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 155.22 - Definitions

Current through Register Vol. 54, No. 28, July 13, 2024
The following words and terms, when used in
						  §§
												155.21-155.24, have the following
						  meanings, unless the context clearly indicates otherwise:
Actual value
-Cash value.
Book income
-Income as reported in Line
						  1 of Schedule M-1 of the Federal 1120 Form.
Capital stock
-Common stock, preferred
						  and special stock.
Capital stock value
-Defined in section
						  601 of the TRC (72 P. S. §
													7601) as the
						  actual value of the taxpayer in cash as it existed at the close of the year for
						  which the report is made, taking into consideration:
(i) The average selling price of
						stock.
(ii) Corporate
						earnings.
(iii) Dividends
						declared.
(iv) Stockholder
						equity.
Corporate earnings
-The book income as
						  reported to the shareholders which is adjusted for distortions in the current
						  and prior years created by nonrecurring-type gains and losses or by use or
						  correction of inconsistent or erroneous accounting practices. Reference should
						  also be made to §
												155.23(b)
						  (relating to determination of valuation factors).
Daily weighted average
-Computed by
						  multiplying each listed price of the capital stock during the taxable year by
						  the number of days the price was listed. The product is added and that sum is
						  divided by the number of days the capital stock was listed.
Example:
$20 listed for 80 days =
1600
15 listed for 40 days =
600
21 listed for 80 days =
1680
18 listed for 60 days =
1080
____________
260 days
4960
The average selling price is $19.08 (4960 ÷
						  260).
Disposition
-A transfer, such as a sale
						  or exchange.
Dividends declared
-Normal
						  distributions of corporate earnings which are not in the nature of liquidating
						  or other nonrecurring or extraordinary distributions. Reference should also be
						  made to §
												155.23(c)
						  (relating to determination of valuating factors).
Mean average
-Computed by taking the
						  average of the highest and lowest price the capital stock was listed during the
						  taxable year.
Example:
The highest listed price of
						  the taxpayer's capital stock was $56; the lowest price was $38. The average
						  selling price is $47 ($94 ÷ 2).
Net book value
-The basis of real
						  property and tangible and intangible personal property after adjustments
						  (depreciation, amortization and other write-downs) as reflected on the
						  corporate financial statements.
Selling price of the stock
-The average
						  which the capital stock sold for during the taxable year. Reference should also
						  be made to § 155.23(a).
Stockholder equity
-Defined in section
						  601 of the TRC (72 P. S. §
													7601) as the
						  actual value indicated or measured by consideration of the intrinsic value of a
						  corporation's tangible property and assets, and of the value of its goodwill
						  and franchise and privileges, as indicated by the material results of their
						  exercise, taking into consideration the amount of its indebtedness. Reference
						  should also be made to §155.23(d).
This section cited in 61 Pa. Code §
														155.21 (relating to general); 61
							 Pa. Code §
														155.23 (relating to determination
							 of valuation factors); 61 Pa. Code §
														155.24 (relating to valuation
							 methods); and 61 Pa. Code §
														155.28 (relating to capital stock
							 value methods-fixed formula).