Pennsylvania Code › Title 61 - REVENUE › Part I - Department of Revenue › Subpart B - General Fund Revenues › Article VI - Corporation Taxes › Chapter 155 - CAPITAL STOCK TAX AND FOREIGN FRANCHISE TAX › VALUATION OF CAPITAL STOCK › Section 155.28 - Capital stock value methods-fixed formula

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
Prior methods
						inapplicable.
The capital stock value arrived at by application of the
						formula set forth in section 601(a) of the TRC (72 P. S. §
													7601(a)) may not be affected
						by the valuation factors or methods set forth in §§
												155.21-155.24 (relating to general;
						definitions; determinations of valuation factors; and valuation methods). This
						includes methods formerly applied to valuing first year companies (§
												155.24(c)(2)),
						last year companies (§
												155.24(c)(3)),
						companies with liquidations in progress (§
												155.24(c)(4)),
						valuations relating to cash sales of assets or outstanding shares (§
												155.24(c)(5)),
						valuations based on the sale of an asset (§
												155.24(c)(7)) or
						valuations based on a stock for stock exchange transaction (§
						155.24(c)(8)).
(b)
Short
						taxable year.
Tax due for a short taxable year shall be prorated as
						follows:
(1)
First year
						companies.
Tax due for a short taxable year resulting from the
						commencement of business activities within this Commonwealth during the taxable
						year shall be prorated either on the basis of proration of tax, or proration of
						the property factor, as required in this section. The payroll of sales factors
						may not be prorated.
(i) In the case of a
						corporation which has done business outside this Commonwealth for more than 1
						year but has been subject to Commonwealth taxation for less than 1 year, the
						numerator of the property factor shall be prorated to reflect the portion of
						the year for which business was done in this Commonwealth. The tax due shall be
						prorated only where all three factors are 100% Commonwealth.
Example 1.
A foreign corporation has
						  operated outside of this Commonwealth for more than 1 year, but was only
						  subject to Pennsylvania taxation for the last 90 days of the taxable year. The
						  average value of real and tangible personal property in this Commonwealth is
						  $80,000, and the average value of the property everywhere is $150,000. The
						  numerator of the property factor would be $19,726 ($80,000 x 90/365 days.) The
						  tax would not otherwise be prorated.
Example 2.
If, in Example 1, all three
						  apportionment factors were 100% Commonwealth, the property factor would not be
						  prorated, but the tax would be prorated by multiplying the tax by a fraction,
						  which is 90/365 days.
(ii)
						In the case of a corporation which has been doing business outside of this
						Commonwealth for the same period for which it has been subject to Commonwealth
						taxation, which is less than 1 year, the property factor is not prorated, but
						the tax due is prorated based on the portion of the year during which the
						corporation did business in and out of this Commonwealth.
(iii) In the case of a corporation which has
						done business outside of this Commonwealth for a period of less than 1 year and
						has been subject to Commonwealth taxation for a shorter period than it has done
						business outside of this Commonwealth, the property factor shall be prorated
						unless it reports 100% Commonwealth factors-in which case the property factor
						would not be prorated-and the tax would be prorated for the period of operation
						everywhere.
Example 1.
A corporation did business
						  outside of this Commonwealth commencing July 15, but did not become subject to
						  Commonwealth taxation until October 1, and files on a calendar year basis. The
						  numerator of the property factor would be prorated by multiplying it by a
						  fraction, which is 92/170 days. The tax due would be prorated by multiplying
						  the tax by a fraction, which is 170/365 days.
Example 2.
If, in Example 1, the
						  corporation was incorporated July 15 but did not transact business anywhere
						  until October 1, the numerator of the property factor would not be prorated,
						  but the tax would be prorated for the Commonwealth period only, by multiplying
						  the tax by a fraction, which is 92/365 days.
Example 3.
If the corporation in
						  examples 1 and 2 reported 100% Commonwealth factors, the property factor would
						  not be prorated but the tax would be prorated for the Commonwealth period only,
						  by multiplying the tax by a fraction, which is 92/365 days.