Ohio § 5733.056

§ 5733.056.

(A) As used in this section: (1) “ Billing address ” means the address where any notice, statement, or bill relating to a customer's

account is mailed, as indicated in the books and records of the taxpayer on the first

day of the taxable year or on such later date in the taxable year when the customer

relationship began. (2) “ Borrower or credit card holder located in this state ” means: (a) A borrower, other than a credit card holder, that is engaged in a trade or business

and maintains its commercial domicile in this state;  or (b) A borrower that is not engaged in a trade or business, or a credit card holder, whose

billing address is in this state. (3) “ Branch ” means a “domestic branch” as defined in section 3 of the “Federal Deposit Insurance

Act,” 64 Stat. 873, 12 U.S.C. 1813(o) , as amended. (4) “ Compensation ” means wages, salaries, commissions, and any other form of remuneration paid to employees

for personal services that are included in such employee's gross income under the

Internal Revenue Code.  In the case of employees not subject to the Internal Revenue Code, such as those

employed in foreign countries, the determination of whether such payments would constitute

gross income to such employees under the Internal Revenue Code shall be made as though

such employees were subject to the Internal Revenue Code. (5) “ Credit card ” means a credit, travel, or entertainment card. (6) “ Credit card issuer's reimbursement fee ” means the fee a taxpayer receives from a merchant's bank because one of the persons

to whom the taxpayer has issued a credit card has charged merchandise or services

to the credit card. (7) “Deposits” has the meaning given in section 3 of the “Federal Deposit Insurance Act,”

64 Stat. 873, 12 U.S.C. 1813(1) , as amended. (8) “ Employee ” means, with respect to a particular taxpayer, any individual who under the usual

common law rules applicable in determining the employer-employee relationship, has

the status of an employee of that taxpayer. (9) “ Gross rents ” means the actual sum of money or other consideration payable for the use or possession

of property.  “Gross rents” includes: (a) Any amount payable for the use or possession of real property or tangible personal

property whether designated as a fixed sum of money or as a percentage of receipts,

profits, or otherwise; (b) Any amount payable as additional rent or in lieu of rent, such as interest, taxes,

insurance, repairs, or any other amount required to be paid by the terms of a lease

or other arrangement;  and (c) A proportionate part of the cost of any improvement to real property made by or on

behalf of the taxpayer which reverts to the owner or lessor upon termination of a

lease or other arrangement.  The amount to be included in gross rents is the amount of amortization or depreciation

allowed in computing the taxable income base for the taxable year.  However, where a building is erected on leased land, by or on behalf of the taxpayer,

the value of the land is determined by multiplying the gross rent by eight, and the

value of the building is determined in the same manner as if owned by the taxpayer. (d) The following are not included in the term “gross rents”: (i) Reasonable amounts payable as separate charges for water and electric service furnished

by the lessor; (ii) Reasonable amounts payable as service charges for janitorial services furnished by

the lessor; (iii) Reasonable amounts payable for storage, provided such amounts are payable for space

not designated and not under the control of the taxpayer;  and (iv) That portion of any rental payment which is applicable to the space subleased from

the taxpayer and not used by it. (10) “ Loan ” means any extension of credit resulting from direct negotiations between the taxpayer

and its customer, or the purchase, in whole or in part, of such extension of credit

from another.  Loans include debt obligations of subsidiaries, participations, syndications, and

leases treated as loans for federal income tax purposes.  “Loan” does not include:  properties treated as loans under section 595 of the Internal Revenue Code ;  futures or forward contracts;  options;  notional principal contracts such as swaps;

 credit card receivables, including purchased credit card relationships;  non-interest

bearing balances due from depositor institutions;  cash items in the process of collection;

 federal funds sold;  securities purchased under agreements to resell;  assets held

in a trading account;  securities;  interests in a real estate mortgage investment

conduit or other mortgage-backed or asset-backed security;  and other similar items. (11) “ Loan secured by real property ” means that fifty per cent or more of the aggregate value of the collateral used

to secure a loan or other obligation, when valued at fair market value as of the time

the original loan or obligation was incurred, was real property. (12) “ Merchant discount ” means the fee, or negotiated discount, charged to a merchant by the taxpayer for

the privilege of participating in a program whereby a credit card is accepted in payment

for merchandise or services sold to the card holder. (13) “ Participation ” means an extension of credit in which an undivided ownership interest is held on

a pro rata basis in a single loan or pool of loans and related collateral.  In a loan participation, the credit originator initially makes the loan and then

subsequently resells all or a portion of it to other lenders.  The participation may or may not be known to the borrower. (14) “ Principal base of operations ” with respect to transportation property means the place of more or less permanent

nature from which the property is regularly directed or controlled.  With respect to an employee, the “ principal base of operations ” means the place of more or less permanent nature from which the employee regularly

