Instructions for Form BPT-IN "Alabama Business Privilege Tax Initial Privilege Tax Return" - Alabama

This document contains official instructions for Form BPT-IN, Alabama Business Privilege Tax Initial Business Privilege Tax Return - a form released and collected by the Alabama Department of Revenue.

Instruction Details:

  • This 4-page document is available for download in PDF;
  • Might not be applicable for the current year. Choose an older version;
  • Complete, printable, and free.

Download your copy of the instructions by clicking the link below or browse hundreds of other forms in our library of forms released by the Alabama Department of Revenue.

ADVERTISEMENT
ADVERTISEMENT

Download Instructions for Form BPT-IN "Alabama Business Privilege Tax Initial Privilege Tax Return" - Alabama

Download PDF

Fill PDF online

Rate (4.5 / 5) 71 votes
I
F
T
P
FORM
NSTRUCTIONS
OR
HE
REPARATION OF
BPT-IN
2021
A
D
R
LABAMA
EPARTMENT OF
EVENUE
Alabama Business Privilege Tax
INSTRUCTIONS
Initial Business Privilege Tax Return
DO NOT FILE FORM BPT-IN AS AN ANNUAL RETURN
Business Privilege Tax liability. The account number is also provided in the letter
notifying the taxpayer of a Sign-On ID and an Access Code for using the
Section 40-14A-29, Code of Alabama 1975, requires newly organized cor-
Electronic Funds Transfer (EFT) System. Contact the Business Privilege Tax
porations, limited liability entities, and disregarded entities to file an initial
Section (334-242-1170, option 8) for any questions regarding the BPT account
Business Privilege Tax Return and to pay the business privilege tax reported on
number.
the return within two and one-half months after date of qualification.
Line 3d. Secretary of State Entity ID Number – Enter the Alabama
Corporations, limited liability entities, and disregarded entities organized
Secretary of State’s Entity ID Number. The entity ID number is obtained from
outside of Alabama, but qualifying with the Alabama Secretary of State to do
the Alabama Secretary of State’s website www.sos.alabama.gov or by contact-
business in Alabama, must file an Initial Business Privilege Tax Return and pay
ing the Secretary of State’s office at (334) 242-5324.
the business privilege tax reported on the return within two and one-half months
after date of qualification.
Please enter the last six digits of the entity ID number.
For example, if the Alabama Secretary of State’s Office has assigned a
Form BPT-IN, Initial Business Privilege Tax Return, is used to file an initial
domestic limited liability company the file number of DLL 999-999, the last six
return. Filing Form BPT-IN as an annual Business Privilege Tax Return could
digits of the entity ID number (999999) would be entered for Line 3d.
result in a failure to timely file penalty. An Alabama Schedule AL-CAR, the cor-
porate annual report, is not required for an initial return.
Line 3e. Federal Business Code Number (NAICS) – Enter the Federal
Business Activity Code Number to be reported on the taxpayer’s federal income
The preparation of the Form BPT-IN differs from an annual return, as
tax return. The federal activity codes are based on the North American Industry
follows:
Classification System (NAICS). NAICS information is available on the U.S.
1. Date of Qualification, Incorporation, or Organization – Line 2a of the
Census Bureau’s website (www.census.gov) or by contacting the U.S. Census
Form BPT-IN should be the date of incorporation or organization for corpora-
Bureau (800-923-8282).
tions, limited liability entities, and disregarded entities organized in Alabama.
Line 3f. Mailing Address – Enter the taxpayer’s mailing address or street
For corporations, limited liability entities, and disregarded entities organized
address.
outside the State of Alabama, line 2a should be the date the entity qualified with
the Alabama Secretary of State to do business in Alabama or started doing
Line 3g. City – Enter the taxpayer’s city.
business in Alabama, whichever occurred first.
Line 3h. State – Enter the taxpayer’s state.
2. Apportionment Factor – The apportionment factor used on the initial
Line 3i. Zip Code – Enter the taxpayer’s 9-digit zip code.
return is based solely on the ratio of property located in Alabama to total prop-
Line 4a. Contact Person Concerning This Form – Enter the name of the
erty owned by the taxpayer (which includes property located outside of
person who can answer questions concerning the preparation of this form.
