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Delaware General AssemblyDelaware RegulationsMonthly Register of RegulationsOctober 2014

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(5 Del.C. §§121(b), 1101A(c)(3) & 1101A(c)(5)
5 DE Admin. Code 1114
A copy of the proposed amended regulation is being published in the October 1, 2014 edition of the Delaware Register of Regulations. A copy is also on file in the Office of the State Bank Commissioner, 555 E. Loockerman Street, Suite 210, Dover, DE 19901 and is available for inspection during regular office hours. Copies are available upon request.
1.0 This regulation applies to banking organizations and trust companies, other than federal savings banks not headquartered in this State but maintaining branches in this State, that annually elect to pay an alternative franchise tax pursuant to Section 1101A of Title 5 of the Delaware Code. The election to pay the alternative franchise tax is made by filing an original final alternative franchise tax return on the due date, or an amended return within 180 days of the due date of the original return.
Bankmeans every bank and every corporation conducting a banking business of any kind or plan whose principal place of business is in this State, except a national bank.
Banking organization means:
A foreign bank branch, foreign bank limited purpose branch or foreign bank agency organized pursuant to Chapter 14 of Title 5 of the Delaware Code, or a resulting branch in this State of a foreign bank authorized pursuant to Chapter 14 of Title 5 of the Delaware Code; or
International Banking Transaction shall mean any of the following transactions, whether engaged in by a banking organization, any foreign branch thereof (established pursuant to Section 771 of Title 5 of the Delaware Code or federal law) or any subsidiary corporation directly or indirectly owned by any banking organization:
International Banking Facility means a set of asset and liability accounts, segregated on the books and records of a banking organization, that includes only international banking facility deposits, borrowings and extensions of credit.
National Bank means a banking association organized under the authority of the United States and having a principal place of business in this State.
Net Operating Income Before Taxes means all pre-tax net income from the operations of a banking organization or trust company, including extraordinary items and other adjustments, computed in accordance with principles used by the Federal Financial Institutions Examination Council or other appropriate federal authority.
Out-of-state bank has the same meaning as in Section 795 of Title 5 of the Delaware Code, which is (i) a State bank, as defined in the Federal Deposit Insurance Act, as amended, at 12 U.S.C. § 1813(a), that is not chartered under Delaware law, or (ii) a national bank association created under the National Bank Act (12 U.S.C. § 21 et seq.) whose organization certificate identifies an address outside Delaware as the place at which its discount and deposit operations are to be carried out.
Resulting branch in this State of an out-of-state bank has the same meaning as in Section 1101(a) of Title 5 of the Delaware Code, which is a branch office in this State of an out-of-state bank resulting from a merger as provided in Subchapter VII of Chapter 7 of Title 5 of the Delaware Code, and, in addition, a branch office in this State of an out-of-state bank.
Securities Business means to engage in the sale, distribution and underwriting of, and deal in, stocks, bonds, debentures, notes or other securities.
Trust Company means a trust company or corporation doing a trust company business which has a principal place of business in this State.
3.1 Filing. A banking organization or trust company whose alternative franchise tax liability for the current year is estimated to exceed $10,000 should file an estimated alternative franchise tax return with the State Bank Commissioner, instead of the estimated franchise tax report in Regulation No. 1104 or No. 1111, and pay estimated alternative franchise tax:.
3.1.1 Filing. The estimated alternative franchise tax return shall be filed with the State Bank Commissioner on the first day of March of the current year. Filing an estimated tax return for a particular taxation method is not a mandatory election of that particular method. Additional tax due that results from the underpayment of estimated taxes will be computed on the basis of the final method properly chosen.
3.1.2 Penalty for late filing. A late filing penalty shall be assessed against the taxpayer in the amount of $25 for each day after the due date that the taxpayer fails to file the estimated alternative franchise tax return required by section 3.1.1., or an estimated franchise tax report pursuant to Regulation No. 1104 or No. 1111, unless the State Bank Commissioner is satisfied that such failure was not willful.