(a) starts work and to which the employee customarily returns in order to receive

instructions from the employer or (b) communicates with the employee's customers or

other persons or (c) performs any other functions necessary to the exercise of the

trade or profession at some other point or points. (15) “ Qualified institution ” means a financial institution that on or after June 1, 1997: (a)(i) Has consummated one or more approved transactions with insured banks with different

home states that would qualify under section 102 of the “Riegle-Neal Interstate Banking

and Branching Efficiency Act of 1994,” Public Law 103-328, 108 Stat. 2338 ; (ii) Is a federal savings association or federal savings bank that has consummated one

or more interstate acquisitions that result in a financial institution that has branches

in more than one state;  or (iii) Has consummated one or more approved interstate acquisitions under authority of Title

XI of the Revised Code that result in a financial institution that has branches in

more than one state;  and (b) Has at least nine per cent of its deposits in this state as of the last day of June

prior to the beginning of the tax year. (16) “ Real property owned ” and “ tangible personal property owned ” mean real and tangible personal property, respectively, on which the taxpayer may

claim depreciation for federal income tax purposes, or to which the taxpayer holds

legal title and on which no other person may claim depreciation for federal income

tax purposes, or could claim depreciation if subject to federal income tax.  Real and tangible personal property do not include coin, currency, or property acquired

in lieu of or pursuant to a foreclosure. (17) “ Regular place of business ” means an office at which the taxpayer carries on its business in a regular and systematic

manner and which is continuously maintained, occupied, and used by employees of the

taxpayer. (18) “ State ” means a state of the United States, the District of Columbia, the commonwealth of

Puerto Rico, or any territory or possession of the United States. (19) “ Syndication ” means an extension of credit in which two or more persons fund and each person is

at risk only up to a specified percentage of the total extension of credit or up to

a specified dollar amount. (20) “ Transportation property ” means vehicles and vessels capable of moving under their own power, such as aircraft,

trains, water vessels and motor vehicles, as well as any equipment or containers attached

to such property, such as rolling stock, barges, trailers, or the like. (21) “ Qualified financial institution ” means a financial institution in which not less than eighty per cent of the financial

institution's ownership interest is owned directly or indirectly by a grandfathered

unitary savings and loan holding company described in 12 U.S.C. 1467a(c)(9)(C) . (B) The annual financial institution report determines the value of the issued and outstanding

shares of stock of the taxpayer, and is the base or measure of the franchise tax liability.  Such determination shall be made as of the date shown by the report to have been

the beginning of the financial institution's annual accounting period that includes

the first day of January of the tax year.  For purposes of this section, division (A) of section 5733.05 , and division (D) of section 5733.06 of the Revised Code , the value of the issued and outstanding shares of stock of the financial institution

shall include the total value, as shown by the books of the financial institution,

of its capital, surplus, whether earned or unearned, undivided profits, and reserves,

but exclusive of: (1) Reserves for accounts receivable, depreciation, depletion, and any other valuation

reserves with respect to specific assets; (2) Taxes due and payable during the year for which such report was made; (3) Voting stock and participation certificates in corporations chartered pursuant to

the “Farm Credit Act of 1971,” 85 Stat. 597, 12 U.S.C. 2091 , as amended; (4) Good will, appreciation, and abandoned property as set up in the annual report of

the financial institution, provided a certified balance sheet of the company is made

available upon the request of the tax commissioner.  Such balance sheet shall not be a part of the public records, but shall be a confidential

report for use of the tax commissioner only. (5) A portion of the value of the issued and outstanding shares of stock of such financial

institution equal to the amount obtained by multiplying such value by the quotient

obtained by: (a) Dividing (1) the amount of the financial institution's assets, as shown on its books,

represented by investments in the capital stock and indebtedness of public utilities,