Alabama). The apportionment factor is computed as of the date of organization,
if organized in Alabama, or the date the entity qualified with the Alabama
Line 4b. Contact Person’s Phone Number – Enter the telephone number
Secretary of State, if a foreign entity.
of the person who can answer questions concerning the preparation of this
form.
3. Possible Short Taxable Year Proration of Privilege Tax – If the initial
return is for a short taxable year (the period of time between the date organized
Line 4c. Taxpayer’s E-mail Address – Enter the entity’s e-mail address.
or qualified and the last day of the taxable year is less than one year), the busi-
Line 5a. County of Incorporation or Organization for All Alabama
ness privilege tax is prorated over the short period. The business privilege tax
Entities – Enter the Alabama county of incorporation or organization, if the enti-
for a short taxable year will never be less than $100.
ty was incorporated or formed in Alabama.
Preparation Instructions:
Line 5b. State or Country of Incorporation or Organization for All
Foreign Entities – Enter the state or country of incorporation or organization,
Line 1a. through Line 1i. Type of taxpayer (check only one) – Indicate
if the entity was not incorporated or formed in Alabama.
the type of taxpayer by checking one of the boxes on line 1a through line 1i.
Line 6a. Date of Qualification or Registration in Alabama for Foreign
Line 2a. Date of Qualification, Incorporation, or Organization – Enter
Entities – Enter the date the entity qualified with the Alabama Secretary of
the date the entity was incorporated or organized in Alabama. If the entity was
State to do business in Alabama.
organized outside the State of Alabama, enter the date the entity qualified with
Line 6b. Date of Incorporation or Organization for All Entities – Enter
the Secretary of State to do business in Alabama.
the date of incorporation or organization.
Line 3a. Legal Name of Business Entity – Enter the legal name of the
Line 6c. Date Started Doing Business in Alabama – Enter the date the
business entity. Do not enter the owner’s name or “doing business as” name.
company started doing business in Alabama.
Line 3b. FEIN – The taxpayer’s Federal Employer Identification Number
Line 6d. Telephone Number of Taxpayer – Enter the telephone number of
(FEIN) is required to complete Form BPT-IN. Enter “applied for” if an FEIN will
the taxpayer’s primary office.
be assigned to the taxpayer. Check the box (FEIN Not Required) if an FEIN will
Line 7a. Name of Registered Agent in Alabama – Enter the name of the
not be assigned to the taxpayer and enter the BPT account number on Line 3c.
registered agent in Alabama. This form cannot be used to change the registered
Single member limited liability companies should NOT use their owner’s
agent of a corporation.
FEIN or Social Security Number.
Line 7b. FEIN or Social Security Number – Enter the FEIN or Social
Line 3c. BPT Account Number – Enter the taxpayer’s BPT (Business
Security Number of the registered agent.
Privilege Tax) account number only if the taxpayer does not have an FEIN
(Federal Employer Identification Number). The account number is issued when
Line 7c. Street Address – Enter the street address or mailing address of
the account is opened and is provided in the notice advising the taxpayer of the
the registered agent.
1
I
F
T
P
FORM
NSTRUCTIONS
OR
HE
REPARATION OF
BPT-IN
2021
A
D
R
LABAMA
EPARTMENT OF
EVENUE
Alabama Business Privilege Tax
INSTRUCTIONS
Initial Business Privilege Tax Return
DO NOT FILE FORM BPT-IN AS AN ANNUAL RETURN
Business Privilege Tax liability. The account number is also provided in the letter
notifying the taxpayer of a Sign-On ID and an Access Code for using the
Section 40-14A-29, Code of Alabama 1975, requires newly organized cor-
Electronic Funds Transfer (EFT) System. Contact the Business Privilege Tax
porations, limited liability entities, and disregarded entities to file an initial
Section (334-242-1170, option 8) for any questions regarding the BPT account
Business Privilege Tax Return and to pay the business privilege tax reported on
number.
the return within two and one-half months after date of qualification.
Line 3d. Secretary of State Entity ID Number – Enter the Alabama
Corporations, limited liability entities, and disregarded entities organized
Secretary of State’s Entity ID Number. The entity ID number is obtained from
outside of Alabama, but qualifying with the Alabama Secretary of State to do
the Alabama Secretary of State’s website www.sos.alabama.gov or by contact-
business in Alabama, must file an Initial Business Privilege Tax Return and pay
ing the Secretary of State’s office at (334) 242-5324.
the business privilege tax reported on the return within two and one-half months
after date of qualification.
