Form 20C — Corporate Income Tax Return Instructions

# preamble

What's New For 2013 Electronic Filing Option. Alabama's Paperless Filing and Payment System (ACH Debit Method) is no longer available. Effective July 1, 2013, taxpayers are re - quired to remit electronic payments using one of the options listed on Page 2 of the Form 20C instructions. Schedule BC. The Alabama Department of Revenue now requires the use of Schedule BC, Business Credits, when claiming business tax credits. The new sched - ule allows the taxpayer to compute the total amount of tax credits allowable. The amounts entered on the Schedule BC will carry over to the Form 20C, page 4, Sched - ule F. This schedule must be submitted with the return to receive credit(s). See in - structions for Schedule BC for additional information. Entertainment Industry Incentive Act of 2009. Act Number 2013-34 passed the Alabama Legislature during the 2013 Regular Session. The Act amends Code of Ala - bama Section 41-7A-43 (Act 2012-212, originally passed in 2009). Act Number 2013- 34 clarifies certain expenses allowed to be rebated, retroactive to June 14, 2011. See the instructions for Form 20C, Schedule F, line 5. Irrigation Credit. The Alabama Legislature passed Act Number 2013-66 during the 2013 Regular Session. The Act amends Code of Alabama Section 40-18-342 (Act 2012-391, originally passed in 2012). Act Number 2013-66 makes changes to the flow rate of rivers/streams excepted from the reservoir requirements; allowance for the credit to be carried forward for 5 years and pro rata share of the credit on a passthrough basis. See the instructions for Form 20C, Schedule F, line 5. Alabama Accountability Act of 2013. The Alabama Legislature passed Act Number 2013-64 during the 2013 Regular Session. The act authorizes a tax credit for contributions to organizations that provide educational scholarships to qualifying schools. The credit is equal to 100% of the total contributions made to a scholarship granting organization for educational scholarships during a taxable year for which the credit is claimed up to 50% of the tax liability of the taxpayer. See the instructions for Form ET-1, Schedule G, line 3. General Information For C Corporations Corporations Subject To Income Tax: Sections 40-18-2 and 40-18-31, Code of Alabama 1975 , impose an income tax on every corporation doing business in Alabama or deriving income from sources within Alabama, including income from property located in Alabama and on every corporation licensed or qualified to transact business in Alabama except for those corporations specifically exempted by §40-18-32. Filing Requirements: Every corporation, joint stock company, or association subject to income tax under Title 40, Code of Alabama 1975 , is required by §40-18-39 to file a return with the Ala - bama Department of Revenue for each taxable period stating gross income and al - lowable deductions and credits. Penalties will be added for failure to timely file, failure to timely pay, or fraudulent filing. The Commissioner of Revenue is authorized to dis - tribute, apportion or allocate income and deductions of related taxpayers to clearly re - flect the income of the entities. See §40-18-35(b)(5). Consolidated Filing: Please refer to our Web site at www.revenue.alabama.gov for instructions on fil - ing a Consolidated Corporate Income Tax Return, Form 20C-C . When To File: ORIGINAL DUE DATE. The return for calendar year 2013 is due on or before March 15, 2014. For fiscal year or short-year taxpayers, the return is due on or be - fore the 15th day of the 3rd month following the close of the tax period. If the due date falls on a Saturday, Sunday, or state holiday, the return will be due the following busi - ness day. Which Form To Use: FORM 20C. Corporations must file Form 20C, Corporation Income Tax Return, unless (1) a valid election is in effect to be an S corporation under 26 U.S.C. §1362, (2) a valid election is in effect to be a qualified subchapter S subsidiary under 26 U.S.C. §1361(b)(3) and all of its stock is owned by an Alabama S corporation, or (3) the corporation has exempt status under §40-18-25(e), 40-18-25(f), or 40-18-32 and the corporation has no unrelated business taxable income. NOTE: Payments of $750 or more are required to be made electronically. However, any business income tax payment mailed into the Department must be remitted with Form BIT-V. FORM 20C-C Alabama Consolidated Corporate Income Tax Return. The Form 20C-C must be filed by or on behalf of the members of the Alabama affiliated group in accordance with Alabama Code Section 40-18-39, when a Consolidated Filing election has been made pursuant to Code Section 40-18-39(c). FORM BIT-V. Taxpayers with a business income tax payment of less than $750 must complete Form BIT-V, Alabama Business Income Tax Voucher. Detach the com - pleted voucher, and mail it along with your payment. Payments of $750 or more must be remitted electronically. DO NOT staple or otherwise attach your payment or Form BIT-V to your return or to each other. Instead, place the items loose in the envelope. A valid Form BIT-V must accompany all tax payments that are not made elec - tronically. To obtain Form BIT-V visit our Web site at www.revenue.alabama.gov. Estimate/Extension/Informational Requirements: Estimated Income Tax Payments. A corporation that has an Alabama income tax liability in excess of $500 must pay estimated tax. The first payment is due by the 15th day of the 4th month of the taxable year. The 2nd, 3rd, and 4th payments are due by the 15th day of the 6th, 9th, and 12th months, respectively. The amount of required installments shall be 25 percent of the required annual payment. Required annual payment generally means the lesser of a) 100 percent of the tax shown on the return for the taxable year, or b) 100 percent of the tax shown on the return of the corporation for the preceding taxable year. The prior period ex - ception shall not apply if the preceding taxable year was not a taxable year of 12 months or the corporation did not file a return for such preceding taxable year show - ing a liability for tax. Refer to Alabama Code Section 40-18-80.1. Large corporations (taxable income of $1,000,000 or more for any taxable year during the testing period) are required to pay 100 percent of the current year tax. The prior year exception shall not apply in the case of a large corporation. The testing pe - riod is the 3 taxable years immediately preceding the taxable year involved. Also, tax - able income shall be determined without regard to any net operating loss carried to the taxable year under Section 40-18-35.1. Refer to Alabama Code Section 40 -18 -80.1. Estimated tax payments not paid by each quarterly due date will be subject to in - terest on the underpayment - determined by applying the underpayment rate estab - lished by 26 U.S.C. §6621 (as provided by Alabama Code Section 40-18-80.1) to the underpayment for the period of underpayment. In addition, the 10% penalty provided for in Alabama Code Section 40-2A-11 applies to estimated tax payments not paid by the quarterly due date. Form 2220AL. Relief from the interest and penalty due on underpayment of es - timated tax may be granted to eligible taxpayers who file Alabama Form 2220AL and meet one of the exceptions below. • A corporation computed their required quarterly installments using an approved federal method (annualized or seasonal) . • A Large Corporation is allowed to base its first quarter installment on the prior year tax liability. • An exception if the corporation's main source of Alabama Taxable Income is the result of Schedule K-1 income generated from a Pass Through Entity. Automatic Extension Payments. An automatic extension of six months is granted to file the Alabama Corporation Income Tax Return, Form 20C. If estimated payments do not equal or exceed the amount of tax due for the period, the balance