except electric companies and combined companies, and, for tax years 2005 and thereafter,

telephone companies, of which at least eighty per cent of the utility's issued and

outstanding common stock is owned by the financial institution by (2) the total assets

of such financial institution as shown on its books; (b) Dividing (1) the amount of the financial institution's assets, as shown on its books,

represented by investments in the capital stock and indebtedness of insurance companies

of which at least eighty per cent of the insurance company's issued and outstanding

common stock is owned by the financial institution by (2) the total assets of such

financial institution as shown on its books; (c) Dividing (1) the amount of the financial institution's assets, as shown on its books,

represented by investments in the capital stock and indebtedness of other financial

institutions of which at least twenty-five per cent of the other financial institution's

issued and outstanding common stock is owned by the financial institution by (2) the

total assets of the financial institution as shown on its books.  Division (B)(5)(c) of this section applies only with respect to such other financial

institutions that for the tax year immediately following the taxpayer's taxable year

will pay the tax imposed by division (D) of section 5733.06 of the Revised Code . (6) Land that has been determined pursuant to section 5713.31 of the Revised Code by the county auditor of the county in which the land is located to be devoted exclusively

to agricultural use as of the first Monday of June in the financial institution's

taxable year. (7) Property within this state used exclusively during the taxable year for qualified

research as defined in section 5733.05 of the Revised Code . (C) Except as provided under division (I) of this section, the base upon which the tax

levied under division (D) of section 5733.06 of the Revised Code shall be computed by multiplying the value of a financial institution's issued and

outstanding shares of stock as determined in division (B) of this section by a fraction.  The numerator of the fraction is the sum of the following:  the property factor

multiplied by fifteen, the payroll factor multiplied by fifteen, and the sales factor

multiplied by seventy.  The denominator of the fraction is one hundred, provided that the denominator shall

be reduced by fifteen if the property factor has a denominator of zero, by fifteen

if the payroll factor has a denominator of zero, and by seventy if the sales factor

has a denominator of zero. (D) A financial institution shall calculate the property factor as follows: (1) The property factor is a fraction, the numerator of which is the average value of

real property and tangible personal property rented to the taxpayer that is located

or used within this state during the taxable year, the average value of real and tangible

personal property owned by the taxpayer that is located or used within this state

during the taxable year, and the average value of the taxpayer's loans and credit

card receivables that are located within this state during the taxable year;  and

the denominator of which is the average value of all such property located or used

within and without this state during the taxable year. (2)(a) The value of real property and tangible personal property owned by the taxpayer is

the original cost or other basis of such property for federal income tax purposes

without regard to depletion, depreciation, or amortization. (b) Loans are valued at their outstanding principal balance, without regard to any reserve

for bad debts.  If a loan is charged-off in whole or in part for federal income tax purposes, the

portion of the loan charged-off is not outstanding.  A specifically allocated reserve established pursuant to financial accounting guidelines

which is treated as charged-off for federal income tax purposes shall be treated as

charged-off for purposes of this section. (c) Credit card receivables are valued at their outstanding principal balance, without

regard to any reserve for bad debts.  If a credit card receivable is charged-off in whole or in part for federal income

tax purposes, the portion of the receivable charged-off is not outstanding. (3) The average value of property owned by the taxpayer is computed on an annual basis

by adding the value of the property on the first day of the taxable year and the value

on the last day of the taxable year and dividing the sum by two.  If averaging on this basis does not properly reflect average value, the tax commissioner

may require averaging on a more frequent basis.  The taxpayer may elect to average on a more frequent basis.  When averaging on a more frequent basis is required by the tax commissioner or is

elected by the taxpayer, the same method of valuation must be used consistently by

the taxpayer with respect to property within and without this state and on all subsequent

returns unless the taxpayer receives prior permission from the tax commissioner or

the tax commissioner requires a different method of determining value. (4)(a) The average value of real property and tangible personal property that the taxpayer

has rented from another and is not treated as property owned by the taxpayer for federal

income tax purposes, shall be determined annually by multiplying the gross rents payable

during the taxable year by eight. (b) Where the use of the general method described in division (D)(4)(a) of this section

results in inaccurate valuations of rented property, any other method which properly

reflects the value may be adopted by the tax commissioner or by the taxpayer when