Please enter the last six digits of the entity ID number.
For example, if the Alabama Secretary of State’s Office has assigned a
Form BPT-IN, Initial Business Privilege Tax Return, is used to file an initial
domestic limited liability company the file number of DLL 999-999, the last six
return. Filing Form BPT-IN as an annual Business Privilege Tax Return could
digits of the entity ID number (999999) would be entered for Line 3d.
result in a failure to timely file penalty. An Alabama Schedule AL-CAR, the cor-
porate annual report, is not required for an initial return.
Line 3e. Federal Business Code Number (NAICS) – Enter the Federal
Business Activity Code Number to be reported on the taxpayer’s federal income
The preparation of the Form BPT-IN differs from an annual return, as
tax return. The federal activity codes are based on the North American Industry
follows:
Classification System (NAICS). NAICS information is available on the U.S.
1. Date of Qualification, Incorporation, or Organization – Line 2a of the
Census Bureau’s website (www.census.gov) or by contacting the U.S. Census
Form BPT-IN should be the date of incorporation or organization for corpora-
Bureau (800-923-8282).
tions, limited liability entities, and disregarded entities organized in Alabama.
Line 3f. Mailing Address – Enter the taxpayer’s mailing address or street
For corporations, limited liability entities, and disregarded entities organized
address.
outside the State of Alabama, line 2a should be the date the entity qualified with
the Alabama Secretary of State to do business in Alabama or started doing
Line 3g. City – Enter the taxpayer’s city.
business in Alabama, whichever occurred first.
Line 3h. State – Enter the taxpayer’s state.
2. Apportionment Factor – The apportionment factor used on the initial
Line 3i. Zip Code – Enter the taxpayer’s 9-digit zip code.
return is based solely on the ratio of property located in Alabama to total prop-
Line 4a. Contact Person Concerning This Form – Enter the name of the
erty owned by the taxpayer (which includes property located outside of
person who can answer questions concerning the preparation of this form.
Alabama). The apportionment factor is computed as of the date of organization,
if organized in Alabama, or the date the entity qualified with the Alabama
Line 4b. Contact Person’s Phone Number – Enter the telephone number
Secretary of State, if a foreign entity.
of the person who can answer questions concerning the preparation of this
form.
3. Possible Short Taxable Year Proration of Privilege Tax – If the initial
return is for a short taxable year (the period of time between the date organized
Line 4c. Taxpayer’s E-mail Address – Enter the entity’s e-mail address.
or qualified and the last day of the taxable year is less than one year), the busi-
Line 5a. County of Incorporation or Organization for All Alabama
ness privilege tax is prorated over the short period. The business privilege tax
Entities – Enter the Alabama county of incorporation or organization, if the enti-
for a short taxable year will never be less than $100.
ty was incorporated or formed in Alabama.
Preparation Instructions:
Line 5b. State or Country of Incorporation or Organization for All
Foreign Entities – Enter the state or country of incorporation or organization,
Line 1a. through Line 1i. Type of taxpayer (check only one) – Indicate
if the entity was not incorporated or formed in Alabama.
the type of taxpayer by checking one of the boxes on line 1a through line 1i.
Line 6a. Date of Qualification or Registration in Alabama for Foreign
Line 2a. Date of Qualification, Incorporation, or Organization – Enter
Entities – Enter the date the entity qualified with the Alabama Secretary of
the date the entity was incorporated or organized in Alabama. If the entity was
State to do business in Alabama.
organized outside the State of Alabama, enter the date the entity qualified with
Line 6b. Date of Incorporation or Organization for All Entities – Enter
the Secretary of State to do business in Alabama.
the date of incorporation or organization.
Line 3a. Legal Name of Business Entity – Enter the legal name of the
Line 6c. Date Started Doing Business in Alabama – Enter the date the
business entity. Do not enter the owner’s name or “doing business as” name.
company started doing business in Alabama.