INSTRUCTIONS FOR THE PREPAR ATION OF Corpor ation Income Tax Return FORM 20C

# INSTRUCTIONS

of the corporation's tax liability is due on or before the original due date of the return. Automatic extension payments of $750 or more must be made electronically. DO NOT MAIL FORM BIT-V IF THE PAYMENT IS REMITTED ELECTRONICALLY. To obtain Form BIT-V visit our Web site at www.revenue. alabama.gov. Taxes not paid on or before the unextended due date will be subject to interest until paid at the rate provided in §40-1-44, Code of Alabama 1975, and all applicable penalties. Returns or payments under $750 bearing a U.S. Postal Service cancellation no later than midnight of the due date will be considered timely. CIVIL PENALTIES. Section 40-2A-11 provides additional penalties for (1) failure to timely file, (2) failure to timely pay, (3) underpayment due to negligence, and (4) underpayment due to fraud. These penalties may be assessed in addition to the amounts provided by §40-18-80.1. How To File: REQUIRED ATTACHMENTS.For the return to be considered complete and properly filed, a signed copy of the appropriate federal return (Form 1120, 1120A, 1120F, 1120H, 990/990T, etc.) must be attached. However, if the corporation is completing a 20C proforma return, the appropriate federal return and required attachments should be attached to the Form 20C-C. Failure to attach the complete federal return, as filed with the IRS, with the necessary supporting schedules, forms and statements (ex: Schedule D, Schedule UTP; Form 8886, Form 4797, balance sheet, supporting statements for other income and other deductions) may result in the imposition of delinquent and/or frivolous penalties. In addition to the required federal attachments, Alabama requires copies of Schedules K-1 for each tax entity the corporation held an interest in during the taxable year. Itemized depreciation schedules are not required to be attached to Form 20C, but should be maintained and available upon request. If the corporation is a member of an affiliated group which files a consolidated federal return, additional information is required. In addition to the signed copy of the appropriate federal return, the following are required: 1) Federal Form 851, the federal affiliations schedule, should be included and the names of those entities subject to Alabama tax should be identified. The names of the entities subject to Alabama tax can either be underlined, or identified by using an (*) asterisk beside the name of the entity. 2) Copies of the supporting schedules, forms and statements filed as an attachment with the appropriate federal form type. This includes items such as the consolidating income spreadsheets (including the column that identifies any eliminations or adjustments that occur as a result of the federal consolidation rules); the consolidating balance sheets (by separate company) for the beginning of the year and the end of the year; supporting statements for other income and other deductions (by separate company). These supporting statements, forms and schedules should be copies of the actual documents provided to the Internal Revenue Service, not reproduced versions for state tax purposes. 3) a Proforma U.S. Corporation Income Tax Return Form 1120, with supporting statements, for each separate entity to support any differences in Form 20C, line 1, Federal Taxable Income due to capital gains, charitable contribution and federal SRLY NOLs. Period Covered: File the 2013 return for calendar year 2013, for fiscal years or short years that begin in 2013. Mark the appropriate box at the top of the form for a calendar, fiscal or short-year. Signature: The return must be signed by an authorized officer of the corporation. If the property or business is being operated by a receiver trustee in bankruptcy or an assignee, such person shall sign for the corporation. Enter the date signed and the title of the person whose signature is affixed. If the return is prepared by anyone other than an employee of the taxpayer, enter the signature and identification information of the preparer. PAID PREPARER AUTHORIZATION.Above the return signature area is a check box which can be used to authorize the Alabama Department of Revenue to discuss the Alabama Form 20C and its attachments with the paid preparer - who is identified in the Paid Preparer's Use Only section of the return. To represent the taxpayer before the Alabama Department of Revenue for tax matters related to the return, this box must be checked. PAID PREPARER INFORMATION. Anyone who is paid to prepare the Alabama Form 20C must sign and provide the information requested in the Paid Preparer's Use Only section of the Form 20C. The signature can be made by hand, rubber stamp, mechanical device, or a computer software program. Paid preparers must provide the taxpayer with a copy of the prepared return. Any questions concerning the preparation of the Alabama Form 20C should be directed to the Corporate Income Tax Section 334-242-1200. Alabama Corporate Income Tax law, regulations, forms and instructions are available on the Alabama Department of Revenue's Web site at www.revenue. alabama. gov. Where To File/Payment of Tax: The total amount of the corporation's income tax liability for the period is due on or before the unextended due date of the return. If the return is to be filed under extension, any liability due should be remitted no later than the original due date of the return. Payments of $750 or more must be made electronically. Non-electronic payments must be remitted with Form BIT-V. DO NOT MAIL FORM BIT-V IF THE PAY- MENT IS REMITTED ELECTRONICALLY. ELECTRONIC PAYMENT. Section 41-1-20 requires electronic payments for all single business tax payments of $750 or more. Substantial penalties will be assessed for noncompliance. Electronic Payment Options available: • My Alabama Taxes (MAT)- Taxpayers who have an account with the Alabama Department of Revenue may register and make e-payments using MAT. Visit the Department's Web site at www.revenue.alabama.gov (click the MAT icon on the home page). Signing up or using MAT, call the MAT Help Desk toll free (1-800-267-2146) 24/7 • ACH Credit - Taxpayers making e-payments via ACH Credit must be pre-approved by ADOR. To register, complete and submit Form EFT:001 entitled EFT Authorization Agreement Form. Visit our Web site at www.revenue.alabama.gov/ eservices.htm for additional information. Technical assistance with making a payment using ACH Credit, call the toll free hotline (1-800-322-4106 or 334-242-0192, option 7) from 8:00 a.m. through 5:00 p.m. (Central Standard Time) • Alabama Interactive - The Department will accept e-payments for estimated and automatic extension payments through Alabama Interactive. Visit www.alabamainteractive.org/taxestimation/ or www.alabamainteractive.org/ taxextension/. Technical assistance with making a payment using Alabama Interactive, call toll free (1-866-353-3468) • Official Payments - The Department will accept electronic check (e-check) and credit card payments through Official Payments Corporation on the Internet. Visit www.officialpayments.com/echeck. A convenience fee may be charged for the use of this service and will be automatically calculated, if applicable. The fee is based on the amount of the tax payment and is paid directly to Official Payments Corporation. Customer service support, making a payment using, Official Payment call toll-free 1-800-487-4567 form 7:00 a.m. through 7:00 p.m. (Central Standard Time) • Link2Gov - The Department will accept credit and debit card payments through Link2Gov. There is a convenience fee for this service. The fee is based on the amount of the tax payment and is paid directly to Link2Gov. Customer service support, making a payment using, Link2Gov call toll-free 1-866-972-9829 form 7:00 a.m. through 7:00 p.m. (Central Standard Time) • Value Payment Systems - The Department will accept credit and debit card payments through Value Payment Systems. Value Payment Systems does not accept the American Express card but has a program called BillMeLater. There is a convenience fee for this service. The fee is based on the amount of the tax payment and is paid directly to Value Payment Systems. Customer service support, making a payment using, Value Payment System call toll¬free 1-888-877-0450 form 7:00 a.m. through 7:00 p.m. (Central Standard Time) Make check or money order payable to: Alabama Department of Revenue Write the corporation's federal employer identification number, the income tax form number or type of payment (Form 20C, Form 20C-C, return, automatic extension payment, estimated tax payment), and the tax year end on the check. Remit with Form BIT-V. Tax due and not paid on or before the due date will be subject to a failure to timely

