Definition of business capital and capital base

# (a)

# (1)

Business capital is all assets, other than investment capital and stocks issued by the taxpayer, less liabilities not deducted from investment capital. Business capital includes only those assets the income, loss, or expense of which are properly reflected (or would have been properly reflected if not fully depreciated or expensed or depreciated or expensed to a nominal amount) in the computation of entire net income for the taxable year.

# (2)

(i) Business capital includes, but is not limited to:
(a) cash;

# (b)

stock in a controlled foreign corporation, except to the extent such stock qualifies as investment capital under Subpart 3-4 of this Part;

# (c)

cross-article corporation stock;

# (d)

other unitary corporation stock;

# (e)

reverse repurchase agreements and securities borrowing agreements, as well as the securities underlying those agreements and repurchase agreements and securities lending agreements;

# (f)

real property;

# (g)

tangible personal property; and

# (h)

investments in a Federal reserve bank or a Federal home loan bank.
(b) Total business capital is the sum of business capital and any presumed investment capital from the immediately preceding tax year required to be added back pursuant to section 3-4.4(a)(2) of this Part. The total business capital of the taxpayer is determined by computing the total of the average value, during the period covered by the report, of all the assets of the taxpayer, other than investment capital and stock issued by the taxpayer, less the average value of liabilities not deducted in computing investment capital.
(c)

# (1)

The capital base is the product of total business capital and the business apportionment factor
(BAF) determined under this Subchapter.

# (2)

In the case of a combined report, the combined capital base is the product of the combined total business capital and the BAF determined under this Subchapter. In computing combined business capital, all intercorporate stockholdings, intercorporate bills, intercorporate notes receivable and payable, intercorporate accounts receivable and payable and other intercorporate indebtedness between corporations included in the combined report must be eliminated.