Line 3b. FEIN – The taxpayer’s Federal Employer Identification Number
Line 6d. Telephone Number of Taxpayer – Enter the telephone number of
(FEIN) is required to complete Form BPT-IN. Enter “applied for” if an FEIN will
the taxpayer’s primary office.
be assigned to the taxpayer. Check the box (FEIN Not Required) if an FEIN will
Line 7a. Name of Registered Agent in Alabama – Enter the name of the
not be assigned to the taxpayer and enter the BPT account number on Line 3c.
registered agent in Alabama. This form cannot be used to change the registered
Single member limited liability companies should NOT use their owner’s
agent of a corporation.
FEIN or Social Security Number.
Line 7b. FEIN or Social Security Number – Enter the FEIN or Social
Line 3c. BPT Account Number – Enter the taxpayer’s BPT (Business
Security Number of the registered agent.
Privilege Tax) account number only if the taxpayer does not have an FEIN
(Federal Employer Identification Number). The account number is issued when
Line 7c. Street Address – Enter the street address or mailing address of
the account is opened and is provided in the notice advising the taxpayer of the
the registered agent.
1
Line 7d. City, State, and Zip Code – Enter the city, state and zip code of
ify as an electing family limited liability entity, in accordance with Section 40-
the registered agent.
14A-1(h), Code of Alabama 1975.
Line 8a. Name of Corporate President or Primary Member/Partner –
Instructions for Form BPT-IN, Page 2
Enter the name of the current corporate president or primary member/partner.
Line 1a. FEIN – Enter the Federal Employer Identification Number (FEIN)
Line 8b. Social Security Number – Enter the Social Security Number of
of the entity.
the current corporate president or primary member/partner.
Line 1b. Legal Name of Business Entity – Enter the legal name of the
Line 8c. Street Address – Enter the street address or mailing address of
business entity as shown on page 1, line 3a.
the current corporate president or primary member/partner.
Line 1c. Date of Qualification, Organization, or Incorporation – Enter
Line 8d. City, State and Zip Code – Enter the city, state, and zip code of
the date of qualification, organization, or incorporation (same as line 2a on page
the current corporate president or primary member/partner.
1 of Form BPT-IN).
Line 9a. Name of Corporate Secretary or Secondary Member/Partner –
Part A – Net Worth Computation:
Enter the name of the current corporate secretary or secondary member/
partner.
I. Corporations & Entities Taxed as Corporations
Line 9b. Social Security Number – Enter the Social Security Number of
the current corporate secretary or secondary member/partner.
Line 1. Enter the total amount of the taxpayer’s capital stock and additional
Line 9c. Street Address – Enter the street address or mailing address of
paid in capital, but not less than zero. The amount must not be reduced for any
the current corporate secretary or secondary member/partner.
treasury stock owned by the corporation.
Line 9d. City, State and Zip Code – Enter the city, state, and zip code of
Line 2. Enter the amount of Retained Earnings, but not less than zero.
the current corporate secretary or secondary member/partner.
Include any amounts designated for the payment of dividends until the amounts
are definitely and irrevocably placed to the credit of the stockholders, subject to
Line 10. Kind of Business Done in Alabama – Please provide a brief
withdrawal on demand. If the taxpayer does not issue stock or if the taxpayer is
statement of the character of business in which the entity is engaged in the
either a business trust or a limited liability entity taxed as a corporation for fed-
State of Alabama.
eral tax purposes, enter the book value of the taxpayer’s assets minus liabilities,
Line 11. Principal Place of Business in Alabama – Please provide the
but not less than zero.
address for the principal place of business in Alabama.
Line 3. Enter the gross amount of related party debt exceeding the total of
Line 12. Kind of Business Done Generally – Please provide a brief state-
the amounts entered on line 1 and line 2, as required by Section 40-14A-23,
ment of the general character of business in which the entity is engaged.
