§ 40-16-1 — Definitions

For the purpose of this chapter, the following terms shall have the respective meanings ascribed to them by this section:
(1) FINANCIAL INSTITUTION. Any person, firm, corporation, and any legal entity whatsoever doing business in this state as a national banking association, bank, banking association, trust company, industrial or other loan company or building and loan association, and such term shall likewise include any other institution or person employing moneyed capital coming into competition with the business of national banks, and shall apply to such person or institution regardless of what business form and whether or not incorporated, whether of issue or not, and by whatsoever authority existing. The common parent corporation of a controlled group of corporations eligible to elect to file a consolidated excise tax return, in accordance with Section 40-16-3, shall be considered a financial institution if such parent corporation is a registered bank holding company as defined by the Bank Holding Company Act of 1956, as amended. As a financial institution, the common parent corporation will be governed by Sections 40-16-1 through 40-16-11 and exempt from all income taxes under Chapter 18 of this title, with the exception that the credit for licenses or taxes as provided by Section 40-16-8 and the rules adopted pursuant thereto by the Department of Revenue will not apply to amounts of excise tax on financial institutions imposed hereby and paid by such parent corporation. Financial institution shall not mean or include individual citizens and fiduciaries acting in a representative capacity for individual citizens, not engaged in a banking, loan, investment, or similar business, but merely making personal investments of personal or fiduciary funds in bonds, notes, or other evidences of indebtedness and not made in competition with the business of national banks, nor shall such term apply to insurance companies or insurance associations merely making investments of reserves in bonds, notes or other evidences of indebtedness and not made in competition with the business of national banks.
(2) INTERNAL REVENUE CODE or U.S.C. All references in this chapter to the Internal Revenue Code or to 26 U.S.C. shall mean the applicable section of the Internal Revenue Code of 1986, as in effect from time to time, as codified in Title 26 of the United States Code, as in effect from time to time. The Department of Revenue may adopt reasonable rules under the Alabama Administrative Procedure Act prescribing operating rules with respect to the adoption by this state for its financial institution excise tax of certain provisions of the laws of the United States relating to the determination of taxable income for federal income tax purposes, similar to those contained in Section 40-18-1.1 to the extent consistent with this chapter.
(3) NET INCOME. In the case of a financial institution subject to the tax imposed by this chapter, the term means federal taxable income without the benefit of federal net operating losses, plus the additions prescribed and less the deductions and adjustments allowed by this chapter, as allocated and apportioned to Alabama according to rules adopted by the Department of Revenue pursuant to Section 40-16-4. Financial institutions not subject to the federal income tax shall begin the calculation of net income by performing a pro forma calculation of federal taxable income.
(4) TAX YEAR or TAXABLE YEAR. A full period of 12 consecutive months constituting the fiscal year or calendar year of each financial institution subject to the tax imposed by this chapter. In the case of any financial institution taxable under this chapter whose business was conducted only during a fractional period of any year, or a period of less than 12 months resulting from a change in accounting period permitted by applicable federal authorities, a return shall be made as herein provided and the tax computed as herein provided, and such tax as assessed shall be an excise tax for the privilege of doing business in this state for such fractional year.
(5) STATE TAX YEAR. The calendar year.
(6) TRUST. Any entity which is classified as a trust for federal income tax purposes.

Legislative History

(Acts 1935, No. 194, p. 256; Acts 1939, No. 48, p. 56; Acts 1939, No. 369, p. 496; Code 1940, T. 51, §425; Acts 1945, No. 130, p. 129; Acts 1945, No. 319, p. 520; Acts 1955, No. 568, p. 1232; Acts 1957, No. 639, p. 964; Acts 1978, No. 840, p. 1247, §1; Acts 1993, 1st Ex. Sess., No. 93-852, p. 95, §1; Act 2019-284, §2.)