HB142 Alabama 2015 Session

Summary

Primary Sponsor

Mike Hill

Republican

Session

Regular Session 2015

Title

Corporate income tax, combined reporting of income required, Secs. 40-18-1, 40-18-30, 40-18-31 am'd.

Summary

HB142 would require Alabama corporate income tax filers with unitary businesses to file a single, combined return for all related entities.

What This Bill Does

It introduces combined reporting for unitary businesses, aggregating income and apportionment factors from all related entities into one Alabama return. The tax rate is 6.5% of taxable income, with the combined group’s tax calculated on the group's Alabama income. It provides election options (water’s-edge and affiliated-group) to control which members are included and how income is allocated, and it establishes an Alabama consolidated return option for affiliated groups. The Department of Revenue would issue rules to guide implementation and prevent tax avoidance.

Who It Affects

• Large Alabama corporations with affiliated subsidiaries that operate as a unitary business would file one combined Alabama corporate income tax return for the group, rather than separate entity returns.
• Members of Alabama affiliated groups or unitary groups (and those choosing water’s-edge, affiliated-group, or consolidated-return options) would see their income, deductions, and apportionment factors treated under new combined-reporting rules, potentially changing how their Alabama tax is calculated.

Key Provisions

• Combined reporting required for unitary businesses: all related corporations that are in a unitary group must file a single combined report including income and apportionment factors for the group.
• Determination of taxable income in a combined group: rules define how to compute each member's share of income and how apportionment factors are applied across the group, including treatment of intercompany transactions, dividends, and loss adjustments.
• Water’s-edge election: eligible members may elect to limit which members' income and apportionment factors are included in the combined group, with specific criteria and a binding 10-year term (flexible withdrawal under certain conditions).
• Affiliated group election: allows an affiliated group to treat all members as a single combined group for the return, with a 10-year term and potential renewal or revocation after the initial period; requires designation of a common parent and may involve a graduated annual fee based on total assets.
• Alabama consolidated return: provides a framework for filing a consolidated return on behalf of an Alabama affiliated group, with rules on member eligibility, liability, allocation and apportionment, and the involvement of a common parent; includes transition provisions and fees.
• Regulatory transition and effectiveness: the Department of Revenue would promulgate regulations to align with Treasury rules and to manage transitions from separate entity reporting to unitary combined reporting; the act takes effect for tax years beginning after December 31, 2014.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation