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Alabama Code (Last Updated: November 28, 2014) |
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Title40 REVENUE AND TAXATION. |
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Chapter14. CORPORATIONS. |
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Article3. Franchise Tax. |
§40-14-41. (Not Effective After December 31, 1999) Levy on foreign corporations.
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(a) Amount of levy. Every corporation organized under the laws of any other state, nation, or territory and doing business in this state, except strictly benevolent, educational, or religious corporations, shall pay annually to the state an annual franchise tax of three dollars ($3) on each one thousand dollars ($1,000) of the actual amount of its capital employed in this state. Corporations which have qualified to do business in this state shall for the purpose of this title prima facie be held to be doing business in Alabama. However, in no event shall the amount paid by any corporation for annual franchise tax be less than the sum of twenty-five dollars ($25).
(b) Definition of capital. The total capital of such foreign corporation, herein referred to as the "taxpayer," shall equal the aggregate net amount of the following items determined in accordance with generally accepted accounting principles appropriate in the particular case, as promulgated by the Financial Accounting Standards Board or a similar or successor agency or board, unless otherwise defined in this article:
(1) The outstanding capital stock and any additional paid-in capital, whether positive or negative, but excluding the taxpayer's cost of its treasury stock.
(2) Retained earnings, whether positive or negative, which shall include any amounts designated for the payment of dividends until the amounts are definitely and irrevocably placed to the credit of stockholders subject to withdrawal on demand.
(3) The amount of bonds, notes, debentures, or other evidences of indebtedness maturing and payable more than one year after the first day of the franchise tax year, but not including deposit liabilities of banks and other financial institutions as defined by state or federal law.
(4) The amount of bonds, notes, debentures, or other evidences of indebtedness, but not including deposit liabilities of banks and other financial institutions as defined by state or federal law, maturing and payable at the time to: (i) any individual stockholder owning directly or indirectly 10 percent or more of the outstanding capital stock of the taxpayer, or (ii) another corporation owning more than 50 percent of the outstanding capital stock of the taxpayer, or (iii) another corporation more than 50 percent of the outstanding capital stock of which is owned by the taxpayer, unless the other corporation referred to in clause (ii) or (iii) is also required to pay a franchise tax to the State of Alabama.
(5) The amount reasonably required to adjust the depreciable or amortizable property accounts for any rapid, excessive, or unreasonable depreciation or amortization charges, so as to restore the depreciable or amortizable property accounts, for franchise tax purposes, to original cost less depreciation or amortization computed on the basis of the useful life of the property to the taxpayer.
(c) Determination of capital employed in state. The actual amount of capital employed by the taxpayer in this state shall then be determined by apportioning the total capital of the taxpayer, as defined above, to Alabama in accordance with regulations promulgated by the Department of Revenue appropriate in the particular case, except that if the apportionment formula prescribed by the regulations and otherwise applicable to the taxpayer would not fairly represent the actual amount of the capital of the taxpayer employed in this state, then the taxpayer may petition for or the department may require, if reasonable, any one of the following:
(1) The exclusion of any one or more of the three standard factors plus the cost-of-manufacturing component;
(2) The inclusion of one or more additional factors which fairly represents the taxpayer's actual amount of capital employed in this state; or
(3) The employment of any other method, including, without limitation, the method commonly referred to as the summation method, which effectuates an equitable determination of the actual amount of the taxpayer's capital employed in this state.
However, in the case of organizations whose accounts and records are kept according to rules prescribed by a regulatory agency or instrumentality of the United States or by the Alabama Public Service Commission, or by a state insurance department, the actual amount of capital employed in this state as so determined shall in no event exceed the value of the sum of its tangible property located in this state and its intangible property employed in the conduct of its business in this state.
(d) Exclusions and deductions. (1) There shall be excluded from the amount of capital as determined in subsection (b) of this section the investment by the taxpayer in the capital of other corporations organized under the laws of Alabama, or under the laws of any other state if such other corporations also pay a franchise tax to the State of Alabama, unless the taxpayer is a dealer in stocks or securities.
(2) Except as provided in subdivision (3), in addition to any other applicable exclusions, in the case of any taxpayer, there shall be excluded from the amount of capital as determined in subsection (b), the investment by the taxpayer in the capital of any other corporation that does not pay a franchise tax to the State of Alabama if the taxpayer owns more than 50 percent of the outstanding capital stock of the other corporation, unless the other corporation is dormant and not regularly engaged in one or more business activities.
