Section 701.1. Ascertainment of Taxable Amount; Exclusion of United States Obligations.--(a) (1) The taxable amount of shares shall be ascertained and fixed by the book value of total bank equity capital as determined by the Reports of Condition at the end of the preceding calendar year in accordance with the requirements of the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation or other applicable regulatory authority.
(2) If an institution does not file the Reports of Condition, book values shall be determined by generally accepted accounting principles as of the end of the preceding calendar year.
(3) For institutions which file Reports of Condition on a consolidated basis with subsidiaries formed pursuant to 12 U.S.C. § 611 (relating to formation authorized; fiscal agents; depositaries in insular possessions), total bank equity capital shall exclude the book value of total equity capital of the subsidiaries in accordance with the following schedule:
(i) For the calendar year beginning January 1, 2018, the exclusion for the book value of total equity capital of the subsidiaries shall be limited to twenty per cent of the book value of total equity capital of the subsidiaries.
(ii) For the calendar year beginning January 1, 2019, the exclusion for the book value of total equity capital of the subsidiaries shall be limited to forty per cent of the book value of total equity capital of the subsidiaries.
(iii) For the calendar year beginning January 1, 2020, the exclusion for the book value of total equity capital of the subsidiaries shall be limited to sixty per cent of the book value of total equity capital of the subsidiaries.
(iv) For the calendar year beginning January 1, 2021, the exclusion for the book value of total equity capital of the subsidiaries shall be limited to eighty per cent of the book value of total equity capital of the subsidiaries.
(v) For the calendar year beginning January 1, 2022, and each calendar year thereafter, the exclusion for the book value of total equity capital of the subsidiaries shall be one hundred per cent of the book value of total equity capital of the subsidiaries.
(b) A deduction for the value of United States obligations shall be provided from the taxable amount of shares in an amount equal to the same percentage of total bank equity capital as the book value of obligations of the United States bears to the book value of the total assets. In computing the deduction for United States obligations, any goodwill deducted from the taxable amount of shares under subsection (b.1) shall be subtracted from the book value of total bank equity capital and disregarded in determining the deduction provided for obligations of the United States. For purposes of this article, United States obligations shall be obligations coming within the scope of 31 U.S.C. § 3124 (relating to exemption from taxation). ((b) amended July 11, 2024, P.L.674, No.56)
(b.1) A deduction for goodwill shall be provided from the taxable amount of shares in an amount equal to the value of any goodwill recorded in the Reports of Condition of the institution pursuant to generally accepted accounting principles because of an acquisition or business combination and occurring after June 30, 2001. ((b.1) amended July 11, 2024, P.L.674, No.56)
(c) ((c) deleted by amendment July 11, 2024, P.L.674, No.56)
(701.1 amended July 13, 2016, P.L.526, No.84)
Compiler's Note: See sections 27 and 28 of Act 56 of 2024 in the appendix to this act for special provisions relating to applicability and findings and declarations.
Compiler's Note: Section 51(3)(ii) of Act 84 of 2016, which amended section 701.1, provided that the amendment or addition of subsections (b) and (b.1) shall apply retroactively to January 1, 2014.
Compiler's Note: Section 42(2.1) of Act 52 of 2013, which amended section 701.1, provided that the amendment shall apply to the calendar year beginning on January 1, 2014, and to each calendar thereafter. See section 43 of Act 52 in the appendix to this act for special provisions relating to applicability.
Compiler's Note: Section 14 of Act 55 of 2007, which amended section 701.1, provided that the amendment of section 701.1 is not intended to reverse or modify the ruling of First Union National Bank v. Commonwealth, 867 A.2d 711 (Pa. Commonwealth 2005).
Compiler's Note: See sections 1, 3 and 4 of Act 317 of 1982 in the appendix to this act for special provisions relating to legislative intent and applicability.