pay penalty of 1% per month, up to 25%, and will accrue interest at the rate provided in §40-1-44. Mail returns with payments and payment vouchers to: Individual and Corporate Tax Division Corporate Income Tax P.O. Box 327435 Montgomery, AL 36132-7435 Telephone (334) 242-1200 Mail non-payment and refund returns to: Individual and Corporate Tax Division Corporate Income Tax P.O. Box 327430 Montgomery, AL 36132-7430 Telephone (334) 242-1200

# Specific Instructions

At the top, left-hand corner of page 1 check all applicable boxes if filing an initial, final, amended return, or address change. At the top, right-hand corner of page 1 check the appropriate box indicating a cal - endar-year, fiscal-year, or short-year return. Fill in the blanks indicating the beginning and ending dates of the tax period if the return is for a fiscal year or a short year. If this corporation is included in a consolidated federal income tax return, check the block and enter the name and federal employer identification number of the com - mon parent corporation. Check the appropriate filing status. ONLY ONE BOX can be checked for the cor - poration's filing status. Filing status 1 through 4. Check one of the boxes for filing status 1 through 4 if the taxpayer will not file as part of a consolidated Alabama return. Filing status 1, Corporation operating only in Alabama, should be used by taxpayers with 100% Ala - bama activities. Filing status 2, Multi-state corporation, is available as an option to tax - payers whose business activity in Alabama is represented by the apportionment percentage (has operations in Alabama and one or more states). Filing status 3, Per - centage of Sales, is available as an option to taxpayers whose only activities within Alabama consist of sales and do not include owning or renting real estate or tangi - ble personal property and whose gross Alabama sales are not in excess of $100,000. Use Schedule D-2 to compute tax. Filing status 4, Separate (Direct) Accounting, should only be used by taxpayers that have received prior permission from the Ala - bama Commissioner of Revenue. Filing status 5, Proforma return, should be used only by those taxpayers who have elected to file as part of a consolidated group for Alabama purposes. Taxpayers with a valid election to file as part of a consolidated Alabama return must mark "Filing Status 5" and include the return with Form 20C-C in order for each com - pany's return to process correctly. Taxpayers should not check the box for filing sta - tus 1 through 4 if they are part of a consolidated filing. In addition to checking Filing status 5, Schedule D-1 must be completed by the entity whose business activity in Ala - bama is represented by the apportionment percentage (has operations in Alabama and one or more states). Taxpayers with 100% Alabama activities should not complete Schedule D-1. Schedule D-2 may be completed by the entity whose only activities within Alabama consist of sales and do not include owning or renting real estate or tangible personal property and whose gross Alabama sales are not in excess of $100,000; or Schedule C should be completed if the taxpayer's has received prior per - mission from the Commissioner of Revenue to report utilizing the Separate (Direct) Accounting. Items reported on Schedule C are excluded from apportionable income and are allocated either to Alabama or to another state. See Rule 810-27-1-4-.01. Please see our Web site at www.revenue.alabama.gov for instructions on filing a Consolidated Tax Return. In the top, center block of page 1 enter the corporation's federal business code number, its federal employer identification number (FEIN), and its name and mailing address (with complete zip code). Below the address enter the state of incorpora - tion, date of incorporation, the date the corporation qualified to do business in Ala - bama, and the nature of business being conducted in Alabama. Check the appropriate box to indicate the following: • Final IRS change and notification is attached. • Federal Form 1120-REIT was filed. • Alabama Form 2220AL (which is used to compute underpayment of esti - mated taxes based on an allowable federal method) is attached. BE SURE TO FILL OUT ALL APPLICABLE LINES ON PAGE 1 even if detailed schedules are attached. Failure to properly complete the return may result in delin - quent penalties. LINE 1. Enter the amount of the corporation's federal taxable income or (loss) from the corporation's federal income tax return. REITs should enter the Real Estate Investment Trust Taxable Income from the federal 1120-REIT return. Regulated In - vestment Companies (RICs) should enter the Investment Company Taxable Income from the federal 1120-RIC return. Tax exempt entities should enter the Unrelated Business Taxable Income from the federal 990-T return. LINE 2. Enter the amount of the net operating loss deduction claimed by the cor - poration from the federal income tax return. LINE 3. Enter the net amount of reconciliation adjustments from line 25, Sched - ule A, on page 2. Enclose the amount on line 3 in parentheses if net reconciliation de - ductions exceed additions. LINE 5. Enter the amount shown in line 2, Column E, Schedule C, page 3. En - close net nonbusiness income in parentheses. Net nonbusiness income is a negative amount in computing total apportionable income on line 6. Net nonbusiness expense or loss is a positive amount in comput - ing total apportionable income on line 6. LINE 6. Enter the sum of lines 4 and 5. Special attention should be paid to whether the amounts on lines 4 and 5 are positive or negative. Negative amounts must be netted against positive amounts. LINE 9. Enter the amount shown on line 2, Column F, Schedule C, page 3. En - close net nonbusiness expense or (loss) in parentheses. Net nonbusiness income allocated to Alabama is a positive amount in computing Alabama income before federal income tax deduction. Net nonbusiness expense or (loss) allocated to Alabama is a negative amount in computing Alabama income be - fore federal income tax deduction. LINE 11b. Enter the total Health Insurance Premiums paid as allowed by Act Number 2011-155. The new law allows qualifying employers to deduct 100 percent (100%) of the amount paid as health insurance premiums on qualifying employees in connection with an employer-provided health insurance plan. Attach an itemized list of qualified employees. Include the employee name, social security number; and the amount of health insurance premiums paid. LINE 13. Enter the amount of net operating loss (not to exceed line 12, Alabama Income before net operating loss) carried forward from taxable years beginning after December 31, 1997. Complete Schedule B showing the amount of net operating loss incurred for each tax period beginning January 1, 1998 or later and the amount of such loss absorbed in each subsequent taxable period. Schedule B must be com - pleted for the return to be considered complete and may result in an automatic de - nial of any net operating loss claimed. Copies of the Alabama corporate income tax returns (page 1 only) for all applicable years more than six years old must be attached, including tax periods where the net operating losses were utilized. A net operating loss is the excess of allowable deductions over the gross income of a corporation during a taxable year. A net operating loss is applied to the first tax - able year to which it may be carried. A loss incurred in a taxable year beginning after December 31, 1984 may be carried forward 15 consecutive years. Corporations may not carry back a net operating loss to offset Alabama in - come in prior years. LINE 15. ALABAMA INCOME TAX (Alabama income tax rate is 6.5%.) - (multi - ply line 14 by 6.5%) LINE 16. TAX PAYMENTS, CREDITS, AND DEFERRAL LINE 16a. Enter the amount of tax overpayments carried over from last year. LINE 16b. Enter the amount of estimated tax payments. LINE 16c. Enter the amount of any composite payments made on this line. Make sure to include the Name and FEIN of the entity making the payment in the space pro - vided. (Attach a schedule of payments if multiple payments were made.) LINE 16d. Enter the amount of any automatic extension payments made for the tax year. LINE 16e. This line is only to be used if a taxpayer is filing an AMENDED RE - TURN. The amount shown should be any payments made with the original return and/or any payments made because of adjustments to the return by the Alabama