Code of Alabama 1975. This amount will be added to the amounts on line 1
Line 13. Principal Office and Place of Business if Outside the State of
and line 2 in arriving at the taxpayer’s net worth. Related parties are defined in
Alabama – Please provide the mailing address for the principal place of busi-
Section 40-14A-1, Code of Alabama 1975, as any member of a controlled
ness, if it is located outside of Alabama.
group of corporations as defined by Internal Revenue Code Section 1563. The
Line 14. Privilege tax due (Page 2, Part B, line 20) – Enter the amount
definition of related parties also includes any limited liability entity that would be
from page 2, Part B, line 20 (Privilege Tax Due). The Alabama Business
a member of a controlled group if rules similar to Section 1563 were applied to
Privilege Tax is due, in full, by the original due date of the Initial Business
limited liability entities. Note: The amount entered on line 3 must not be less
Privilege Tax Return.
than zero. Individual shareholders are not considered related parties. Related
party debt and related party receivables are not netted in any circumstances.
Line 15. Penalty due – Enter the total amount of the penalty for failure to
Exempt payables are defined as stated in Section 40-14A-23(e)(2)(b). They
timely file the return and the penalty for failure to timely pay the tax shown due
include trade debt, accounts payable, or deposit liabilities to related parties that
on the return, as specified in Section 40-2A-11, Code of Alabama 1975. The
are doing business in Alabama. Non-Exempt payables are all other related
penalty for failure to timely file an Alabama Business Privilege Tax Return by the
party debts.
due date is 10% of the tax or $50, whichever is greater. The penalty for failure
to timely pay the amount of tax shown due on an Alabama Business Privilege
Line 4. For the determination period, enter the excess amount (the amount
Tax Return equals to 1% of the amount of tax shown due on the return for each
in excess of $500,000 for each shareholder) of compensation or similar
month the tax is unpaid – not to exceed 25% of the amount shown due on the
amounts paid to (or accrued as a liability to) certain direct or indirect sharehold-
return.
ers, as defined in Section 40-14A-23, Code of Alabama 1975. This amount will
be added to lines 1, 2, and 3, in arriving at the taxpayer’s net worth. Section 40-
Line 16. Interest due – Enter the amount of interest due on any Business
14A-23(f), Code of Alabama 1975, should be referred to for a more thorough
Privilege Tax unpaid as of the original due date of the Business Privilege Tax
explanation of this adjustment.
Return. Section 40-1-44(a), Code of Alabama 1975, specifies the interest rate
to be used in computing the amount of interest due (Section 40-1-44 references
Line 5. For the determination period, enter the excess amount (the amount
Internal Revenue Code Section 6621 for the interest rates to be used for under-
in excess of $500,000 for each shareholder) of compensation or similar
payments).
amounts paid to (or accrued as a liability to) certain direct or indirect sharehold-
ers, as defined in Section 40-14A-23, Code of Alabama 1975. This amount will
Line 17. Total privilege tax due – Add the amounts shown on lines 14, 15,
be added to lines 1, 2, and 3, in arriving at the taxpayer’s net worth. Section 40-
and 16.
14A-23(f), Code of Alabama 1975, should be referred to for a more thorough
Line 18. Indicate payment type – Check the box if the payment due was
explanation of this adjustment.
made by electronic payment.
Line 6. Total Net Worth – Enter the sum of lines 1 through 5.
Line 19. Family LLE Election Indicator – Check the box if the Family LLE
II. Limited Liability Entities (LLEs)
Election Schedule is completed and attached. The Family Limited Liability
Election must be made annually on or before the due date, including exten-
Line 7. Enter the total amount of the partner/member capital accounts, but
sions, of the return in accordance with Section 40-14A-1(h)(2), Code of
not less than zero.
Alabama 1975. Failure to attach Schedule BPT-E and sign Page 1 of Form
BPT-IN will result in the disallowance of the election. Single-member LLCs that
Line 8. Enter the excess amount (the amount in excess of $500,000 for
are treated as a disregarded entity for federal income tax purposes do not qual-
each partner/member) of compensation, distributions or similar amounts paid to
2
(or accrued as a liability to) certain direct or indirect partners/members during
as a liability to) certain direct or indirect owners during the determination period,
the determination period, as defined in Section 40-14A-23, Code of Alabama
as defined in Section 40-14A-23, Code of Alabama 1975. This amount will be
1975. This amount will be added to the amounts entered on lines 7 and 9, in
added to the amounts entered on lines 13 and 14, in arriving at the taxpayer’s
arriving at the taxpayer’s net worth. Section 40-14A-23(f), Code of Alabama
net worth. Section 40-14A-23(f), Code of Alabama 1975, should be referred to
1975, should be referred to for a more thorough explanation of this adjustment.
for a more thorough explanation of this adjustment.