(3) In addition to any other applicable exclusions, in the case of any bank or bank holding company, there shall be excluded from the amount of capital as determined in subsection (b) as subsection (b) provided prior to the enactment of Act 95-564, the investment by the bank or bank holding company in the capital of any other corporation that does not pay a franchise tax to the State of Alabama if the bank or bank holding company owns more than 50 percent of the outstanding capital stock of the other corporation, unless the other corporation is dormant and not regularly engaged in one or more business activities. A corporation shall not be deemed dormant and shall be considered regularly engaged in one or more business activities, if the corporation owns, directly or indirectly, more than 50 percent of the outstanding capital stock of another corporation regularly engaged in one or more business activities. A corporation shall be deemed to directly or indirectly own more than 50 percent of another corporation if both corporations would be part of a controlled group of corporations as defined in 26 U.S.C. Section 1563 if a 50 percent ownership requirement is applied in lieu of the 80 percent ownership requirement in 26 U.S.C. Section 1563.
(4) There shall be deducted from the amount of capital employed in this state as determined in accordance with subsections (b) and (c) of this section, the following amounts:
a. The aggregate amount of loans of money made by the taxpayer in this state and which shall be secured by existing mortgage or mortgages to it on real estate in this state and upon which mortgage or mortgages there shall have been paid the recording privilege tax provided by law.
b. The amount invested by the taxpayer in bonds or other securities issued by the State of Alabama, or any county, municipality, or other political subdivision of the State of Alabama, or any public corporation organized under the laws of the State of Alabama, unless the corporation is a dealer in securities.
c. The amount invested by the taxpayer in all devices, facilities, or structures, and all identifiable components or materials for use therein, acquired or constructed primarily for the control, reduction, or elimination of air or water pollution.
d. The amount invested by the taxpayer in all real and tangible personal property, equipment, facilities, structures, and components including, but not limited to, all aircraft replacement parts, components, systems, supplies, and sundries affixed or used on an aircraft, and ground support equipment and vehicles used by or for the aircraft, when used by certified or licensed air carrier with a hub operation within this state, for use in conducting intrastate, interstate, or foreign commerce for transporting people or property by air. For the purpose of this paragraph, the words "hub operation within this state" shall be construed to have all of the following criteria:
1. There originate from the location 15 or more flight departures and five or more different first-stop destinations five days per week for six or more months during the calendar year.
2. Passengers or property, or both, are regularly exchanged at the location between flights of the same or a different certificated or licensed air carrier.
e. During the period beginning December 1, 1997, and ending on the date 20years thereafter, the amount invested in all new and existing manufacturing facilities in this state by the taxpayer, which amount shall be limited to the investment in all real and tangible personal property, equipment, facilities, structures, components, and inventory in this state, provided that the taxpayer has met the criteria in subparagraph 1. below, and, in addition, has met the criteria in subparagraph 2. below:
1. The taxpayer must, not later than December 31, 2000, file with the Alabama Department of Revenue a statement of intent to claim the deduction provided under this section. This statement of intent shall contain any information required by the Department of Revenue.
2. During the period commencing with December 1, 1997, and ending on the date six years thereafter, the amount of new investment in all new and existing manufacturing facilities in this state by the taxpayer and, in addition, the number of new employees at all new and existing manufacturing facilities in this state shall meet or exceed the limits described in one of the following brackets:
Amount Invested Number of New Employees 1. Not less than $1,000,000,000 Not less than 500 2. Not less than $900,000,000 Not less than 600 3. Not less than $800,000,000 Not less than 700 4. Not less than $700,000,000 Not less than 800 5. Not less than $600,000,000 Not less than 900 6. Not less than $500,000,000 Not less than 1,000 7. Not less than $400,000,000 Not less than 1,100 8. Not less than $300,000,000 Not less than 1,200 9. Not less than $200,000,000 Not less than 1,300 10. Not less than $100,000,000 Not less than 1,400
No deduction shall be available under this paragraph e. until the criteria defined in subparagraph 1. above, and, in addition, subparagraph 2. above have been met. The deduction available under this paragraph e. shall only be available during those years within the 20 years after December 1, 1997, in which the taxpayer maintains the criteria defined in subparagraph 2. above.
f. The amount invested by the taxpayer in the purchase of an existing manufacturing facility in this state, which amount shall be limited to the investment in all real and tangible personal property, equipment, facilities, structures, components, and inventory on or after January 1, 1998, and during the period for 20 years thereafter, provided that the taxpayer has met the criteria in subparagraphs 1., 2., and 3.
1. The taxpayer must, within six months of February 19, 1998, file with the Alabama Department of Revenue a statement of intent to claim the deduction provided pursuant to this paragraph. The statement of intent shall contain any information required by the department.
2. At the time of purchase, the existing manufacturing facility must have at least 1,000 employees, which employment level must be maintained during the period 20 years after the date of acquisition by the taxpayer.
3. At the time of purchase, the existing manufacturing facility must produce aluminum alloy can stock.