Alabama Administrative Code › Title 810 - ALABAMA DEPARTMENT OF REVENUE › Chapter 810-3-35.1 - ASSESSMENT OF INCOME TAXES - DEDUCTION FOR A LIMITED NET OPERATING LOSS CARRYFORWARD FOR CORPORATIONS › Section 810-3-35.1-.01 - Carryforward Of Net Operating Losses For Corporations

Current through Register Vol. 42, No. 9, June 28, 2024
(1) In addition to the deductions allowed to
			 corporations by Section
			 40-18-35,
Code of Ala. 1975
a corporate taxpayer may be eligible
			 to deduct a net operating loss the corporation generated in a prior taxable
			 year.
(2) The term "net operating
			 loss", as defined by Section
			 40-18-35.1,
Code of Ala. 1975
means the excess of deductions
			 (other than the net operating loss carryforward) allowed by Chapter 18 of Title
			 40,
Code of Ala. 1975
over the gross income.
(3) The term "taxable year" is any taxable
			 period on which net income is properly computed and includes a period of less
			 than twelve months (short-year) resulting from a change in accounting period
			 pursuant to Section
			 40-18-30,
Code of Ala. 1975
. Thus, a short-year loss may be
			 carried to a succeeding full year, or a full year loss may be utilized in a
			 short-year.
(4) The loss for any
			 year is to be computed under the law applicable to that year.
(5) The amount available for carryforward
			 must be reduced by the amount of any loss deduction which was available for
			 use, even if not actually used. No adjustment will be required under this
			 subparagraph for years in which the corporation had in effect an election to be
			 an Alabama S corporation.
(6)
			 Multi-state corporations. Net operating losses allowed to be carried forward by
			 a corporate taxpayer that is a multi-state business are limited "to sources
			 attributable to Alabama". For purposes of this rule, "sources attributable to
			 Alabama" means the portion of net operating loss attributable to Alabama on a
			 post-allocation and apportionment basis pursuant to Chapter 27 of Title 40,
Code of Ala. 1975
.
(7) A net operating loss carryforward
			 deduction may only be utilized by the corporation which incurred the loss. A
			 corporation, resulting from a reorganization will be considered to have
			 incurred the losses not utilized by the parties to a reorganization. However,
			 the utilization of such losses may be limited based on the application of
			 26 U.S.C §
									381,
			 26
			 U.S.C §382, and
			 26
			 U.S.C §
									384. If a taxpayer is a
			 multi-state taxpayer, such federal limitations must be adjusted to reflect the
			 fact that Alabama multi-state taxpayers must calculate Alabama taxable income
			 on a post-allocation and apportionment basis, see Rule 810-3-1.1 -.01.
(8) A net operating loss from any year in
			 which the corporation had elected to be an Alabama S corporation may not be
			 carried forward. See Rule
			 810-3-168-.01.
(9) A net operating loss from any year in
			 which the corporation filed as a financial institution pursuant to Chapter 16,
Code of Ala. 1975
may not be carried forward to offset
			 an income tax imposed by Chapter 18,
Code of Ala.
			 1975.
(10) For
			 taxpayers filing as part of an Alabama affiliated group, see Rule
			 810-3-39-.03.
Author: Holly H. Coon
Statutory Authority:
Code of Ala.
				  1975
, §§
										40-2A-7(a)(5),
40-18-35.1.