3.1.3 Form. The estimated alternative franchise tax return is contained in this regulation as Form 1114E.
3.1.4 Rounding. All amounts shall be rounded to the nearest dollar.
3.1.5 Calculation of estimated alternative franchise tax. The total estimated alternative franchise tax shall be calculated as follows:
3.1.5.1 The estimated net operating income before taxes of the banking organization or trust company; , not including any corporation(s) making an election as provided in Regulation No. 1101;
3.1.5.33.5.2 Less any deductions set forth in Section 1101A(c)(1) of Title 5 of the Delaware Code;
3.1.5.43.5.3 Less the estimated net operating income before taxes of any subsidiary corporation(s) and Edge Act corporation(s) making an election as provided in Regulation No. 1113;
3.1.5.53.5.4 Apportion the entire net income to the State of Delaware in accordance with Section 1101A(c)(6) of Title 5 of the Delaware Code (attach Schedule 1 – Apportionment Percentage Calculation Worksheet [apportionment percentage shall be rounded to the nearest tenth of a percent]);
3.5.5 Plus the estimated net operating income before taxes of any corporation(s) making an election as provided in Regulation No. 1101, less any deductions set forth in Section 1101A(c)(1) of Title 5 of the Delaware Code that apply to any such Electing Corporation(s), apportioned in accordance with Section 1101A(c)(6) of Title 5 of the Delaware Code [attach supporting schedules including completed Schedule 1 for each such Electing Corporation(s)];
3.1.5.6 Multiply the elective income tax base by the rate of taxation set forth in Section 1101A(c)(7) of Title 5 of the Delaware Code;
3.1.5.7 Plus the estimated location benefit tax liability calculated in accordance with Section 1101A(d) of Title 5 of the Delaware Code, (attach Schedule 2 – Location Benefit Tax Calculation Worksheet);
3.1.5.8 Adjust the subtotal estimated alternative franchise tax for applicable employment tax credits pursuant to Section 1105 of Title 5 of the Delaware Code, calculated in accordance with Regulation No. 1109;
3.1.5.109 Adjust the subtotal estimated alternative franchise tax for Historic Preservation Tax Credits calculated in accordance with Chapter 18 of Title 30 of the Delaware Code and the regulations thereunder.
3.1.6 Payment of estimated alternative franchise tax. The estimated alternative franchise tax liability shall be due and payable as follows:
3.1.6.1 40% due on or before June 1 of the current taxable year;
3.1.6.2 20% due on or before September 1 of the current taxable year;
3.1.6.3 20% due on or before December 1 of the current taxable year.
4.5.1 The net operating income before taxes of the banking organization or trust company, not including any corporation(s) making an election as provided in Regulation No. 1101, (attach a statement of net income that is filed with an appropriate financial regulatory agency);
4.5.32 Less any deductions set forth in Section 1101A(c)(1) of Title 5 of the Delaware Code;
4.5.43 Less the net operating income before taxes of any subsidiary corporation(s) and Edge Act corporation(s) making an election as provided in Regulation No. 1113;
4.5.54 Apportion the entire net income to the State of Delaware in accordance with Section 1101A(c)(6) of Title 5 of the Delaware Code (attach Schedule 1 – Apportionment Percentage Calculation Worksheet [apportionment percentage shall be rounded to the nearest tenth of a percent]);
4.5.5 Plus the net operating income before taxes of any corporation(s) making an election as provided in Regulation No. 1101, less any deductions set forth in Section 1101A(c)(1) of Title 5 of the Delaware Code that apply to any such Electing Corporation(s), apportioned in accordance with Section 1101A(c)(6) of Title 5 of the Delaware Code, (attach Regulation 1101 form – Election To Be Treated As A Subsidiary Corporation Under Sections 1101(f) or 1101A(c)(3) of Title 5 of the Delaware Code and a separate report of income for each electing corporation). Taxpayer shall complete and attach supporting schedules and a separate Schedule 1 for each such electing corporation to determine the elective income tax base in accordance with the procedures of the provisions mentioned in this subsection;