approved in writing by the tax commissioner.  Once approved, such other method of valuation must be used on all subsequent returns

unless the taxpayer receives prior approval from the tax commissioner or the tax commissioner

requires a different method of valuation. (5)(a) Except as described in division (D)(5)(b) of this section, real property and tangible

personal property owned by or rented to the taxpayer is considered to be located within

this state if it is physically located, situated, or used within this state. (b) Transportation property is included in the numerator of the property factor to the

extent that the property is used in this state.  The extent an aircraft will be deemed to be used in this state and the amount of

value that is to be included in the numerator of this state's property factor is determined

by multiplying the average value of the aircraft by a fraction, the numerator of which

is the number of landings of the aircraft in this state and the denominator of which

is the total number of landings of the aircraft everywhere.  If the extent of the use of any transportation property within this state cannot

be determined, then the property will be deemed to be used wholly in the state in

which the property has its principal base of operations.  A motor vehicle will be deemed to be used wholly in the state in which it is registered. (6)(a)(i) A loan, other than a loan or advance described in division (D)(6)(d) of this section,

is considered to be located within this state if it is properly assigned to a regular

place of business of the taxpayer within this state. (ii) A loan is properly assigned to the regular place of business with which it has a

preponderance of substantive contacts.  A loan assigned by the taxpayer to a regular place of business without the state

shall be presumed to have been properly assigned if: (I) The taxpayer has assigned, in the regular course of its business, such loan on its

records to a regular place of business consistent with federal or state regulatory

requirements; (II) Such assignment on its records is based upon substantive contacts of the load 1 to such regular place of business;  and (III) The taxpayer uses the records reflecting assignment of loans for the filing of all

state and local tax returns for which an assignment of loans to a regular place of

business is required. (iii) The presumption of proper assignment of a loan provided in division (D)(6)(a)(ii)

of this section may be rebutted upon a showing by the tax commissioner, supported

by a preponderance of the evidence, that the preponderance of substantive contacts

regarding such loan did not occur at the regular place of business to which it was

assigned on the taxpayer's records.  When such presumption has been rebutted, the loan shall then be located within this

state if (1) the taxpayer had a regular place of business within this state at the

time the loan was made;  and (2) the taxpayer fails to show, by a preponderance of

the evidence, that the preponderance of substantive contacts regarding such loan did

not occur within this state. (b) In the case of a loan which is assigned by the taxpayer to a place without this state

which is not a regular place of business, it shall be presumed, subject to rebuttal

by the taxpayer on a showing supported by the preponderance of evidence, that the

preponderance of substantive contacts regarding the loan occurred within this state

if, at the time the loan was made the taxpayer's commercial domicile was within this

state. (c) To determine the state in which the preponderance of substantive contacts relating

to a loan have occurred, the facts and circumstances regarding the loan at issue shall

be reviewed on a case-by-case basis and consideration shall be given to such activities

as the solicitation, investigation, negotiation, approval, and administration of the

loan.  The terms “ solicitation ,” “ investigation ,” “ negotiation ,” “ approval ,” and “ administration ” are defined as follows: (i) “Solicitation” is either active or passive.  Active solicitation occurs when an employee of the taxpayer initiates the contact

with the customer.  Such activity is located at the regular place of business which the taxpayer's employee

is regularly connected with or working out of, regardless of where the services of

such employee were actually performed.  Passive solicitation occurs when the customer initiates the contact with the taxpayer.  If the customer's initial contact was not at a regular place of business of the

taxpayer, the regular place of business, if any, where the passive solicitation occurred

is determined by the facts in each case. (ii) “Investigation” is the procedure whereby employees of the taxpayer determine the

creditworthiness of the customer as well as the degree of risk involved in making

a particular agreement.  Such activity is located at the regular place of business which the taxpayer's employees

are regularly connected with or working out of, regardless of where the services of

such employees were actually performed. (iii) Negotiation is the procedure whereby employees of the taxpayer and its customer determine

the terms of the agreement, such as the amount, duration, interest rate, frequency

of repayment, currency denomination, and security required.  Such activity is located at the regular place of business to which the taxpayer's

employees are regularly connected or working from, regardless of where the services

of such employees were actually performed. (iv) “Approval” is the procedure whereby employees or the board of directors of the taxpayer

