HB552 Alabama 2019 Session

Summary

Primary Sponsor

Danny GarrettRepresentative

Republican

Session

Regular Session 2019

Title

Corporate Income Tax, allow taxpayer who is part of a controlled group to factor that controlled group in computing deduction limitations, Sec. 40-18-39.1 added.

Summary

The bill lets Alabama corporate groups that include an insurance company add the group's other members' business interest income when calculating the deduction limit for business interest expenses.

What This Bill Does

Retroactive to January 1, 2019, it allows a corporation in a controlled group that includes an insurance company to include the aggregate business interest income of all other group members in computing the deduction limit for business interest expenses. This is allowed only if the group meets two conditions: (1) the corporation opts out of tax treatment under a specific property rule for all classes of qualified property placed in service that year, and (2) the group is primarily engaged in life/annuity or property and casualty insurance and is classified as a Direct Life Insurance Carrier or Direct Property and Casualty Insurance Carrier (or the equivalent). The law applies to taxable years beginning after December 31, 2018 and becomes effective a few months after passage and governor approval.

Who It Affects

• Alabama corporate taxpayers that are part of a controlled group which includes an insurance company and that are engaged in life/annuity or property and casualty insurance businesses.
• Other members of those controlled groups, including the insurance companies within the group, to the extent the group elects to include their business interest income in the calculation.
• Tax departments and financial officers of qualifying corporations who must make the opt-out election and manage the new calculation.

Key Provisions

• Section 40-18-39.1 allows a qualifying corporation to include the aggregate business interest income of all other controlled-group members in the calculation of the business interest expense deduction limit for the taxable year.
• Eligibility requires (a) an opt-out election under 26 U.S.C. § 168(k)(7) for all classes of qualified property placed in service during the year, and (b) the controlled group to be primarily engaged in life and annuity insurance or property and casualty insurance, classified as Direct Life Insurance Carrier (NAICS 524113) or Direct Property and Casualty Insurance Carrier (NAICS 524126) or equivalent.
• Retroactive effect to taxable years beginning after December 31, 2018, with applicability described as beginning in 2019, and the act taking effect for years after the specified dates.

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