If, at the close of each quarter of its taxable year, at least fifty per cent of the value of the total assets of a regulated investment company consists of obligations with respect to which taxation by this state is prohibited by federal law, the company shall be qualified to pay exempt dividends, as defined in section 12-701, to its shareholders. The value of the total assets of a regulated investment company shall be the value as defined in Section 851(c)(4) of the Internal Revenue Code. If the aggregate amount of dividends designated as exempt dividends with respect to a taxable year of any company is greater than an amount equal to the sum of the amount of interest income derived from obligations with respect to which taxation by this state is prohibited by federal law less the amount allowed as a deduction under Section 212 of the Internal Revenue Code for the production or collection of such interest income, the portion of such distribution which shall constitute an exempt dividend shall be only that portion of the amount so designated as the amount of such excess for such taxable year bears to the amount so designated.

(June Sp. Sess. P.A. 91-3, S. 69, 168; May Sp. Sess. P.A. 92-5, S. 13, 37.)

History: June Sp. Sess. P.A. 91-3, S. 69, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made a technical change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992.