SB375 Alabama 2019 Session

Summary

Primary Sponsor

Dan RobertsSenator

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

SB 375 would let a corporate taxpayer in a controlled group that includes an insurance company include the group's total business interest income when calculating the deduction limit for business interest expenses, retroactive to 2019.

What This Bill Does

The bill changes how the federal limitation on business interest deductions is calculated for certain Alabama corporate taxpayers. If the controlled group includes an insurance company and meets specific insurance classifications, the taxpayer may include the aggregate business interest income of all other group members in the deduction limit calculation. This option is available only if the taxpayer makes an opt-out election for all classes of qualified property placed in service during the year and the group is primarily engaged in life/annuity or property and casualty insurance. The changes apply to taxable years beginning after December 31, 2018, with retroactive effect to January 1, 2019.

Who It Affects

• Corporate income taxpayers in Alabama that are part of a controlled group containing an insurance company and meet the specified insurance classifications (Direct Life Insurance Carrier NAICS 524113 or Direct Property and Casualty Insurance Carrier NAICS 524126, or equivalent).
• The controlled group as a whole, since the group may be able to include members' business interest income in the deduction limitation calculation if the conditions are satisfied and the opt-out election is made.

Key Provisions

• Adds new §40-18-39.1 allowing the aggregate business interest income of all other members of a controlled group to be included in the calculation of any limitation on the deduction for business interest expense when the group includes an insurance company.
• Conditions: the corporation must make an opt-out election under 26 U.S.C. § 168(k)(7) for all classes of qualified property placed in service during the taxable year, and the controlled group must be primarily engaged in life/annuity insurance or property and casualty insurance (NAICS 524113 or 524126 or equivalent).
• Effective date and retroactivity: becomes law on the first day of the third month after passage and approval, applies to taxable years beginning after December 31, 2018, with retroactive application to January 1, 2019.

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