SB67 Alabama 2017 Session

Summary

Primary Sponsor

Linda Coleman-MadisonSenator

Democrat

Session

Regular Session 2017

Title

Corporate income tax, combined reporting of income required, Secs. 40-18-36, 40-18-38, 40-18-38.1 added; Secs. 40-18-1, 40-18-30, 40-18-31, 40-18-39 am'd.

Summary

SB67 would require Alabama corporate income tax reporting on a combined basis for unitary businesses, replacing separate returns.

What This Bill Does

It would require related entities in a unitary business to file one Alabama corporate income tax return, combining income and apportionment factors for all members. It creates two elections—water's-edge and affiliated-group—to control which members' income is included and how the group is treated, each with a 10-year binding period and withdrawal options. It also sets how taxable income is determined under combined reporting, including rules for intercompany transactions, dividends, and credits, and adds an annual fee for consolidated groups. The changes would apply to tax years beginning after December 31, 2017.

Who It Affects

• Unitary-business corporations with operations in Alabama will be required to file a single combined return, changing how their income is calculated and taxed in Alabama.
• Corporations that are part of an Alabama affiliated group (including foreign corporations) may elect to file an Alabama consolidated return, involving joint and several liability and a new annual asset-based fee; this election lasts 10 years and can be revoked after that period.

Key Provisions

• Unitary combined filing: Requires all related entities in a unitary business to file one combined Alabama corporate income tax return, including income and apportionment factors for all members.
• Water's-edge election (40-18-38): Allows selecting which members' income and apportionment factors are included in the combined return, with initiation, withdrawal rules, and a 10-year binding period.
• Affiliated group election (40-18-38.1): Allows an Alabama affiliated group to treat all members as a single Alabama consolidated return for up to 10 years, with renewal/withdrawal provisions and a new annual fee based on total assets.
• Determination of income (40-18-36): Establishes how to compute each member's share of business income under the combined group, including allocation, apportionment, intercompany transactions, dividends, capital gains, and net operating losses.
• Return requirements and enforcement (40-18-39 and related): Sets filing rules, arm's-length reporting, potential adjustments for distortions, and joint and several liability for group members; allows Department regulations and enforcement actions.
• Effective date: Applies to tax years beginning after December 31, 2017, with transition provisions guided by the Department of Revenue.

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