Line 16. Total Disregarded Entity Net Worth – Enter the sum of lines 13
Line 9. Enter the gross amount of related party debt exceeding line 7, as
through 15 and go to Part B, line 1.
required by Section 40-14A-23, Code of Alabama 1975. This amount will be
added to the amount on line 7 in arriving at the taxpayer’s net worth. Related
Part B – Privilege Tax Exclusions
parties are defined in Section 40-14A-1, Code of Alabama 1975, as any mem-
and Deductions:
ber of a controlled group of corporations as defined by Internal Revenue Code
Section 1563. The definition of related parties also includes any limited liability
Exclusions are allowed by Section 40-14A-23 (g), Code of Alabama 1975.
entity that would be a member of a controlled group if rules similar to Section
Attach documentation supporting any exclusion claimed on the return.
1563 were applied to limited liability entities. Note: The amount entered on line
9 must not be less than zero. Individual shareholders are not considered related
Line 1. Enter the Total Net Worth from line 6, 10, or 16, Part A.
parties. Related party debt and related party receivables are not netted in any
Line 2. Enter the total book value amount for the investment the taxpayer
circumstances. Exempt payables are defined as stated in Section 40-14A-
has in the equity of other taxpayers. Attach a listing providing for each separate
23(e)(2)(b). They include trade debt, accounts payable, or deposit liabilities to
investment, the name of the taxpayer, the taxpayer’s FEIN, the taxpayer’s
related parties that are doing business in Alabama. Non-Exempt payables are
address and the book value of the investment. This exclusion is not available for
all other related party debts.
the book value of securities (as defined in Internal Revenue Code Section 1236)
Line 10. Total LLE Net Worth – Enter the sum of lines 7 through 9.
primarily for sale to customers in the ordinary course of its trade or business.
Line 3. This Exclusion is Only Available to Financial Institutions –
III. Disregarded Entities & Business Trusts
Financial Institutions should enter the total book value amount for the invest-
Line 11. Enter the name and Federal Employer Identification Number
ment the Financial Institution taxpayer has in the equity of other entities not
(FEIN) or Social Security Number (SSN) of the single member of the disregard-
doing business in Alabama. The Financial Institution taxpayer must have an
ed entity.
ownership percentage in the other entity of more than 50%. Section 40-14A-
23(g), Code of Alabama 1975, provides additional information concerning the
Line 12. If the taxpayer is a disregarded entity that has as its single member
exclusion. Attach a listing providing for each separate investment, the name of
a taxpayer that IS subject to the Alabama Business Privilege Tax, then the dis-
the entity, the entity’s FEIN, the entity’s address, and the book value of the
regarded entity pays only the minimum tax. Enter $100, the amount of the min-
investment. The return will not be considered complete without the listing.
imum business privilege tax, in Part B, line 20. The form can then be completed
from that point, in accordance with the instructions for this form. The name and
Line 4. Enter the amount reported on the taxpayer’s balance sheet for the
FEIN of the single member must be provided on line 11, or the form will be con-
unamortized portion of goodwill and core deposit intangibles that resulted from
sidered incomplete.
a direct purchase of another corporation or limited liability entity. For goodwill,
attach a listing showing for each direct purchase the goodwill originally
Line 13. Disregarded Entity Net Worth Computation – If the taxpayer is
acquired, the date the direct purchase occurred, accumulated amortization, the
a disregarded entity that has as its single member a taxpayer that IS NOT sub-
name and location of the business acquired, and the name and FEIN of the enti-
ject to the Alabama Business Privilege Tax, then the disregarded entity must
ty that acquired the business and goodwill.
compute its own net worth, and pay the Alabama Business Privilege Tax
Line 5. Enter the amount reported on the taxpayer’s balance sheet for the
accordingly. Enter the amount the taxpayer’s assets exceed its liabilities, but not
less than zero. The name and FEIN/SSN of the single member must be provid-
unamortized portion of post-retirement benefits, which the taxpayer elected to
ed on line 11, or the form will be considered incomplete. A statement must be
amortize under Financial Accounting Standards Board (FASB) Statement
attached to the business privilege tax return explaining why the owner is not
Number 106, Employers’ Accounting for Postretirement Benefits Other Than
subject to the Alabama business privilege tax.
