2016 Code of Alabama
Title 40 - REVENUE AND TAXATION.
Chapter 18 - INCOME TAXES.
Article 1 - General Provisions.
Section 40-18-1 - Definitions.
For the purpose of this chapter, the following terms shall have the respective meanings ascribed by this section:
(1) ADVANCED FOSSIL-BASED GENERATION. The production of electricity from fossil-based generation with the use of technology or efficiency improvements to control or reduce carbon emissions, including but not limited to, technologies described in 26 U.S.C. § 48A(f), as such provision existed on December 31, 2007.
(2) ALTERNATIVE ENERGY RESOURCES. Coal gasification or liquefaction, nuclear, and advanced fossil-based generation.
(3) BIOMASS. Animals and plants, and the waste, by-products, or derivatives of either, including, but not limited to, the materials described in 26 U.S.C. §§ 45(c)(2), 45(c)(3), 45K(c)(3), or 48B(c)(4).
(4) BUSINESS TRUST. Any entity which is a business trust for federal income tax purposes.
(5) CAPTIVE REIT. Any REIT whose shares or certificates of beneficial interest are not regularly traded on an established securities market and are owned or controlled, at any time during the last half of the tax year, by an association taxable as a corporation that is not exempt from tax under 26 U.S.C. § 501(a), and is not any of the following: (i) a REIT; (ii) a listed Australian property trust (including any trust that a listed Australian property trust owns or controls, directly or indirectly, seventy-five percent or more of the voting power or value of the beneficial interests or shares of such trust); or (iii) any qualified foreign entity. The term Captive REIT shall not include any REIT at least 50 percent of the shares of which (by vote or value) are owned or controlled, directly or indirectly, at any time during the last half of the tax year, by a financial institution, as such term is defined in Chapter 16. For purposes of this definition, own or control means to own or control directly, indirectly, beneficially, or constructively more than fifty percent (50%) of the voting power or value of an entity. The attribution rules of 26 U.S.C. § 318, as modified by 26 U.S.C. § 856(d)(5), apply in determining ownership and control.
(6) CASH. Any legal tender, negotiable paper, or solvent credit.
(7) COAL GASIFICATION OR LIQUEFACTION. Liquid or gaseous fuels which are produced from coal, including lignite and including but not limited to fuels described in 26 U.S.C. §§ 45(c)(7)(A)(i), 45K(c)(1)(C), 48A(c)(7), or 48B(c)(2) as to coal, as such provisions existed on December 31, 2007.
(8) CORPORATION. The term includes associations, joint stock companies, and any other entity classified as an association taxable as a corporation for federal income tax purposes.
(9) DISREGARDED ENTITY. Any entity which is disregarded for federal income tax purposes.
(10) DOMESTIC. When applied to a corporation or subchapter K entity means created or organized under the laws of the State of Alabama.
(11) FIDUCIARY. A guardian, trustee, executor, administrator, personal representative, receiver, conservator, or any person acting in any fiduciary capacity for any person.
(12) FISCAL YEAR. An accounting period of 12 months ending on the last day of any month other than December.
(13) FOREIGN. When applied to a corporation or a subchapter K entity means created or organized under a jurisdiction other than the State of Alabama.
(14) GEOTHERMAL. Any geothermal reservoir in Alabama consisting of natural heat which is stored in rocks or in an aqueous liquid or vapor, whether or not under pressure.
(15) HEAD OF FAMILY. As used in this chapter, the term head of family has the same meaning as the term head of household as defined in 26 U.S.C. §2(b).
(16) HYDROPOWER PRODUCTION. The hydropower production of any hydroelectric dam or pumped hydro facility in Alabama, including, but not limited to, the hydropower production described in 26 U.S.C. § 45(c)(8), as such provision existed on December 31, 2007.
(17) INTANGIBLE EXPENSES AND COSTS. Any expenses, losses, and costs for, related to, or in connection directly or indirectly with the acquisition, use, maintenance, management, ownership, sale, exchange, or disposition of intangible property to the extent such amounts are allowed as deductions in determining taxable income before operating loss deduction and special deductions for the taxable year including, without limitation, expenses or losses related to or incurred in connection directly or indirectly with factoring transactions or discounting transactions, royalties, patents, technical and copyright licensing fees, and other similar expenses and costs. Intangible expenses and costs paid for the use of intangible property in this state are, to the recipient, income derived from sources within Alabama.
(18) INTANGIBLE PROPERTY. Patents, patent applications, trade names, trademarks, service marks, franchises, know-how, formulas, designs, patterns, processes, formats, copyrights and similar types of intangible assets, choses in action, and accounts receivable.
(19) INTEREST EXPENSES AND COSTS. Amounts directly or indirectly allowed as deductions under 26 U.S.C. § 163 for purposes of determining taxable income under the Internal Revenue Code. Interest expenses and costs paid to a related member by a subchapter K entity or a corporation, to the extent apportioned to Alabama by the payor, are to the recipient related member income derived from sources within Alabama.
