(a) An Alabama S corporation shall not be subject to the tax imposed by Section 40-18-31.
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Terms Used In Alabama Code 40-18-160

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
(b) For purposes of this chapter, an “Alabama S corporation” is a corporation:

(1) With respect to which an election under 26 U.S.C. § 1362 is in effect; or
(2)

a. With respect to which there is in effect an election under 26 U.S.C. § 1361(b)(3) to treat such corporation as a qualified subchapter S subsidiary; and
b. All the stock of which is owned by an S corporation qualifying as an “Alabama S corporation” under subdivision (b)(1).

No corporation shall be an Alabama S corporation for any portion of a taxable year of the corporation during which an election under 26 U.S.C. § 1362 or §1361(b)(3), whichever is applicable, is not in effect for federal income tax purposes. No corporation shall be an Alabama S corporation if it is a financial institution, as defined in Section 40-16-1.

(c) For purposes of this chapter, an “Alabama C corporation” means any corporation other than an Alabama S corporation.
(d) With respect to a qualified subchapter S subsidiary for which there is in effect an election under 26 U.S.C. § 1361 (b)(3), all of its assets, liabilities, and items of income, deductions, and credit shall be treated as assets, liabilities, and such items, as the case may be, of the Alabama S corporation owning the stock of the qualified subchapter S subsidiary.
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