Current through Register Vol. 42, No. 11, August 30, 2024
(1)
Scope. This
regulation provides guidance concerning the Alabama business privilege tax
filing requirements for certain disregarded entities and the owners of the
disregarded entities.
(2)
Net Worth Computation of Disregarded Entities. Section
40-14A-23,
Code of Ala. 1975, establishes the net worth
computation for business entities subject to the Alabama business privilege
tax. In accordance with the section, the net worth computations of a
disregarded entity differ based upon whether the owner of the disregarded
entity is subject to the Alabama business privilege tax. See Section
40-14A-1,
Code of Ala. 1975, for a definition of "disregarded
entity."
(a)
Disregarded Entity
Net Worth Computation if the Owner of the Disregarded Entity is Subject to the
Alabama Business Privilege Tax. The net worth of the disregarded
entity shall be zero, and the items that would enter into determining the net
worth of the disregarded entity shall be used in computing the net worth of the
owner of the disregarded entity.
1. Both the
disregarded entity and the disregarded entity's owner would be required to file
an Alabama business privilege tax return.
2. The disregarded entity must disclose the
owner's name and Federal Employer Identification Number (FEIN) as required by
the Alabama business privilege tax form.
(b)
Disregarded Entity Net Worth
Computation if the Owner of the Disregarded Entity Is Not Subject to the
Alabama Business Privilege Tax. The net worth of the disregarded
entity shall be equal to the amount of the disregarded entity's assets less its
liabilities.
1. Since, the owner of the
disregarded entity is not subject to the Alabama business privilege tax, the
owner would not be required to file an Alabama business privilege tax
return.
2. Disregarded entity
owners that are not subject to the Alabama business privilege tax include, but
are not limited to: resident individual taxpayers; nonresident individual
taxpayers; general partnerships; and, foreign business entities not doing
business in the state of Alabama and not registered with the Alabama Secretary
of State's Office to do business in the state of Alabama.
3. The disregarded entity must disclose the
owner's name and FEIN as required by the Alabama business privilege tax form. A
statement must be attached to the business privilege tax return explaining why
the owner is not subject to the Alabama business privilege tax.