Department of Revenue. LINE 16f. Credits/Exemptions. Refer to instructions for Schedule F. LINE 16g. The increase in tax due to the LIFO reserve recapture is payable in 4 equal installments. The first installment is due no later than the due date (without ex - tension) for filing the return for the last taxable year before the corporation became an S corporation. The 3 succeeding installments are due no later than the due date (without extension) for the succeeding 3 years. To calculate the LIFO tax deferral, multiply the amount of LIFO reserve recapture included in the Federal taxable income by 6.5%. Multiply the total by 75%. Enter the result on line 16g not to exceed line 15 on page one. Multistate taxpayers should cal - culate the LIFO tax deferral by multiplying the result from above by the apportion - ment percentage on page 1, line 7. LINE 17. REDUCTION/APPLICATIONS OF OVERPAYMENTS LINE 17a. Enter the amount of the overpayment to be applied to next year's es - timated tax. LINE 17b. Enter the amount of the overpayment elected to be contributed to the Penny Trust Fund. Once the election is made to apply an overpayment to the next year's esti - mated tax and/or contribute to the Penny Trust Fund, the election may not be changed. The amount of overpayment applied to the estimated tax for the following year will not be refunded until after the following year's tax return has been filed. Con - tributions to the Penny Trust Fund are designated for the promotion of public schools and public health. LINE 17c. If the return is not filed on or before the due date (with extensions), enter a delinquent penalty of 10% of the tax due or $50, whichever is greater. Taxes not paid by the original due date will be subject to a late payment penalty of 1% per month for each month or fraction thereof that the tax remains unpaid, up to 25%, as provided in §40-2A-11. Estimated tax payments not paid by each quarterly due date will be subject to in - terest on the underpayment - determined by applying the underpayment rate estab - lished by 26 U.S.C. §6621 (as provided by Alabama Code Section 40-18-80.1) to the underpayment for the period of underpayment. In addition, the 10% penalty provided for in Alabama Code Section 40-2A-11 applies to estimated tax payments not paid by the quarterly due date. LINE 17d. Enter the amount of interest due on the balance of tax due, computed from the due date (without extensions) of this return to the date paid. The Alabama interest rate is the same as provided in 26 U.S.C. §6621. LINE 18. Enter the amount of tax due or the amount to be refunded. Refunds should be entered as a negative or in parenthesis. ELECTRONIC PAYMENT INDICATOR. Check the box if the payment shown due on this return was made electronically. Payments of $750 or more must be made electronically. Direct Deposit Information For Electronically Filed (e-filed) Returns Direct Deposit is available for Alabama Form 20C e-filed returns. Line 1. The routing number must be nine digits. The first two digits must be 01 through 12 or 21 through 32. Otherwise, the direct deposit will be rejected and a check sent instead. Your check may state that it is payable through a financial insti - tution different from the one at which you have your checking account. If so, do not use the routing number on that check. Instead, contact your financial institution for the correct routing number to enter on line 1a. Line 3. The account number can be up to 17 characters (both number and let - ters), to include hyphens but omit spaces and special symbols. Enter the number from left to right and leave any unused boxes blank. Be sure not to include the check number. WARNING: Due to changes in the electronic banking rules, the Alabama De - partment of Revenue will no longer allow direct deposits to or through foreign finan - cial institutions. If you use a foreign institution you will be issued a paper check. If the direct deposit is rejected, a check will be sent instead. The Department is not responsible if a financial institution rejects a direct deposit. If you are unsure of the routing number and/or account number, you should check with your financial in - stitution to ensure they are correct. The Department is not responsible for a lost re - fund if you enter the wrong account information. Instructions For Schedule A The Alabama income tax law is similar, but not identical, to the federal income tax law. It is necessary to make certain adjustments to reconcile federal taxable income before federal net operating loss to total taxable income from all locations computed in accordance with Alabama income tax law and rules before adjustments for federal income tax and net operating loss carryforward. Use Schedule A to itemize these rec - onciliation adjustments. NOTE: Sections 40 -18 -33, 40 -18 -34, and 40 -18 -35 define Alabama corporate tax - able income, and the definition was revised for taxable years beginning on or after January 1, 2001.