make the final determination whether to enter into the agreement.  Such activity is located at the regular place of business to which the taxpayer's

employees are regularly connected or working from, regardless of where the services

of such employees were actually performed.  If the board of directors makes the final determination, such activity is located

at the commercial domicile of the taxpayer. (v) “Administration” is the process of managing the account.  This process includes bookkeeping, collecting the payments, corresponding with the

customer, reporting to management regarding the status of the agreement, and proceeding

against the borrower or the security interest if the borrower is in default.  Such activity is located at the regular place of business that oversees this activity. (d) A loan or advance to a subsidiary corporation at least fifty-one per cent of whose

common stock is owned by the financial institution shall be allocated in and out of

the state by the application of a ratio whose numerator is the sum of the net book

value of the subsidiary's real property owned in this state and the subsidiary's tangible

personal property owned in this state and whose denominator is the sum of the subsidiary's

real property owned wherever located and the subsidiary's tangible personal property

owned wherever located.  For purposes of calculating this ratio, the taxpayer shall determine net book value

in accordance with generally accepted accounting principles.  If the subsidiary corporation owns at least fifty-one per cent of the common stock

of another corporation, the ratio shall be calculated by including the other corporation's

real property and tangible personal property.  The calculation of the ratio applies with respect to all lower-tiered subsidiaries,

provided that the immediate parent corporation of the subsidiary owns at least fifty-one

per cent of the common stock of that subsidiary. (7) For purposes of determining the location of credit card receivables, credit card

receivables shall be treated as loans and shall be subject to division (D)(6) of this

section. (8) A loan that has been properly assigned to a state shall, absent any change of material

fact, remain assigned to that state for the length of the original term of the loan.  Thereafter, the loan may be properly assigned to another state if the loan has a

preponderance of substantive contact to a regular place of business there. (E) A financial institution shall calculate the payroll factor as follows: (1) The payroll factor is a fraction, the numerator of which is the total amount paid

in this state during the taxable year by the taxpayer for compensation, and the denominator

of which is the total compensation paid both within and without this state during

the taxable year. (2) Compensation is paid in this state if any one of the following tests, applied consecutively,

is met: (a) The employee's services are performed entirely within this state. (b) The employee's services are performed both within and without this state, but the

service performed without this state is incidental to the employee's service within

this state.  The term “ incidental ” means any service which is temporary or transitory in nature, or which is rendered

in connection with an isolated transaction. (c) The employee's services are performed both within and without this state, and: (i) The employee's principal base of operations is within this state;  or (ii) There is no principal base of operations in any state in which some part of the services

are performed, but the place from which the services are directed or controlled is

in this state;  or (iii) The principal base of operations and the place from which the services are directed

or controlled are not in any state in which some part of the service is performed

but the employee's residence is in this state. (F) A financial institution shall calculate the sales factor as follows: (1) The sales factor is a fraction, the numerator of which is the receipts of the taxpayer

in this state during the taxable year and the denominator of which is the receipts

of the taxpayer within and without this state during the taxable year.  The method of calculating receipts for purposes of the denominator is the same as

the method used in determining receipts for purposes of the numerator. (2) The numerator of the sales factor includes receipts from the lease or rental of real

property owned by the taxpayer if the property is located within this state, or receipts

from the sublease of real property if the property is located within this state. (3)(a) Except as described in division (F)(3)(b) of this section the numerator of the sales

factor includes receipts from the lease or rental of tangible personal property owned

by the taxpayer if the property is located within this state when it is first placed

in service by the lessee. (b) Receipts from the lease or rental of transportation property owned by the taxpayer

are included in the numerator of the sales factor to the extent that the property

is used in this state.  The extent an aircraft will be deemed to be used in this state and the amount of

receipts that is to be included in the numerator of this state's sales factor is determined

by multiplying all the receipts from the lease or rental of the aircraft by a fraction,

the numerator of which is the number of landings of the aircraft in this state and

the denominator of which is the total number of landings of the aircraft.  If the extent of the use of any transportation property within this state cannot

be determined, then the property will be deemed to be used wholly in the state in

which the property has its principal base of operations.  A motor vehicle will be deemed to be used wholly in the state in which it is registered. (4)(a) The numerator of the sales factor includes interest and fees or penalties in the

nature of interest from loans secured by real property if the property is located