4.5.7 Plus the location benefit tax liability calculated in accordance with Section 1101A(d) of Title 5 of the Delaware Code, computed as of December 31 of the year prior to the year for which alternative franchise tax is paid (attach Schedule 2 – Location Benefit Tax Calculation Worksheet);
4.5.8 Adjust the subtotal alternative franchise tax for applicable employment tax credits pursuant to Section 1105 of Title 5 of the Delaware Code calculated in accordance with Regulation No. 1109, (attach Employment Tax Credit Calculation Worksheet);
4.5.109 Adjust the subtotal alternative franchise tax for Historic Preservation Tax Credits calculated in accordance with Chapter 18 of Title 30 of the Delaware Code and the regulations thereunder, (attach a Certificate of Completion issued by the Delaware State Historic Preservation Office certifying that the credits have been properly earned, in accordance with Section 1105(g) of Title 5 of the Delaware Code, and if the credits have been transferred, sold or assigned to the taxpayer by another person, also attach a Certificate of Transfer in accordance with Section 1814(c) of Title 30 of the Delaware Code).;
6.1 In the case of any underpayment of alternative estimated franchise tax or an installment of estimated alternative tax required by Chapter 11 of Title 5 of the Delaware Code, there shall be added to the tax for the taxable year an amount determined at the rate of 0.05 percent per day upon the amount of the underpayment for the period of the underpayment. The amount of the underpayment shall be the excess of:
In the case of a late payment of final alternative franchise tax as required by Chapter 11 of Title 5 of the Delaware Code, there shall be added to the tax a penalty in an amount determined at the rate of 0.05 percent per day until required payment is made.
8.2 Any corporation which has elected to be treated as a "subsidiary corporation" of a banking organization or trust company pursuant to Section 1101A(c)(3) of Title 5 of the Delaware Code and has filed with the State Bank Commissioner the required election form in accordance with Regulation No. 1101 shall provide a report of income for each electing corporation as of December 31 of each year to be submitted in conjunction with the final alternative franchise tax return due January 30; provided, however, that a banking organization may file this report on or before any later date allowed by the Federal Financial Institutions Examination Council guidelines for filing its Report of Condition and Income.
Regulation No. 1113 shall apply to elections to be taxed in accordance with Chapter 19 of Title 30 pursuant to Section 1101A(c)(2) of Title 5 of the Delaware Code.
Regulation No. 1113 shall apply to elections to be taxed in accordance with Chapter 19 of Title 30 pursuant to Section 1101A(c)(4) of Title 5 of the Delaware Code.
A resulting branch in this State of an out-of-state bank shall be treated as if it were a corporation, pursuant to Section 1101A(c)(5) of Title 5 of the Delaware Code, for purposes of determining the alternative franchise tax. Resulting branches may account for their operations in accordance with Section 9.0 (Separate Accounting by Resulting Branches) of Regulation 1110 (Instructions for Preparation of Franchise Tax for Resulting Branches in this State of Out-of-state Banks), or in accordance with such other reasonable method as may be approved by the State Bank Commissioner.
112.0 Instructions for Filing an Amendment to the Final Alternative Franchise Tax Return
Filing. To amend a previously filed final alternative tax return, or to elect the alternative franchise tax method as provided in Section 1101A(a) of Title 5 of the Delaware Code, place a check mark () in the box provided on Form 1114F and complete the return in accordance with Section 4 of this regulation. Attach a complete copy of the original filing along with a statement of explanation for all changes.
1114A.pdf Form 1114E - Estimated Alternative Franchise Tax Return and Form 111F Final Alternative Franchise Tax Return
Last Updated: December 31 1969 19:00:00.
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