# MULTISTATE CORPORATIONS MUST NOT USE SCHEDULE A TO MAKE AD -

JUSTMENTS FOR NONAPPORTIONABLE (NONBUSINESS) ITEMS. Adjust - ments for these items must be made on Schedule C. Additions To Federal Taxable Income: LINE 1. Enter the amounts of state and/or local taxes based on net income or measured by net income which have been deducted on the federal return. (If netted with line 10 below and the amount is negative, enter on line 10.) LINE 2. Enter the amount of interest earned which is exempt from federal taxa - tion. This includes state and local municipal bonds. LINE 3. Enter the amount of dividend income earned from corporations of which the taxpayer owns less than 20% of the stock (by vote and value) to the extent the dividends are deducted in computing taxable income for federal income tax purposes. LINE 4a. Enter any Federal deductions taken on pollution control items which were previously deducted on an Alabama income tax return (for equipment placed in service during tax years beginning prior to 1/1/2001 only). LINE 4b. Enter on Line 4b any gain attributable to property purchased and sub - ject to the bonus depreciation or additional Section 179 expense as allowed by the 2008 Federal Economic stimulus Act. LINE 5. Real estate investment trusts (REIT) enter the net income from foreclo - sure property from Federal Form 1120-REIT. LINE 6. Add back otherwise deductible related member interest or intangible ex - penses and costs except to the extent the corporation establishes that the expense satisfies an exception in §40-18-35(b) and Alabama Regulation 810-3-35-.02. (Sched - ule AB must be attached.) LINE 6a. Enter the Total Intangible/Interest Expenses Paid to All Related Mem - bers from line 12 of the Alabama Schedule AB (Add Back Form). LINE 6b. Enter the Total Exempt Amount from line 13 of the Alabama Schedule AB (Add Back Form). LINE 7. Captive REIT - Dividend Paid Deduction. Captive REITs are required by Section 40-18-35, Code of Alabama 1975 , to add the federal Dividends Paid De - duction back to the federal taxable income in computing Alabama taxable income. A Captive REIT is defined in Section 40-18-1, Code of Alabama 1975 , as: "Any REIT whose shares or certificates of beneficial interest are not regularly traded on an established securities market and are owned or controlled, at any time during the last half of the tax year, by an association taxable as a corporation that is not exempt from tax under 26 U.S.C. §501(a), and is not any of the following: (i) a REIT; (ii) a listed Australian property trust (including any trust that a listed Australian property trust owns or controls, directly or indirectly, seventy-five percent or more of the voting power or value of the beneficial interests or shares of such trust); or (iii) any qualified foreign entity. The term "Captive REIT" shall not include any REIT at least 50 percent of the shares of which (by vote or value) are owned or controlled, directly or indirectly, at any time during the last half of the tax year, by a financial institution, as such term is defined in Chapter 16. For purposes of this definition, own or control means to own or control directly, indirectly, beneficially, or constructively more than fifty percent (50%) of the voting power or value of an entity. The attribution rules of26 U.S.C. §318, as modified by 26 U.S.C. §856(d)(5), apply in determining ownership and control." LINE 8. Other items required to be added back to federal taxable income to ar - rive at Alabama taxable income should be entered on this line. A brief description should be written in if an amount is reported on line 8. If any items that were deducted in computing federal taxable income were also previously deducted on an Alabama corporate income tax return for taxable years beginning prior to January 1,2001, attach a schedule which details each and include in the total on line 8, of page 2, Schedule A.

Deductions From Federal Taxable Income: LINE 10. Enter the amount of refunds of state and/or local taxes on net income which have been refunded and included in federal income (only if not netted in line 1 above). LINE 11. Enter the amount of interest income earned on obligations of the U.S. government. Do not include interest on federal tax refunds or interest income from FNMA, GNMA, Federal Home Loan Mortgage Corporation, or World Bank, since in - struments issued by these organizations are not direct obligations of the U.S government. LINE 12. Enter the amount of interest income earned on obligations of the State of Alabama or any of its subdivisions or instrumentalities to extent included in the Federal return. LINE 13. Enter the amount of interest income earned on obligations issued prior to December 31, 1994 by Alabama or any of its subdivisions or instrumentalities pur - suant to §40-9B-7, to the extent included in the Federal return. The interest income relates to obligations issued by State of Alabama Public Authorities or Public Indus - trial Authorities, for "Private Use Property" only. LINE 14. Enter the amount of aid or assistance provided to the Alabama State Industrial Development Authority pursuant to §41-10-44.8(d). LINE 15. Enter expenses not deductible on the federal income tax return due to an election to claim a federal tax credit, i.e. jobs credit, etc. LINE 16. Enter dividends described in 26 U.S.C. §78 received from corporations in which taxpayer owns more than 20% of stock by vote or value. LINE 17. Enter dividends, including those described in 26 U.S.C. §951, from non-U.S. corporations to extent dividend income would be deductible under 26 U.S.C. §243 if received from a U.S. corporation. Taxpayer must own more than 20% of these payer corporations by vote or value. LINE 18. Enter dividends from foreign sales corporations as defined in 26 U.S.C. §922. LINE 19. Enter interest portion of rent paid under lease agreements entered into prior to December 31, 1994 relating to obligations of this state and its subdivisions/ instrumentalities to the extent such obligations were issued solely to pay the cost of assets described pursuant to §40-9B-7(c) through (e). LINE 20. Enter the amount of depletion on oil and gas wells, but only to the ex - tent the depletion allowed by §40 -18 -16 exceeds the amount allowed by federal law. LINE 21. Enter on Line 21 any difference in the Federal Recapture Amount (Re - ported on line 35, Part IV, Form 4797) and the Alabama Recapture Amount due to the basis difference resulting from Alabama's decoupling from the provisions of the 2008 Federal Economic Stimulus Act. Include any difference in loss on items of property disposed of caused by an Alabama basis being greater than the federal basis due to the federal bonus depreciation having been taken as allowed by the 2008 Federal Economic Stimulus Act or the additional Section 179 expense deduction having been taken as allowed by the 2008 Federal Economic Stimulus Act. Identify the items of property on an attachment to the return. LINES 22 and 23. List any transitional items of income included in federal tax - able income that were previously reported on an Alabama corporate income tax re - turn for taxable years beginning prior to January 1, 2001. LINE 24. Enter the sum of lines 10 through 23. LINE 25. Subtract line 24 from line 9 and enter the result on line 25. If line 24 is larger than line 9 enclose the amount on line 25 in parentheses. Carry the amount on line 25 to page 1, line 3. Instructions For Schedule B For taxable years beginning after December 31, 1984, a net operating loss may be carried forward for a maximum of 15 years. There is no provision in Alabama tax law that allows corporations to carry a net operating loss back to prior taxable years. NOTE: Failure to properly complete Schedule B will result in an automatic denial of any net operating loss claimed. Schedule B must be completed in order to claim the net operating loss deduction. Copies of the Alabama corporate income tax returns (page 1 only) for all ap - plicable years more than six years old must be attached, including tax periods where the net operating losses were utilized. NOTE: Please begin the net operating loss schedule with the oldest loss year first, ending with the most current loss year. Please list loss years only. Tax years that uti - lize net operating losses should not be listed. The utilized losses are shown in column 3. Column 1. Enter the tax year end (MM/DD/YYYY) in which the net operating loss was generated. Column 2. Enter the amount of the net operating loss incurred by the corpora - tion for the tax period in Column 1. Column 3. Enter the amount of the net operating loss utilized in period years for the loss listed in Column 2. Column 4. Enter the amount of the net operating loss to be utilized in the cur - rent tax period, not to exceed the remaining balance for this loss period. Column 5. Enter the remaining balance of the unused net operating loss for this loss period. (Column 2 - Column 3 - Column 4 = Column 5.) The Alabama net operating loss deduction is limited to net operating losses in - curred by a corporation which did business in Alabama and filed Alabama corporate income tax returns in prior taxable years. Instructions For Schedule C Enter on Schedule C all items of nonbusiness income, nonbusiness loss, and nonbusiness expense. These items are excluded from apportionable income and are allocated either to Alabama or to another state. See Alabama Department of Rev - enue Administrative Rule 810-27-1-4-.01 for a discussion of the classification of in - come and expense into business and nonbusiness categories and the assignment of nonbusiness items to specific jurisdictions. Beside the line number in Schedule C, enter the item description. In Column A, enter the total amount of gross income or loss to be excluded from apportionable in - come. In Column B enter the amount of gross income or loss allocable to Alabama. Enter total nonbusiness expense in Column C and any allocable to Alabama in Column D. Nonbusiness expense may exceed nonbusiness income and, in fact, may be present when there is no nonbusiness income. Expenses which are not directly identifiable as business or nonbusiness must be prorated. See Rule 810-27-1-4-.01. The method for prorating interest expense is to multiply total interest expense de - ducted on the federal return by a fraction, the numerator of which is the average amount invested in nonbusiness assets at cost and the denominator of which is the average amount invested in total assets at cost. Investments originally acquired by means of stock for stock swaps may be eliminated from both the numerator and the denominator of the nonbusiness interest expense proration factor. Subtract Column C from Column A, and enter the remainder in Column E. Sub - tract Column D from Column B, and enter the remainder in Column F. Add the amounts in Columns E and F, and enter the totals on line 2. Carry the total of Column E to page 1, line 5. Carry the total of Column F to page 1, line 9. Instructions For Schedule D-1 ENTER ALL SCHEDULE D-1 AMOUNTS AS POSITIVE (+) VALUES. The corporation's business activity in Alabama is represented by the apportion - ment percentage. Except for special cases provided for in Rule 810-27-1-4-.18, the apportionment factor consists of the average of three factors: property, payroll, and a double weighted sales factor; and divide the results by 4. Property Factor: In the appropriate columns, enter the amounts (at cost, unless stated otherwise) of property available for use in the production of business (apportionable) income. LINE 1. Inventories. LINE 2. Land. LINE 3. Furniture and fixtures. LINE 4. Machinery and equipment. LINE 5. Buildings and leasehold improvements. LINE 6. Property financed through industrial development boards or by industrial revenue bonds issued by municipalities. All Industrial Development Board prop - erty utilized by the taxpayer will be included at its original cost. NOTE: All Industrial Development Board property must be listed separately on Schedule D-1 and not included in the regular property listed elsewhere. If the prop -