within this state.  If the property is located both within this state and one or more other states,

the receipts described in this paragraph are included in the numerator of the sales

factor if more than fifty per cent of the fair market value of the real property is

located within this state.  If more than fifty per cent of the fair market value of the real property is not

located within any one state, then the receipts described in this paragraph shall

be included in the numerator of the sales factor if the borrower is located in this

state. (b) The determination of whether the real property securing a loan is located within

this state shall be made as of the time the original agreement was made and any and

all subsequent substitutions of collateral shall be disregarded. (5) The numerator of the sales factor includes interest and fees or penalties in the

nature of interest from loans not secured by real property if the borrower is located

in this state. (6) The numerator of the sales factor includes net gains from the sale of loans.  Net gains from the sale of loans includes income recorded under the coupon stripping

rules of section 1286 of the Internal Revenue Code . (a) The amount of net gains, but not less than zero, from the sale of loans secured by

real property included in the numerator is determined by multiplying such net gains

by a fraction the numerator of which is the amount included in the numerator of the

sales factor pursuant to division (F)(4) of this section and the denominator of which

is the total amount of interest and fees or penalties in the nature of interest from

loans secured by real property. (b) The amount of net gains, but not less than zero, from the sale of loans not secured

by real property included in the numerator is determined by multiplying such net gains

by a fraction the numerator of which is the amount included in the numerator of the

sales factor pursuant to division (F)(5) of this section and the denominator of which

is the total amount of interest and fees or penalties in the nature of interest from

loans not secured by real property. (7) The numerator of the sales factor includes interest and fees or penalties in the

nature of interest from credit card receivables and receipts from fees charged to

card holders, such as annual fees, if the billing address of the card holder is in

this state. (8) The numerator of the sales factor includes net gains, but not less than zero, from

the sale of credit card receivables multiplied by a fraction, the numerator of which

is the amount included in the numerator of the sales factor pursuant to division (F)(7)

of this section and the denominator of which is the taxpayer's total amount of interest

and fees or penalties in the nature of interest from credit card receivables and fees

charged to card holders. (9) The numerator of the sales factor includes all credit card issuer's reimbursement

fees multiplied by a fraction, the numerator of which is the amount included in the

numerator of the sales factor pursuant to division (F)(7) of this section and the

denominator of which is the taxpayer's total amount of interest and fees or penalties

in the nature of interest from credit card receivables and fees charged to card holders. (10) The numerator of the sales factor includes receipts from merchant discount if the

commercial domicile of the merchant is in this state.  Such receipts shall be computed net of any card holder charge backs, but shall not

be reduced by any interchange transaction fees or by any issuer's reimbursement fees

paid to another for charges made by its card holders. (11)(a)(i) The numerator of the sales factor includes loan servicing fees derived from loans

secured by real property multiplied by a fraction the numerator of which is the amount

included in the numerator of the sales factor pursuant to division (F)(4) of this

section and the denominator of which is the total amount of interest and fees or penalties

in the nature of interest from loans secured by real property. (ii) The numerator of the sales factor includes loan servicing fees derived from loans

not secured by real property multiplied by a fraction the numerator of which is the

amount included in the numerator of the sales factor pursuant to division (F)(5) of

this section and the denominator of which is the total amount of interest and fees

or penalties in the nature of interest from loans not secured by real property. (b) In circumstances in which the taxpayer receives loan servicing fees for servicing

either the secured or the unsecured loans of another, the numerator of the sales factor

shall include such fees if the borrower is located in this state. (12) The numerator of the sales factor includes receipts from services not otherwise apportioned

under this section if the service is performed in this state.  If the service is performed both within and without this state, the numerator of

the sales factor includes receipts from services not otherwise apportioned under this

section, if a greater proportion of the income-producing activity is performed in

this state based on cost of performance. (13)(a) Interest, dividends, net gains, but not less than zero, and other income from investment

assets and activities and from trading assets and activities shall be included in

the sales factor.  Investment assets and activities and trading assets and activities include but are

not limited to:  investment securities;  trading account assets;  federal funds;  securities

purchased and sold under agreements to resell or repurchase;  options;  futures contracts;

 forward contracts;  notional principal contracts such as swaps;  equities;  and foreign

currency transactions.  With respect to the investment and trading assets and activities described in divisions

