Imposition of license tax on corporations generally; rate; minimum tax; time payable; reduction by holding company of paid-in capital surplus

(A) Except as provided in Section 12-20-100, every corporation required to file an annual report shall pay an annual license fee of fifteen dollars plus one dollar for each thousand dollars, or fraction of a thousand dollars, of capital stock and paid-in or capital surplus of the corporation as shown by the records of the corporation on the first day of the taxable year in which the report is filed. In no case may the license fee provided by this section be less than twenty-five dollars. The license fee must be paid on or before the original due date for filing the annual report.
The phrase "paid in or capital surplus" means the entire surplus of a corporation other than earned surplus including, but not limited to, amounts charged against earned surplus and credited to other surplus accounts, donated capital, amounts representing the increase in valuation of assets made upon a revaluation of the company's assets, and amounts credited to any surplus account other than earned surplus as a result of a merger or acquisition regardless of whether the amount credited to the surplus account was transferred from an earned surplus account.
For purposes of this section "earned surplus" means that portion of the surplus of a corporation equal to the balance of its net profits, income, gains, and losses from the date of incorporation or from the latest date when a deficit was eliminated by application of its capital surplus, after deducting subsequent distributions to shareholders and transfers to stated capital and capital surplus to the extent that such distributions and transfers are made out of earned surplus.
(B)(1) For purposes of this section capital stock and paid-in or capital surplus is the amount reported on the taxpayer's applicable financial statement.

(2) The term "applicable financial statement" means a statement covering the taxable year which is:

# (a)

required to be filed with the Securities and Exchange Commission;

# (b)

a certified audited balance sheet to be used for the purposes of a statement or report:

(i) for credit purposes,

(ii) to shareholder's, or

(iii) for any other substantial nontax purpose;

# (c)

a balance sheet for a substantial nontax purpose required to be provided to:

(i) the federal government or agency of the federal government;

(ii) a state government or agency of a state government; or

(iii) a political subdivision of a state or any agency of the political subdivision; or

# (d)

a balance sheet to be used for the purposes of a statement or report:

(i) for credit purposes;

(ii) to shareholders; or

(iii) for any other purpose.

(3) If a taxpayer has a statement described in more than one part of item (2), the applicable financial statement is the statement with the lowest number and letter designation.

(C) In addition to the provisions of subsection (B) of this section, a holding company may reduce its paid-in capital surplus by the portion of contributions to capital received from its parent corporation that is directly or indirectly used to finance a subsidiary's expansion costing in excess of one hundred million dollars, which on the date construction started is located in an Economic Impact Zone as defined in Section 12-14-30. A reduction is only allowed pursuant to this subsection for the paid-in capital surplus of the holding company attributable to this contribution to capital for expansion. Additionally, no reduction is allowed unless the expansion is completed within three years of the first contribution to capital received by the holding company, but this three-year limitation may be extended by the Department of Revenue upon written application and good cause shown. Amounts previously excluded in paid-in capital surplus pursuant to this subsection must be included in the first license tax year beginning after the period allowed for the expansion if the expansion is not timely completed.

Last amended: 1995 Act No. 76, SECTION 3; 2004 Act No. 168, SECTION 2.A, eff January 16, 2004. Editor's Note 2004 Act No. 168, SECTION 2.B provides as follows: "Notwithstanding the general effective date of this act, this section takes effect upon approval of this act by the Governor and applies to increases in capital over the prior year's capital on January 1, 2003, and thereafter."

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