erty is not listed separately here, it will be assumed that it was not listed and your cor - poration will be billed for additional amounts due including tax, penalties and interest due. LINE 7. Government Property. All government property (whether local, state, or federal), when made available for use by the taxpayer, will be reported at its current fair market value. LINE 8. Any other real or tangible personal property not listed above used in pro - duction of business income. LINE 9. Less Construction in progress (if included in the amounts on lines 1 through 8). LINE 10. Enter the totals of lines 1 through 9. LINE 11. Enter the average (beginning of year plus end of year values divided by 2) value of property in Alabama and Everywhere. See Rule 810-27-1-4-.12 for rules regarding computations other than beginning and end of year values. LINE 12. In the Beginning of Year columns, enter the amount of expense for the rental of real or tangible personal property used in the production of business income in Alabama and Everywhere. Annualize for short-period returns. Multiply the annual rent expense by 8, and enter the result in the End of Year column. This is the capi - talized rental value. LINE 13a. Add the amounts on lines 11 and 12 in the End of Year column for Ala - bama. LINE 13b. Add the amounts on lines 11 and 12 in the End of Year column for Everywhere. LINE 14. Divide the amount on line 13a by the amount on line 13b, and enter the percentage on line 14. This is the ALABAMA PROPERTY FACTOR. Payroll Factor: LINE 15a. Enter the amount of wages and other compensation paid to employ - ees for the production of business income in Alabama. LINE 15b. Enter the amount of wages and other compensation paid to employ - ees for the production of business income Everywhere. (Include officers' salaries.) LINE 15c. Divide the amount on line 15a by the amount on line 15b, and enter the percentage on line 15c. This is the ALABAMA PAYROLL FACTOR. Sales Factor: LINE 16. Enter gross receipts from Alabama destination sales except sales to the U.S. government. This includes total gross receipts from sales of tangible property shipped to Alabama from locations both within and without Alabama. LINE 17. Enter the amount of sales shipped from an Alabama origin to any state or foreign country where this corporation is not taxable. Also enter total sales to the U.S. government shipped from Alabama. LINE 18. In the Alabama column, enter the total of lines 16 and 17. In the Every - where column enter total sales for everywhere. If this amount does not correspond with line 1 of Federal Form 1120, attach an explanation and reconciliation. LINE 19. Enter in the appropriate columns the gross business dividends, if any. (Note that any dividends entered here will be included in apportionable income on page 1.) LINE 20. Enter in the appropriate columns the gross business interest income. LINE 21. Enter in the appropriate columns the gross business income from rents. LINE 22. Enter in the appropriate columns the gross business income from royalties. LINE 23. Enter in the appropriate columns the gross receipts from the sale or dis - position of assets used in the business. See Reg. 810-27-1-4-.15 for exclusion of amounts which would distort the factor. LINE 24. Enter in the appropriate columns the amounts of other business gross receipts, and identify the nature of such receipts and their location in the federal return. LINE 25a. Total the Alabama column for lines 18 through 24. LINE 25b. Total the Everywhere columns for lines 18 through 24. LINE 25c. Divide the amount on line 25a by the amount on line 25b, and enter the percentage on line 25c. LINE 26. Enter the same factor as on Line 25c. LINE 27. Add lines 14, 15c, 25c, and 26. Divide by 4. This is the ALABAMA AP - PORTIONMENT PERCENTAGE. Enter here and on line 7, page 1. (If any factor is not utilized in the production of income, it shall be eliminated and the denominator re - duced accordingly.) Instructions for Schedule D-2 This schedule should be used only by taxpayers whose only activity in Alabama consists of sales and does not include owning or renting real estate or tangible per - sonal property, and whose gross Alabama sales does not exceed $100,000.00. The tax liability is based on a percentage, .25% (or .0025), of Alabama gross sales. See §40-18-23 for further information. LINE 1. Enter gross receipts from Alabama destination sales except sales to the U.S. government. This includes total gross receipts from sales of tangible property shipped to Alabama from locations within and without Alabama. LINE 2. Enter the amount of sales shipped from an Alabama origin to any state or foreign country where this corporation is not taxable. Also enter total sales to the U.S. government shipped from Alabama. LINE 3. In the Alabama column, enter the total of lines 1 and 2. In the Everywhere column, enter total sales for everywhere. If this amount does not correspond with line 1 of Federal Form 1120, attach an explanation and reconciliation. Instructions for Schedule E This schedule should be used to compute the amount of the corporation's federal income tax deduction allowed for Alabama corporate income tax purposes. Corporations filing a consolidated federal return must complete lines 1-12 of this schedule. Corporations filing separate company federal returns should complete lines 6-12 of this schedule only. Lines 1-5 are used to compute the amount of the consolidated federal tax liability attributable to the company fil - ing Form 20C. If the corporation is a member of an affiliated group which files a consolidated federal return, check the appropriate block to indicate the election made under 26 U.S.C. §1552. For taxpayers utilizing 1552(a)(1) and 1552(a)(2), provide a copy of the corporation's federal income tax workpapers showing the members of the consoli - dated federal group. For corporations using 1552(a)(1), the workpapers should in - clude the member's share of federal taxable income (line 30 of Form 1120), positive amounts only . Losses should be entered as a $0.00. For corporations using 1552(a)(2), the workpapers should include the member's federal income tax as com - puted utilizing the current year tax rates and taking into account any federal income tax credits attributable to each member of the federal group. The total (taxable in - come or federal income tax) from this workpaper should be the amount reported on Line 2 of this schedule. Taxpayers utilizing method 1552(a)(3) must attach a copy of the corpora - tion's federal income tax deduction workpapers. Even if the taxpayer is filing as part of a consolidated federal return, taxpayers utilizing method 1552(a)(3) must skip to line 6. Lines 1-5 of this schedule apply only to those taxpayers using methods 1552(a)(1) or 1552(a)(2). LINE 1. Enter the corporation's separate federal (taxable income/tax) from line 30 or 31 of the proforma 1120. LINE 2. Enter the group's total positive federal (taxable income/tax) - See Reg. 810-3-35-.01(1)(b)3. LINE 3. Divide the corporation's separate federal (taxable income/ tax) as shown on line 1 by the group's total positive federal taxable (income/ tax) as shown on line 2. Enter the result. LINE 4. Enter the consolidated federal income tax (liability/ payments). Accrual-basis taxpayers should enter the amount of the corporation's con - solidated federal income tax. The federal liability should correspond with Federal Form 1120, Schedule J. Cash-basis taxpayers should enter the actual tax payment forwarded to the Internal Revenue Service during the tax period. Real estate investment trusts should not include the tax imposed by IRC §857(b)(6) on prohibited transactions as part of the federal tax deduction. LINE 5. Multiply the percentage from line 3 by the consolidated federal income tax (liability/payment) as shown on line 4. Enter the result. LINE 6. Enter the taxpayer's federal income tax (or share of the consolidated federal income tax, if included in a consolidated return, as computed on lines 1-5 above) - See Reg. 810-3-35-.01. Accrual-basis taxpayers should enter the amount of the corporation's fed - eral income tax. The federal liability should correspond with Federal Form 1120, Schedule J. Cash-basis taxpayers should enter the actual tax payment forwarded to the