Pensions. The statement was issued in December 1990, and focuses principal-
ly on postretirement health care benefits. The supporting documentation should
Disregarded entity owners that are not subject to the Alabama business
include a description of benefits, amortization schedule, and the line detail of
privilege tax include, but are not limited to: resident individual taxpayers; non-
the post-retirement benefits on the balance sheet.
resident individual taxpayers; general partnerships; and, foreign business enti-
Line 6. This exclusion is only available to Financial Institutions. Financial
ties not doing business in the state of Alabama and not registered with the
Institutions should enter the total amount that the net worth (computed in accor-
Alabama Secretary of State’s Office to do business in the state of Alabama.
dance with lines 1 through 5, above) exceeds 6% of the total assets of the
Line 14. Enter the gross amount of related party debt exceeding the amount
Financial Institution taxpayer. Attach a computation of the amount claimed as
entered on line 13, as required by Section 40-14A-23, Code of Alabama 1975.
this exclusion.
This amount will be added to the amount on line 13 in arriving at the taxpayer’s
Line 7. Total Exclusions – Enter the total of lines 2 through 6.
net worth. Related parties are defined in Section 40-14A-1, Code of Alabama
1975, as any member of a controlled group of corporations as defined by
Net Worth Apportionment
Internal Revenue Code Section 1563. The definition of related parties also
includes any limited liability entity that would be a member of a controlled group
Line 8. Net Worth Subject to Apportionment – Enter the difference
if rules similar to Section 1563 were applied to limited liability entities. Note: The
between line 1 (Total Net Worth) and line 7 (Total Exclusions).
amount entered on line 14 must not be less than zero. Individual shareholders
Line 9. Alabama Property Factor as of the Date of Organization,
are not considered related parties. Related party debt and related party receiv-
Incorporation, or Qualification – Initial Alabama Business Privilege Tax
ables are not netted in any circumstances. Exempt payables are defined as
Returns require an apportionment factor. The computation of the apportionment
stated in Section 40-14A-23(e)(2)(b). They include trade debt, accounts
factor for an initial return is to be performed as of the opening of business or the
payable, or deposit liabilities to related parties that are doing business in
first day the taxpayer is incorporated, formed, organized (if a domestic entity) or
Alabama. Non-Exempt payables are all other related party debts.
registered with the Alabama Secretary of State to do business in Alabama (if a
Line 15. Enter the excess amount (the amount in excess of $500,000 for
foreign entity). Since usually at that point, a business has no sales or payroll
the owner) of compensation, distributions or similar amounts paid to (or accrued
information, the ratio of Alabama property to total property should be used as
3
the apportionment factor for initial returns. Section 40-14A-24(a), Code of
Line 17. Tax Rate – The number on line 17 should be .00025.
Alabama 1975, establishes the net worth apportionment requirements for the
Line 18. Gross Privilege Tax Calculated – Multiply line 16 (Taxable
Alabama business privilege tax.
Alabama Net Worth) by line 17 (Tax Rate).
Line 10. Total Alabama Net Worth – Multiply line 8 (Net Worth Subject to
Example:
Apportionment) by line 9 (Apportionment Factor).
Line 16. – Taxable Alabama Net Worth . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Deductions
Line 17. – Tax Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.00025
Line 18. – Gross Privilege Tax Calculated . . . . . . . . . . . . . . . . . . . . $
250
Deductions are allowed by Section 40-14A-24(b), Code of Alabama 1975.
Attach documentation supporting any deduction claimed on the return.
Line 19. Ratio of Days Remaining in the Tax Year Divided by 365 – Enter
the ratio of the number of days remaining in the calendar year or, if different, the
Line 11. Enter the net amount invested in bonds and securities issued by
number of days remaining in the taxpayer’s taxable year, divided by 365. This
the State of Alabama, or its political subdivisions, prior to January 1, 2000. “Net
ratio will allow the business privilege tax to be prorated to the short taxable year.
amount invested” means the cash, including any premium and net of any dis-
count, paid as the purchase price for the bond or other security, less the amount
Line 20. Privilege Tax Due. Multiply line 18 (Gross Tax Due) by line 19
of any premium amortized and plus the amount of any discount accreted,
(Ratio of Days Remaining in Taxable Year), but not less than $100, the mini-
reduced by the proportionate amount of principal on the bond or other security
mum amount of the tax.