(F)(13)(a)(i) and (ii) of this section, the sales factor shall include the amounts

described in such divisions. (i) The sales factor shall include the amount by which interest from federal funds sold

and securities purchased under resale agreements exceeds interest expense on federal

funds purchased and securities sold under repurchase agreements. (ii) The sales factor shall include the amount by which interest, dividends, gains, and

other income from trading assets and activities, including, but not limited to, assets

and activities in the matched book, in the arbitrage book, and foreign currency transactions,

exceed amounts paid in lieu of interest, amounts paid in lieu of dividends, and losses

from such assets and activities. (b) The numerator of the sales factor includes interest, dividends, net gains, but not

less than zero, and other income from investment assets and activities and from trading

assets and activities described in division (F)(13)(a) of this section that are attributable

to this state. (i) The amount of interest, other than interest described in division (F)(13)(b)(iv)

of this section, dividends, other than dividends described in that division, net gains,

but not less than zero, and other income from investment assets and activities in

the investment account to be attributed to this state and included in the numerator

is determined by multiplying all such income from such assets and activities by a

fraction, the numerator of which is the average value of such assets which are properly

assigned to a regular place of business of the taxpayer within this state and the

denominator of which is the average value of all such assets. (ii) The amount of interest from federal funds sold and purchased and from securities

purchased under resale agreements and securities sold under repurchase agreements

attributable to this state and included in the numerator is determined by multiplying

the amount described in division (F)(13)(a)(i) of this section from such funds and

such securities by a fraction, the numerator of which is the average value of federal

funds sold and securities purchased under agreements to resell which are properly

assigned to a regular place of business of the taxpayer within this state and the

denominator of which is the average value of all such funds and such securities. (iii) The amount of interest, dividends, gains, and other income from trading assets and

activities, including but not limited to assets and activities in the matched book,

in the arbitrage book, and foreign currency transaction, but excluding amounts described

in division (F)(13)(b)(i) or (ii) of this section, attributable to this state and

included in the numerator is determined by multiplying the amount described in division

(F)(13)(a)(ii) of this section by a fraction, the numerator of which is the average

value of such trading assets which are properly assigned to a regular place of business

of the taxpayer within this state and the denominator of which is the average value

of all such assets. (iv) The amount of dividends received on the capital stock of, and the amount of interest

received from loans and advances to, subsidiary corporations at least fifty-one per

cent of whose common stock is owned by the reporting financial institution shall be

allocated in and out of this state by the application of a ratio whose numerator is

the sum of the net book value of the payor's real property owned in this state and

the payor's tangible personal property owned in this state and whose denominator is

the sum of the net book value of the payor's real property owned wherever located

and the payor's tangible personal property owned wherever located.  For purposes of calculating this ratio, the taxpayer shall determine net book value

in accordance with generally accepted accounting principles. (v) For purposes of this division, average value shall be determined using the rules

for determining the average value of tangible personal property set forth in division

(D)(2) and (3) of this section. (c) In lieu of using the method set forth in division (F)(13)(b) of this section, the

taxpayer may elect, or the tax commissioner may require in order to fairly represent

the business activity of the taxpayer in this state, the use of the method set forth

in division (F)(13)(c) of this section. (i) The amount of interest, other than interest described in division (F)(13)(b)(iv)

of this section, dividends, other than dividends described in that division, net gains,

but not less than zero, and other income from investment assets and activities in

the investment account to be attributed to this state and included in the numerator

is determined by multiplying all such income from such assets and activities by a

fraction, the numerator of which is the gross income from such assets and activities

which are properly assigned to a regular place of business of the taxpayer within

this state, and the denominator of which is the gross income from all such assets

and activities. (ii) The amount of interest from federal funds sold and purchased and from securities

purchased under resale agreements and securities sold under repurchase agreements

attributable to this state and included in the numerator is determined by multiplying

the amount described in division (F)(13)(a)(i) of this section from such funds and

such securities by a fraction, the numerator of which is the gross income from such

funds and such securities which are properly assigned to a regular place of business

of the taxpayer within this state and the denominator of which is the gross income

from all such funds and such securities. (iii) The amount of interest, dividends, gains, and other income from trading assets and

activities, including, but not limited to, assets and activities in the matched book,

in the arbitrage book, and foreign currency transactions, but excluding amounts described

in division (F)(13)(a)(i) or (ii) of this section, attributable to this state and

included in the numerator, is determined by multiplying the amount described in division