Internal Revenue Service during the tax period. Real estate investment trusts should not include the tax imposed by IRC §857(b)(6) on prohibited transactions as part of the federal tax deduction. LINE 7. Enter the amount of Alabama income from line 10, page 1. LINE 8. Enter the amount of federal taxable income adjusted to Alabama basis from line 4, page 1. LINE 9. If the amounts on line 7 and line 8 are greater than zero, divide the amount on line 7 by the amount on line 8. If the amounts on line 7 and/or line 8 are zero or less than zero, enter zero. This is the federal income tax ratio. If the per - centage calculated on line 9 exceeds 100%, the percent should be recalculated as the percentage of allocable gross income as shown on Schedule C. LINE 10. Multiply the amount of federal income tax attributed to this corporation as shown on line 6 by the federal income tax ratio as shown on line 9. Enter the result. LINE 11. If a corporation takes a deduction for federal income tax on its Alabama return and in a later year all or a portion of the tax claimed as a deduction is refunded by the Internal Revenue Service, the taxpayer is required to recognize the refund on its Alabama return to the extent of the benefit received in the year of the deduction. Cash-basis taxpayers recognize refunds in the year they are issued by the In - ternal Revenue Service. Accrual-basis taxpayers recognize refunds in the year in which the refund is accrued for financial accounting purposes. An accrual-basis tax - payer receiving a refund as a result of a NOL carryback would accrue the refund in the year of the carryback. Multistate taxpayers filing separate federal returns (not requiring allocation of the refund among members of a consolidation) should apportion the refund to Alabama using the following steps: (1) If the total refund received or accrued results from a carryback to more than one previous year, identify each of the years to which the carryback is applied and designate the amount attributable to each year. (2) Multiply the amount of refund attributable to each year by the same percent - age used to apportion income to Alabama on that year's return as last reported or audited. (3) Add the results obtained in Step 2 for all years. (4) Enter the total on line 11. A multistate taxpayer filing its federal return as a member of a consolidated group must apportion the refund to each member of the group at the same ratio that the tax deduction being refunded was originally apportioned. See Reg. 810-3-35-.01(1)(b)4. After the amount of refund attributable to the separate corporation has been de - termined for each year, the four (4) steps provided above for corporations filing sep - arate federal returns may be followed in determining the amount of federal income tax refund to be entered on line 11. LINE 12. Subtract line 11 from line 10. If line 10 is larger than line 11, enter the net federal income tax deduction on line 12 and carry to line 11a of page 1. If line 11 is larger than line 10, enter the net federal income tax refund on line 12 and carry to line 11a of page 1. Instructions for Schedule F Schedule BC must be completed if you are claiming a business credit. Capital Credit is available to investing companies and their recipients involved in a project undertaken by certain new businesses to be located in the state and cer - tain expansions of certain existing businesses. This capital credit was enacted by Act 95-187 of the Alabama Legislature and signed into law on June 15, 1997 as the "Capital Credit." For further information regarding the credits listed above and the necessary forms to claim these credits, you should contact: P.O. Box 327410 Montgomery, AL 36132-7410 (334) 242-1200 Alabama New Markets Development Credit is available for taxpayers that in - vest in businesses in impoverished and low income communities located in Alabama which qualify as a "low income community" pursuant to Section 45D of the Internal Revenue Code. Investors must submit an application to the Alabama Department of Commerce to have their investment certified as qualifying for this credit. Alabama Accountability Act. The Alabama Legislature passed Act Number 2013-64 during the 2013 Regular Session. The act authorizes a tax credit for contri - butions to organizations that provide educational scholarships to qualifying schools. The credit is equal to 50% of the total contributions made to a scholarship granting organization for educational scholarships during a taxable year for which the credit is claimed up to 50% of the tax liability of the taxpayer. Alabama Enterprise Zone Act Credit. To stimulate business and industrial growth in depressed areas of the state, Alabama offers certain tax incentives to cor - porations, partnerships, and proprietorships which locate or expand within a desig - nated enterprise zone. These tax credit incentives were enacted by Act No. 87-573 of the Alabama Legislature and signed into law on July 22, 1987 as the "Alabama En - terprise Zone Act." In order to qualify for the tax credits, a business must be located within a des - ignated zone as approved by the Alabama Department of Economic and Commu - nity Affairs. If a credit is earned by a partnership or S corporation, the credit will be distributed to each partner or shareholder based on the percentage of ownership. The partner - ship or S corporation should advise each partner or shareholder of the amount of his/her income subject to this credit. For further information regarding the "Alabama Enterprise Zone Act" and the nec - essary forms to claim this credit, you should contact:

