Alabama Administrative Code
Title 810 - ALABAMA DEPARTMENT OF REVENUE
Chapter 810-3-160 - REQUIREMENTS FOR QUALIFICATION AS AN ALABAMA S CORPORATION
Section 810-3-160-.01 - Qualification Requirements For S Corporations
Universal Citation: AL Admin Code R 810-3-160-.01
Current through Register Vol. 43, No. 02, November 27, 2024
(1)
(a) For
tax years beginning before January 1, 1990, to qualify as an Alabama S
corporation, the criteria to be met for each year of the election are -
1. a valid election must be in effect under
I.R.C. § 1362, and
2. all
nonresident shareholders who hold any stock interest in the electing
corporation during any part of the tax year of the corporation must execute a
consent agreement to report their share of the Alabama S corporation Alabama
income to this state and pay any tax due thereon.
(2)
(a) The election will be made by filing Form
20S, together with the required consent agreements of all nonresident
shareholders (if any), and any other required attachments; not later than the
due date (with extensions) of the corporation return.
(b) Once made, the election to be an Alabama
S corporation for a taxable year may not be revoked or cancelled.
(c) An "Alabama C corporation" means any
corporation other than an Alabama S corporation.
(3)
(a) If
the corporation ceases to qualify under I.R.C. § 1362, part-year S and C
returns will be required as provided in I.R.C. § 1362(e). Such returns
will be due not later than the fifteenth day of the third month after the close
of the corporation's tax year, plus any extensions of time to file that may be
granted.
(b) An "S return" means
Form 20S to be filed by qualified Alabama S corporations. A "C return" means
Form 20S for domestic corporations or Form 2OF for foreign
corporations.
(4)
(a) The consent agreement (Schedule NRA) to
be executed by all nonresident shareholders shall contain the following
information:
1. the name, address and social
security number of the shareholder, and
2. a recitation of the agreement to report
and pay tax to Alabama on the shareholder's share of the Alabama S corporation
income in exchange for the benefits of allowing the corporation to file an
Alabama S Corporation return, and
3. an agreement appointing the Alabama
resident agent of the corporation and any agent or officer of the corporation
present in Alabama as agent of the shareholder for service of process in any
matter before the Department relating to the income tax returns of the
shareholder and/or the corporation, and
4. be notarized or otherwise authenticated
before some officer authorized to administer oaths.
(b) If the stock is held by multiple owners
(such as joint owners), each owner must execute a separate consent
agreement.
(c) Each nonresident
shareholder may designate any other person or firm present in Alabama as agent
for service of process, in addition to the agents required to be appointed in
subparagraph (a) 3. above.
(d) Any
nonresident shareholder may, by power-of-attorney, authorize anyone to execute
the required consent agreement on behalf of the shareholder. Such
power-of-attorney, to be effective, must be filed with the Department on or
before the due date (with extensions) of the first return in which a consent
agreement is being executed under the power-of-attorney. The power-of-attorney
need be filed only once and remains valid until the expiration date specified
therein or until notice of revocation, cancellation or modification is received
by the Department. Such power-of-attorney may be in any form sufficient to
indicate the intent of the parties, and must be authenticated in the manner
prescribed in subparagraph (a)4. above.
(e)
1. A
nonresident is any person who is a legal resident of any state other than
Alabama, or of any territory, possession, district or foreign
country.
2. The status as a
resident or nonresident will be determined as of the date of any distribution
or deemed distribution.
(5)
(a)
During all years (beginning on or after January 1, 1985 and before January 1,
1990) for which the corporation qualifies as an Alabama S corporation, the
corporation will not be subject to income tax as a corporation under §
40-18-31. There are no provisions
of Alabama law similar to Federal law (such as I.R.C. § 1374) imposing an
income tax on the corporation for certain types of non-qualifying income or for
excess investment income.
(b) The
corporation will file a return on Form 20S for each year it qualifies as an
Alabama S corporation. The S return will be due at the same time as other
Alabama corporation income tax returns are due. An Alabama Schedule K-1 must be
attached for each shareholder who held any stock interest in the Alabama S
corporation during the taxable year, showing the shareholder's legal place of
residence, and detailing the shareholder's pro rata share of the corporation's
separately stated and nonseparately stated income and deductions attributed to
Alabama (see Reg.
810-3-31-.02. for attribution of
income to Alabama). The provisions of Reg.
810-3-39-.02 relating to
extensions of time to file corporation returns are equally applicable to an
Alabama S corporation.
(6) For tax years beginning after December 31, 1989, an "Alabama S corporation" means any corporation qualified to do business in Alabama which has in effect a valid election under I.R.C. 1362. (For tax years beginning after December 31, 1989, see Reg. 810-3-176-.01 regarding composite returns for nonresidents.)
Author: John H. Burgess.
Statutory Authority: Act 89-837.
Disclaimer: These regulations may not be the most recent version. Alabama may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.