(F)(13)(a)(ii) of this section by a fraction, the numerator of which is the gross

income from such trading assets and activities which are properly assigned to a regular

place of business of the taxpayer within this state and the denominator of which is

the gross income from all such assets and activities. (iv) The amount of dividends received on the capital stock of, and the amount of interest

received from loans and advances to, subsidiary corporations at least fifty-one per

cent of whose common stock is owned by the reporting financial institution shall be

allocated in and out of this state by the application of a ratio whose numerator is

the sum of the net book value of the payor's real property owned in this state and

the payor's tangible personal property owned in this state and whose denominator is

the sum of the payor's real property owned wherever located and the payor's tangible

personal property owned wherever located.  For purposes of calculating this ratio, the taxpayer shall determine net book value

in accordance with generally accepted accounting principles. (d) If the taxpayer elects or is required by the tax commissioner to use the method set

forth in division (F)(13)(c) of this section, it shall use this method on all subsequent

returns unless the taxpayer receives prior permission from the tax commissioner to

use or the tax commissioner requires a different method. (e) The taxpayer shall have the burden of proving that an investment asset or activity

or trading asset or activity was properly assigned to a regular place of business

outside of this state by demonstrating that the day-to-day decisions regarding the

asset or activity occurred at a regular place of business outside this state.  Where the day-to-day decisions regarding an investment asset or activity or trading

asset or activity occur at more than one regular place of business and one such regular

place of business is in this state and one such regular place of business is outside

this state such asset or activity shall be considered to be located at the regular

place of business of the taxpayer where the investment or trading policies or guidelines

with respect to the asset or activity are established.  Unless the taxpayer demonstrates to the contrary, such policies and guidelines shall

be presumed to be established at the commercial domicile of the taxpayer. (14) The numerator of the sales factor includes all other receipts if either: (a) The income-producing activity is performed solely in this state;  or (b) The income-producing activity is performed both within and without this state and

a greater proportion of the income-producing activity is performed within this state

than in any other state, based on costs of performance. (G) A qualified institution may calculate the base upon which the fee provided for in division (D) of section 5733.06 of the Revised Code is determined for each tax year by multiplying the value of its issued and outstanding

shares of stock determined under division (B) of this section by a single deposits

fraction whose numerator is the deposits assigned to branches in this state and whose

denominator is the deposits assigned to branches everywhere.  Deposits shall be assigned to branches in the same manner in which the assignment

is made for regulatory purposes.  If the base calculated under this division is less than the base calculated under

division (C) of this section, then the qualifying institution may elect to substitute

the base calculated under this division for the base calculated under division (C)

of this section.  Such election may be made annually for each tax year on the corporate report.  The election need not accompany the report;  rather, the election may accompany

a subsequently filed but timely application for refund, a subsequently filed but timely

amended report, or a subsequently filed but timely petition for reassessment.  The election is not irrevocable and it applies only to the specified tax year.  Nothing in this division shall be construed to extend any statute of limitations

set forth in this chapter. (H) If the apportionment provisions of this section do not fairly represent the extent

of the taxpayer's business activity in this state, the taxpayer may petition for or

the tax commissioner may require, in respect to all or any part of the taxpayer's

business activity, if reasonable: (1) Separate accounting; (2) The exclusion of any one or more of the factors; (3) The inclusion of one or more additional factors which will fairly represent the taxpayer's

business activity in this state;  or (4) The employment of any other method to effectuate an equitable allocation and apportionment

of the taxpayer's value. (I) For tax year 2012 and every tax year thereafter, a qualified financial institution

may calculate the base upon which the tax imposed by division (D) of section 5733.06 of the Revised Code is determined by multiplying the value of the qualified financial institution's issued

and outstanding shares of stock as determined under division (B) of this section by

the sales factor calculated in division (F) of this section instead of using the base

calculated under division (C) of this section.  An election under this division shall accompany the report or a subsequently filed

but timely amended report. 1

 Prior and current versions differ;  although no amendment to this language was indicated

in 2003 H 95, 2001 H 405, or 2001 H 94, “of the load” appeared as “of the loan” in

1997 H 215.