Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report

or more interstate acquisitions that result in a ﬁ nancial institution

the instructions for line 4, ownership interest of depositors does not

that has branches in more than one state; or

include any amount which is treated as a liability in accordance with

3. On or after June 1, 1997 the ﬁ nancial institution has consummated

generally accepted accounting principles.

one or more approved interstate acquisitions under authority

Line 4 – Reserves and net deferred tax liabilities. Reserves

of Title Xl of the Ohio Revised Code that result in a ﬁ nancial

and net deferred tax liabilities (that is, deferred tax liabilities less

institution that has branches in more than one state.

deferred tax beneﬁ ts) are includable in the computation of net value

Real property owned and tangible personal property owned

of stock. See Kroger v. Bowers (1965), 3 Ohio St. 2d 76; Baldwin

means real property and tangible personal property, respectively,

Piano and Organ Company v. Kosydar (April 7, 1975) First District

on which the taxpayer can claim depreciation for federal income tax

Court of Appeals Hamilton County, Case No. 7425500; and Allied

purposes or to which the taxpayer holds legal title and on which no

Stores of Penn-Ohio, Inc. v. Limbach, B.T.A. Case No. 85-B-484,

other person can claim depreciation for federal income tax purposes,

February 19, 1988. The debit balance of the taxpayer’s deferred

or could claim depreciation if subject to federal income tax. Real

income tax account (that is, the excess of deferred tax beneﬁ ts

property and tangible personal property do not include coin, currency

over deferred tax liability) accounted for in accordance with

or property acquired in lieu of or pursuant to a foreclosure. Federal

generally accepted accounting principles is deductible from

income tax treatment (not book treatment) of a lease governs

net worth as a negative reserve, thereby decreasing taxable net

whether property is considered “owned” or “rented” by the lessee.

worth. See USX v. Tracy, BTA Nos. 92-1479, 92-1480 (1-22-99).

Property is rented by the lessee if a transaction between lessor and

The gross proﬁ t portion of income received but not yet earned is

lessee is considered a lease or rent for federal income tax purposes;

includable in the net value of stock. For example, the gross proﬁ t

property is owned by the lessee if the transaction is considered a

portion of unearned subscription revenue received by a magazine

purchase for federal income tax purposes.

publisher is includable in the net worth computation.

Regular place of business means an ofﬁ ce at which the taxpayer

Contingent liabilities are includable in the net worth computation if:

carries on its business in a regular and systematic manner and that

is continuously maintained, occupied and used by employees of

• The taxpayer cannot reasonably estimate the amount of the

the taxpayer.

liability; or

• The taxpayer cannot establish from information available prior to

State means a state of the United States, the District of Columbia,

the issuance of the ﬁ nancial statements that it is probable that a

the commonwealth of Puerto Rico, or any territory or possession

liability had been incurred at the balance sheet date.

of the United States.

A taxpayer is not required to add to its net worth as a reserve any

Syndication means an extension of credit in which two or more

account, whether shown on the taxpayer's books as a liability or a

persons fund and each person is at risk only up to a speciﬁ ed

reserve, if that account results from and is maintained in accordance

percentage of the total extension of credit or up to a speciﬁ ed

with FASB Statement No. 106 (see Tax Commissioner Rule 5703-

dollar amount.

5-10). Deferred income that is neither earned nor received is not

Transportation property means vehicles and vessels capable

generally includable in the net worth computation. However, the

of moving under their own power as well as any equipment or

gross proﬁ t portion of income from an installment sale is includable

containers attached to such property.

in the net worth computation.

Schedule E – Net Value of Stock

Schedule F – Adjusted Net Value of Stock for Holding

Companies

Note: For franchise tax years 2002 and thereafter, a ﬁ nancial

institution that is a related member to a company that makes

This schedule applies to:

the qualifying holding company election is not required (nor is

• Financial institutions that own at least 25% of the issued and

it permitted) to make the Schedule E “qualifying amount” debt

outstanding shares of common stock of another financial

to equity adjustment set forth in R.C. 5733.05(C).

institution,

The value of issued and outstanding shares of stock is determined

• Financial institutions that own at least 80% of the issued and

from the books of the taxpayer as of the beginning of the taxpayer’s

outstanding shares of common stock of a public utility as deﬁ ned

annual accounting period that includes the ﬁ rst day of January of

in R.C. 5727.01, and

the tax year. See R.C. 5733.056(B). For example, assume that an

• Financial institutions that own at least 80% of the issued and

Ohio franchise taxpayer has a taxable year beginning July 1, 2010

outstanding shares of common stock of an insurance company

and ending June 30, 2011. The taxpayer’s franchise tax net value

as deﬁ ned in R.C. 5725.01.

of stock for tax year 2012 is determined as of July 1, 2011, the

The taxpayer's excludable investment, total assets and net value

beginning of the taxpayer’s annual accounting period that includes

of stock are determined from the books of the taxpayer as of the

the ﬁ rst day of January of tax year 2012. Generally, the ﬁ gures

beginning of the taxpayer's annual accounting period that includes

at the beginning of the taxpayer’s annual accounting period that

the ﬁ rst day of January of the tax year. See R.C. 5733.056(B). For

includes the ﬁ rst day of January of the tax year (in this example,

example, assume that an Ohio franchise taxpayer has a taxable year

July 1, 2011) will be the same as the ﬁ gures at the end of the taxable

beginning July 1, 2010 and ending June 30, 2011. For tax year 2012

year that concludes prior to Jan. 1 of the tax year (in this example,

the taxpayer's franchise tax excludable investment, total assets and

June 30, 2011).

net value of stock are determined as of July 1, 2011 the beginning

Line 2 – Ownership interest of depositors. With respect to a

of the taxpayer's annual accounting period that includes the ﬁ rst day

ﬁ nancial institution that does not have capital stock “issued and

of January of tax year 2012. Generally, the ﬁ gures at the beginning

outstanding shares of stock” includes, but is not limited to ownership

of the taxpayer's annual accounting period that includes the ﬁ rst day

interests of depositors in the capital employed in such an institution.

of January of the tax year (in this example, July 1, 2011) will be the

See R.C. 5733.04(A). Except for the amounts determined under

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Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report - 2012 Page 17

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