# Alabama Department of Economic and Community Affairs

Development Division 401 Adams Avenue P.O. Box 5690 Montgomery, AL 36103-5690 Phone (334) 242-8672 or P.O. Box 327410 Montgomery, AL 36132-7410 Phone (334) 242-1000 Basic Skills Education Credit is available to employers who provide basic skills education programs approved by the Alabama Department of Education to its em - ployees. Expenses incurred for or relating to instructors, materials, or equipment used in the qualifying program, or for supplies, textbooks, or salaries, including com - pensation paid to employees while participating in the basic skills program may be used in calculating the credit. The credit will equal 20 percent of the actual costs of education limited to the amount of the employer's income tax liability. A credit will not be allowed for employers receiving reimbursement for any cost of the education. Income Tax Credit is available to corporations pursuant to Section 41-10- 44.8(a)(1). See Code of Alabama 1975 , §40-18-35 Tax Increment Fund Payment Credit is available to corporations pursuant to Section 41-10-44.9. See Code of Alabama 1975 , §40-18-35 Coal Credit is available for corporations producing coal mined in Alabama. See Code of Alabama 1975 , §40-18-220. Capital Docks Credit is available for corporations producing coal mined in Ala - bama. See Code of Alabama 1975 , §40-18-220. Entertainment Industry Incentive Credit is available to Qualified Production Companies in Alabama. See Code of Alabama 1975 , §41-7A-43. Full Employment Act of 2011 Credit is available to small business that creates new jobs paying more than ten dollars per hour. A small business is defined as a business that employs 50 or fewer employees. The credit shall equal $1,000 dollars for each qualifying new employee. The credit is available in the tax year during which the employee has completed 12 months of consecutive employment. The employer must have a net increase in the total number of full time employees in Alabama on the last date of each tax year during which employees are hired for which the em - ployer claims a credit, over the number employed in Alabama as of the last day of the tax year immediately preceding the first employment year. The increase must equal or exceed the number of newly hired employees for which a credit is sought by one

employee for each newly hired employee for whom a credit is being sought for the current year, plus one employee for all employees for whom credits were claimed in prior years. Heroes for Hire Tax Credit Act of 2012 Employee Credit is available to small businesses that hire recently deployed and now discharged unemployed veterans. The credit is $1,000 and is in addition to the credit allowed by the Full Employment Act of 2011. The employer cannot take this credit for any employee that claims a business start-up credit allowed under the Heroes for Hire Tax Credit Act of 2012. Heroes for Hire Tax Credit Act of 2012 Business Start-Up Expense Credit is available to recently deployed and now discharged unemployed veterans who start their own business. The amount of this credit is up to $2,000 dollars. To qualify the recently deployed unemployed veteran must hold at least 50 percent ownership in - terest in the business which must be located in Alabama and show a net profit of at least $3,000 for the year in which the credit is taken. The recently deployed unem - ployed veteran is not allowed to claim this credit if an employer has claimed a hire credit for him or her under the Heroes for Hire Tax Credit Act of 2012. Qualified Irrigation System/Reservoir System Credit is available to any agri - cultural trade or business as described in the 2007 North American Industry Classi - fication System, Sector 11. The credit is equal to 20 percent of the cost of the purchase and installation of any qualified irrigation equipment and any conversion costs related to the conversion of irrigation equipment from fuel to electricity or 20 per - cent of the accrued cost of the qualified irrigation equipment and the cost of con - structing the qualified reservoir. The credit shall not exceed $10,000.00 in any tax year and shall not exceed the taxpayer's Alabama income tax liability computed without regard to the credit. Taxpayers can either take a credit for an irrigation system or a reservoir but not both. Qualified irrigation equipment is any equipment used by an agricultural trade or business in irrigation systems, including but not limited to equip - ment used to construct irrigation systems and water wells. A qualified reservoir is an off-stream upland reservoir used as a source of water for irrigation by an agricultural trade or business. Tariff Credit is available for corporations pursuant to Sections 40-18-205 through 40-18-215. Taxpayers claiming the Tariff Credit must attach the approved Notice of Tariff Credit. For more information contact the Alabama Development Office at 1- 800-248-0033 or the Commissioner of the Alabama Department of Revenue at (334) 242-1175. Other Information LINE 1. Describe the corporations operations in Alabama. If no activity is being conducted in the state, provide an explanation. LINE 2. List all cities and counties within Alabama that the corporation has prop - erty. Attach a statement if necessary. LINE 3. List all other states in which the corporation does business. Attach a statement if necessary. LINE 4. Check the box to indicate the corporation's tax accounting method. LINE 5. If this corporation is a member of an affiliated group which files a con - solidated federal return, attach a copy of the following: (a) Copy of Federal Form 851, Affiliations Schedule. Identify by asterisk or underline the names of those corporations subject to tax in Alabama. (b) Signed copy of consolidated Federal Form 1120, pages 1-5 , as filed with the IRS. (c) Copy of the spreadsheet of income statements; all supporting schedules for all legal entities that file as part of the consolidated federal group including (but not limited to) a copy of the spreadsheet of income statements (which includes a separate column that identifies the eliminations and adjustments used in completing the federal consolidated return), beginning and ending balance sheets, Schedule M-3 for the entire federal consolidated group. (d) Copy of Schedule K-1 for each tax entity that the corporation holds an interest in at any time during the taxable year. (e) Copy of federal Schedule(s) UTP. LINE 6. Enter this corporation's federal net income for the 2010, 2011 and 2012 tax periods, as last determined. LINE 7. Check the box if this corporation is currently being audited by the IRS. Indicate the years under audit. LINE 8. Enter the street address, city, state and zip code where this corporate taxpayer's records are located. LINE 9. Enter the taxpayer's representative to contact for information concern - ing the return along with the contact person's email address and telephone number. If the paid preparer will represent the taxpayer for tax matters related to the return, the authorization box on page 1 of the return must be checked in addition to being notated on this line. LINE 10. Enter the FEIN of the corporation that files the Alabama Business Priv - ilege tax return if different from the one listed on this Form 20C.