that is amortized or otherwise paid or retired. The taxpayer must attach a
This amount is also entered on page 1 of Form BPT-IN on line 14 (Privilege
schedule listing the details of the deduction. For each bond or security, the list-
Tax Due).
ing should provide the net amount invested, the issuing agency, issuance date,
See the following concerning the minimum and maximum amounts for the
and how the investment is reported on the taxpayer’s balance sheet. This
tax.
deduction is not available to dealers in securities (those subject to the require-
ments of Internal Revenue Code Section 1236) for the book value of bonds and
Maximum Privilege Tax:
securities held by the dealer primarily for sale to customers in the ordinary
course of its trade or business.
Financial Institution Groups have a $3,000,000 maximum levy for the
Alabama Business Privilege Tax. See Section 40-14A-22, Code of Alabama
Line 12. Enter the net amount invested in, or book value from the taxpayer’s
1975.
balance sheet, for all devices, facilities, or structures, and all identifiable com-
ponents or materials for use therein, that are located in Alabama and are
Insurance companies subject to the insurance premium taxes levied by
acquired or constructed primarily for the control, reduction, or elimination of air,
Chapter 4A Title 27, Code of Alabama 1975, have a $3,000,000 maximum levy
ground, or water pollution or radiological hazards where such pollution or radi-
for the Alabama Business Privilege Tax. See Section 40-14A-22, Code of
ological hazards result from or would be caused by the taxpayer’s activities in
Alabama 1975.
Alabama.
C-corporations and LLEs taxed as corporations have a $15,000 maximum
Line 13. Enter the amount reported on the taxpayer’s balance sheet for the
levy for the Alabama Business Privilege Tax. See Section 40-14A-22, Code of
balance of any reserve, account, or trust reasonably determined to satisfy any
Alabama 1975.
liability that is imposed by federal, state, or local government laws or regulations
S-corporations, LLEs, and Disregarded Entities have a $15,000 maximum
for reclamation, storage, disposal, decontamination, retirement, or other related
levy for the Alabama Business Privilege Tax. See Section 40-14A-22(d), Code
costs associated with a plant, facility, mine, or site in Alabama. Attach documen-
of Alabama 1975.
tation identifying the applicable law or regulation that establishes taxpayer’s lia-
bility, as well as a computation of the liability. The documentation must also
LLEs meeting the definition of “electing family limited liability entity” as stat-
identify the location of the plant, facility, mine or site in Alabama.
ed in Section 40-14A-1, Code of Alabama 1975, have a maximum levy for the
Alabama Business Privilege Tax of $500.
Line 14. Enter the total gross amount reported on the taxpayer’s balance
sheet as the book value of the taxpayer’s investment in low-income, residential
Minimum Privilege Tax:
real estate projects that qualify for federal or state income tax credits, loans or
grants. See Section 40-14A-24(b)(7) Code of Alabama 1975. The taxpayer
Section 40-14A-22(c), Code of Alabama 1975, establishes a minimum
must attach a listing showing the details of the deduction. For each separate
business privilege tax levy of $100 for C-corporations, LLEs taxed as corpora-
low-income housing project, the attached documentation must identify the
tions, insurance companies, REITs, S-corporations, LLEs, and Disregarded
name of the project, the FEIN of the project, the site of the project, and the net
Entities – even for business privilege tax years that are short years.
amount invested in the project. The documentation must also identify how the
The minimum business privilege tax levy for financial insitution groups is
investments are reported on the taxpayer’s balance sheet. If this deduction is
established by Section 40-14A-22(f), Code of Alabama 1975. Section 40-14A-
taken, the return will not be considered complete without the listing.
22(f) defines the terms: affiliated groups; financial institutions; and financial
Line 15. Total Deductions – Enter the total of lines 11 through 15.
institution groups. The section explains how the business privilege tax is com-
Line 16. Taxable Alabama Net Worth – Enter the difference between line
puted for a financial institution group and how the minimum business privilege
10 (Total Alabama Net Worth) and Line 15 (Total Deductions).
tax is computed for a financial institution group.
4
Page of 4