(a) Property which is owned by a domestic corporation of this state is exempt from property taxation if:

1. (1) the corporation owns a water system or waterworks;
2. (2) the corporation is, pursuant to a contract, supplying its entire output of water at wholesale rates to a city or town of this state; and
3. (3) the city or town which receives the water owns at least ninety-five percent (95%) of the corporation's capital stock.

(b) For purposes of this section, stock is preferred stock and not capital stock if:

1. (1) fixed dividends are payable to the stock owner at a rate not to exceed six percent (6%) per year; and

2. (2) the stock owner has no further right to participate in the profits of the corporation.

   [Pre-1975 Property Tax Recodification Citation: 6-1-15-1.]

   Formerly: Acts 1975, P.L.47, SEC.1.