Code of Vermont Rules › Agency 10 - AGENCY OF ADMINISTRATION › Sub-Agency 060 - DEPARTMENT OF TAXES › Chapter 034 - SMALL BUSINESS CORPORATION TAX › Section 10 060 034 - SMALL BUSINESS CORPORATION TAX

Current through June, 2024
THE FOLLOWING REGULATIONS ARE PROMULGATED BY THE VERMONT
				  COMMISSIONER OF TAXES AS PROVIDED BY 32 V.S.A. § 6105 FOR THE PURPOSE OF
				  CLARIFYING AND ADMINISTRATING THE SMALL BUSINESS CORPORATION TAX LAW AND SO AS
				  TO CONFORM AS CLOSELY AS POSSIBLE TO THE OPERATION OF SUB-CHAPTER S OF CHAPTER
				  ONE. SUBTITLE A OF THE INTERNAL REVENUE CODE OF THE UNITED STATES OF AMERICA AS
				  IT RELATES TO FEDERAL TAXATION.
Section
				1.61011 Domestic Corporation
Domestic corporation means a corporation organized under the
				  laws of the State of Vermont and does not include corporations organized under
				  the laws of the United States or any other state or territory. Further, the
				  term does not include an unincorporated business entity.
Section 1.61021 Election
A Vermont domestic corporation which is qualified may elect
				  to be taxed as a small business corporation if all persons who are shareholders
				  in the corporation consent to such election on:
(1) the first day of the first taxable year
				for which such election is effective, if such election is made on or before
				such first day or.
(2) the day on
				which such election is made, if election is made after such first day.
In this connection election may be made during the last month
				  preceding the taxable year for which the election will be effective or during
				  the first month of such taxable year.
For the year 1962 election may be made during the first 90
				  days or on or before March 31, 1962. Election may be made by corporations
				  operating on a fiscal year basis within the first 90 days of 1962 to prorate
				  that portion of their fiscal year operations which falls in 1962 as a small
				  business corporation under Provisions of Chapter 157. In instances where fiscal
				  year corporations elect to be taxed as a small business corporation on 1962
				  earnings, only a single corporate franchise tax return (Form # 104) need be
				  filed. However, a schedule setting forth the 1962 proration should be
				  attached.
Example # 1 - X corporation has four shareholders owning
				  equally and devoting equal time and attention to the business. Operations are
				  on a fiscal year basis, ending April 30th of each year. An election has been
				  made to tax that portion of its 1962 earnings as a small business corporation.
				  Fiscal 1962 earnings total $ 12,000.00. On or before September 15, 1962 the
				  corporation is required to file a franchise tax return (Form # 104) reflecting
				  its entire net income of the fiscal year ending April 30, 1962. A separate
				  schedule prorating 1962 earnings should be attached and the franchise tax
				  computed as follows:
$ 12,000.00 net income
/ 12 = $ 1,000.00 per month
$ 1,000.00
x 8 = $ 8,000.00 1961 income
$ 1,000.00
x 4 = $ 4,000.00 1962 income
Franchise tax for fiscal year ending April 30, 1963 based on
				  operations of fiscal year ending April 30, 1962 (income attributed to small
				  business corporation operations omitted):
$ 8,000.00
x 5% = $ 400.00 franchise tax
Small business corporation income distribution -
$ $ 4,000.00
/ 4 = $ 1,000.00 1962 distributable
to each share-holder.
Example # 2 - Facts same as # 1 except loss of $ 12,000.00 is
				  sustained. Return (Form # 104) is filed September 15,1962 and minimum tax of $
				  25.00 is paid. Small business corporation loss distribution:
$ 12,000.00
/ 12 = $ 1,000.00 per month
$ 1,000.00
x 8 = $ 8,000.00 1961 loss
$ 1,000.00
x 4 = $ 4,000.00 1962 loss
$ 4,000.00
/ 4 = $ 1,000.00 1962 loss
to each shareholder.
No extension will be allowed for election by corporations
				  operating on either a fiscal or calendar year basis beyond the aforementioned
				  90 day period.