or controlled directly or
indirectly by the same interests, if the secretary of revenue determines
such allocation is necessary to prevent evasion of taxes or to clearly reflect
income of the organizations, trades or businesses.

(d) This section shall be and constitute a part of and shall be supple-
mental to the privilege tax statutes enacted at K.S.A. 79-1106 et seq. and
amendments thereto.

Sec. 2. K.S.A. 79-1107 is hereby amended to read as follows: 79-
1107. Every national banking association and state bank located or doing
business within the state shall pay to the state for the privilege of doing
business within the state a tax according to or measured by its net income
for the next preceding taxable year to be computed as provided in this
act. Such tax shall consist of a normal tax and a surtax and shall be com-
puted as follows:

(a) The normal tax shall be an amount equal to 41/4% 21/4% of such
net income; and

(b) the surtax shall be an amount equal to 21/8% of such net income
in excess of $25,000.

The tax levied shall be in lieu of ad valorem taxes which might otherwise
be imposed by the state or political subdivisions thereof upon shares of
capital stock or the intangible assets of national banking associations and
state banks.

Sec. 3. K.S.A. 79-1108 is hereby amended to read as follows: 79-
1108. Every trust company and savings and loan association located or
doing business within the state shall pay to the state for the privilege of
doing business within the state a tax according to or measured by its net
income for the next preceding taxable year to be computed as provided
in this act. Such tax shall consist of a normal tax and a surtax and shall be
computed as follows:

(a) The normal tax on every trust company and savings and loan as-
sociation shall be an amount equal to 41/2% 21/4% of such net income; and

(b) the surtax on every trust company and savings and loan association
shall be an amount equal to 21/4% of such net income in excess of $25,000.

The tax levied shall be in lieu of ad valorem taxes which might otherwise
be imposed by the state or political subdivision thereof upon shares of
capital stock or other intangible assets of trust companies and savings and
loan associations.

New Sec. 4. The provisions of this act shall apply to all taxable years
commencing after December 31, 1997.

Sec. 5. K.S.A. 79-1107 and 79-1108 are hereby repealed.

Sec. 6. This act shall take effect and be in force from and after its
publication in the statute book.

Approved May 18, 1998

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