1. (1) Corporations, associations, or joint-stock companies subject to tax only in the state of Alabama are taxable on income from all sources, both inside and outside the state of Alabama. Corporations, associations, or joint-stock companies subject to tax in multiple states, shall allocate and apportion their income as defined in the statute and rules under §40-27-1, Code of Ala. 1975.
2. (2) For a corporation acting in a fiduciary capacity in Alabama, see Rule 810-3-2-.03.

3. (3) A corporation qualified to do business or doing business in this state and having a valid S election under 26 U.S.C. §1362 shall be an Alabama S corporation under the provisions of §40-18-160, Code of Ala. 1975, et seq. Generally, an S corporation will not pay income tax at the corporate level, but will act as a conduit to pass through income to its shareholders. See §40-18-160 Code of Ala. 1975, and related rules.

   1. (b) Any organization, whether incorporated or not, which receives such "unrelated business taxable income" shall file Form 20C and report income and deductions in the same manner as a corporation. Any organization subject to income tax which receives such "unrelated business taxable income" shall file Form 20C and report the income and deductions attributable to Alabama. See the statute and rules under §40-27-1, Code of Ala. 1975, for guidance on apportionment and allocation of income and deductions.

   (4)(a) Every organization described in §40-18-32, Code of Ala. 1975, which receives "unrelated business taxable income" as defined in 26 U.S.C. §512, shall file Form 20C reporting such "unrelated business taxable income" and pay any tax due thereon.

Author: Christina Hall, Chris Sherlock

Statutory Authority: Code of Ala. 1975, §§40-2A-7(a)(5), 40-18-2, 40-27-1, and 26 U.S.C. §§512 and 1362.

History: Amended: June 17, 1988; filed July 27, 1988. Amended: Filed March 4, 1997; effective April 8, 1997. Amended: Filed July 13, 2018; effective August 27, 2018. Amended: Filed January 25, 2019; effective March 11, 2019.