(20) MUNICIPAL SOLID WASTE. The definition given in 26 U.S.C. § 45(c)(6), if located in Alabama.
(21) NONRESIDENT ESTATE. An estate other than a resident estate of this state.
(22) NONRESIDENT TRUST. A trust other than a resident trust of this state.
(23) NUCLEAR. Any nuclear facility the reactor design for which is approved after December 31, 1993, by the Nuclear Regulatory Commission, including, but not limited to, the facilities described in 26 U.S.C. § 45J(d), as such provision existed on December 31, 2007.
(24) PAID. For the purpose of deductions and credits hereinafter provided for with respect to income tax means paid or accrued or paid or incurred, and the terms paid or accrued and paid or incurred shall be construed according to the method of accounting on the basis of which the net income is computed under this chapter.
(25) PERSON. Any individual, trust, estate, corporation, association, disregarded entity, or subchapter K entity.
(26) QUALIFIED FOREIGN ENTITY. An entity organized outside of the U.S. that is similar in operation and form to a U.S. REIT that is not a captive REIT, and shall take into account the entity's: (i) total real estate assets; (ii) tax transparency; (iii) actual distribution or required distribution of taxable income; and (iv) concentration of ownership.
(27) REIT. A Real Estate Investment Trust having the meaning ascribed to that term in 26 U.S.C. §§ 856 to 858, inclusive.
(28) RELATED ENTITY. A stockholder who is an individual, or a member of the stockholder's family enumerated in 26 U.S.C. § 318, if the stockholder and the members of the stockholder's family own, directly, indirectly, beneficially, or constructively, in the aggregate, at least 50 percent of the value of the taxpayer's outstanding stock; a stockholder, or a stockholder's partnership, limited liability company, estate, trust or corporation, if the stockholder and the stockholder's partnerships, limited liability companies, estates, trusts, and corporations own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50 percent of the value of the taxpayer's outstanding stock; or a corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of 26 U.S.C. § 318, if the taxpayer owns, directly, indirectly, beneficially, or constructively, at least 50 percent of the value of the corporation's outstanding stock. The attribution rules of 26 U.S.C. § 318 shall apply for purposes of determining whether the ownership requirements of this subdivision have been met.
(29) RELATED MEMBER. A person that, with respect to the taxpayer any time during the taxable year, is a related entity as defined in this section, a component member as defined in 26 U.S.C. § 1563(b) of a controlled group of which the taxpayer is also a component, or is a person to or from whom there is attribution of stock ownership in accordance with 26 U.S.C. § 1563(e).
(30) RENEWABLE ENERGY RESOURCES. Wind, biomass, black liquor, tidal or ocean current, geothermal, solar energy, small irrigation, municipal solid waste, and hydropower production, and such term also includes hydrogen when derived or produced from some other renewable energy resource.
(31) REPORT FROM SOURCE. All individuals, corporations, associations, and partnerships, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, employers, and all other officers and employees of the state or of any municipal corporation or political subdivision of the state having control, receipt, custody, or payment of interest, rent, salaries, wages, premiums, annuities, compensation, remunerations, emoluments, barter income, or other fixed or determinable annual or periodical gains, profits, and income taxable under this chapter.
(32) RESIDENT ESTATE. The estate of any person who was a resident of Alabama at the time of his or her death.
(33) RESIDENT TRUST. A trust is a resident trust for a taxable year if it is a trust which meets both a. and b.:
a. The trust is created by the will of a decedent who was an Alabama resident at death or by a person who was an Alabama resident at the time such trust became irrevocable; and
b. For more than seven months during such taxable year, a person, as defined in this section, who either resides in or is domiciled in Alabama is either a fiduciary of the trust or a beneficiary of the trust to whom distributions currently may be made.
(34) SMALL IRRIGATION. An irrigation system canal or ditch in Alabama which does not include a dam or impoundment of water, including, but not limited to, facilities in Alabama described in 26 U.S.C. § 45(c)(5).
(35) SUBCHAPTER K ENTITY. A partnership, including a limited partnership or limited liability partnership, limited liability company, or any other entity subject to subchapter K of the Internal Revenue Code, 26 U.S.C. §§ 701 to 761, for federal income tax purposes, not including a single member limited liability company.
(36) TAXABLE YEAR. The calendar year or the fiscal year ending during the calendar year upon the basis of which net income is computed, or a period of less than 12 months resulting from a change in accounting period as provided in Section 40-18-30.
(37) TAXPAYER. Any person subject to a tax imposed by this chapter, or whose income is, in whole or in part, subject to a tax imposed by this chapter.
(38) TRUST. Any entity which is a trust for federal income tax purposes.
(Acts 1935, No. 194, p. 256; Code 1940, T. 51, §373; Acts 1985, No. 85-515, §4; Acts 1990, No. 90-583, p. 988, §1; Acts 1997, No. 97-625, p. 1048, §3; Act 2001-1088, 4th Sp. Sess., p. 1095, §1; Act 2006-114, p. 173, §2; Act 2008-275, p. 402, §7; Act 2008-543, p. 1175, §1.)
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