CFTC Form 1-FR-IB Instructions - National Futures Association

Enter the amount of any current tax liability related to income
accrued which is directly related to any noncurrent asset. An
example is commission income receivable which has been
outstanding for more than 30 days.
Line 3.D. - Long term debt pursuant to regulation 1.17(c)(4)(vi)
An IB may exclude long term debt from total liabilities under
the following conditions:
1. the IB reports plant, property, and equipment that is
used in a segment of its business other than that
involving securities or commodities futures/options
dealings; and
2. such plant, property, and equipment has not been
included in current assets.
For purposes of this exclusion, long term debt and business
segment are defined under generally accepted accounting
principles. The amount of the liability to be excluded is
limited to the net book value of the plant property and
equipment.
See also the instructions to line 10 (plant, property, and
equipment) of the Statement of Financial Condition.
Example
An IB carries on a commodity futures business and operates a
retail farm implement sales outlet. The extent of the IB
implement sales operation is such that it would be treated as a
separate business segment under generally accepted accounting
principles. Net book value of property and equipment used in
the farm implement sales operation is $5,500,000. It reports
the entire $5,500,000 as a noncurrent asset on line 10 of the
Statement of Financial Condition. The IB carries a liability
for a mortgage of $3,000,000, $300,000 of which represents
principal payments due within the next twelve months. The IB
may show $2,700,000 of the mortgage liability on line 3.D.
Line 3.E. - Total deductions
The total of lines 3.A. through 3.D.
Line 3.F. - Adjusted liabilities
Subtract line 3.E. from line 2.
Line 4. - Net capital
Subtract line 3.F. from line 1
Lines 5. through 12. - Charges against net capital
These lines reflect various charges the IB is required to take
against unadjusted net capital. They are detailed in Regulation
1.17(c)(5).