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Chapter 458-28 WAC

Last Update: 11/1/72


WAC Sections

HTMLPDF458-28-010Scope of rule.
HTMLPDF458-28-020Gross income defined.
HTMLPDF458-28-040Branch locations, division of income.


Scope of rule.

Chapter 134, Laws of 1972 ex. sess., authorizes cities and towns to impose a license fee or tax on financial institutions. Financial institutions having business locations in cities and towns which levy a tax upon gross income or gross receipts for the privilege of engaging in business shall divide their gross income for purposes of computing income earned in the cities, towns or unincorporated areas in which such places of business are located in accordance with these rules.
[Order ET 72-1, § 458-28-010, filed 9/29/72.]


Gross income defined.

"Gross income of the business" means the value proceeding or accruing by reason of the transaction of the business engaged in and includes gross proceeds of sales, compensation for the rendition of services, gains realized from trading in stocks, bonds, or other evidences of indebtedness, interest, discount, rents, royalties, fees, commissions, dividends, and other emoluments however designated, all without any deduction on account of the cost of tangible property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses.
Other examples of gross income are receipts from carrying charges, service charges, credit cards, safety deposit box rentals, bookkeeping or data processing, overdraft fees, flooring fees, and penalty fees.
[Order ET 72-1, § 458-28-020, filed 9/29/72.]



In arriving at income taxable to a city or town from activities of a place of business located therein, financial institutions may deduct from gross income:
(1) Dividends received by a parent from a subsidiary corporation.
(2) Interest received on investments or loans primarily secured by first mortgages or trust deeds on nontransient residential properties.
(3) Interest received on obligations of the state of Washington, its political subdivisions, and municipal corporations. A deduction may also be taken for interest received on direct obligations of the federal government, but not for interest attributable to loans or other financial obligations on which the federal government is merely a guarantor or insurer.
(4) Gross proceeds from the sale or rental of real estate.
[Order ET 72-1, § 458-28-030, filed 9/29/72.]


Branch locations, division of income.

Financial institutions having more than one place of business shall divide total taxable gross income so as to attribute taxable income to each location in the ratio of total interest earned (whether taxable or not) on loans originated at each location during the period covered by the tax return. The location at which a loan is originated is the place of business of the financial institution at which the customer deals with the financial institution to obtain the loan. Financial institutions having time or demand deposits may compute the ratio of total deposits at each location as a basis for approximating gross income of each location, provided the financial institution can demonstrate that the taxable income so computed will not differ by more than $10,000 in any one calendar year as to any one business location from the amount computed using the ratio of interest earned on loans originated at each location.
[Order ET 72-1, § 458-28-040, filed 9/29/72.]