67-4-2107 - Tax diminished by operating deficits or business losses deemed impairment of capital.
67-4-2107. Tax diminished by operating deficits or business losses deemed impairment of capital.
(a) Where a corporation doing business without surplus or undivided profits has had the value of its capital stock impaired by operating deficits or other business losses, such as fire, flood, tornado, or other natural disasters, and where such deficit or loss is carried upon the books and records of the corporation as an impairment of capital, the measure of the tax shall be diminished by such loss or deficit.
(b) (1) If the capital stock of a corporation that is a subsidiary of another corporation or closely affiliated with another corporation by stock ownership is inadequate for its business needs apart from credit extended or indebtedness guaranteed by the parent or an affiliated corporation, in determining the amount of capital, surplus and undivided profit of such corporation with respect to its liability for the tax imposed by this part, there shall be included in the measure of the tax the indebtedness owed to or guaranteed by the parent or an affiliated corporation. If necessary to apportion such indebtedness, the methods of allocation set forth in subdivision (b)(2) shall be used.
(2) (A) Notwithstanding the provisions of this subsection (b) to the contrary, any corporation that, pursuant to the provisions of this subdivision (b)(2), has excluded any indebtedness to or guaranteed by a parent or an affiliated corporation in determining the amount of its capital, surplus and undivided profits subject to franchise tax, shall provide the commissioner with an additional computational schedule to supplement its franchise and excise tax return. This schedule shall be filed with the return or within ninety (90) days from April 23, 1998, if the return has already been filed. It shall show the corporation's total indebtedness to or guaranteed by its parent or any affiliated corporation, and a computation of the amount of any indebtedness that would have been included in the determination of its capital, surplus and undivided profits subject to the franchise tax had it not been for the provisions of this subdivision (b)(2).
(B) Any corporation that fails to timely file the schedule required by subdivision (b)(2)(A) shall be expressly prohibited from relying upon subdivision (b)(2)(A) to exclude any of its indebtedness to or guaranteed by a parent or affiliated corporation from its franchise tax base. In such a case, the commissioner shall disregard the provisions of subdivision (b)(2)(A) for the tax year involved and shall assess any resulting additional franchise tax plus interest accrued from the original due date of the return.
[Acts 1999, ch. 406, § 4; 2000, ch. 982, § 32; 2002, ch. 729, § 1; 2004, ch. 932, § 6.]