For purposes of this chapter, the following terms shall mean:

(a) ALABAMA S CORPORATION. An S corporation defined under Section 40-18-160.

(b) C CORPORATION. A corporation other than an Alabama S corporation.

(c) CODE. The Internal Revenue Code of 1986, as amended from time to time.

(d) CORPORATION. An entity, including a limited liability company electing to be taxed as a corporation for federal income tax purposes, through which business can be conducted while offering limited liability to the owners of the entity with respect to some or all of the obligations of the entity, other than a limited liability entity or a disregarded entity. The term 'corporation' shall include but not be limited to the following: Corporations, professional corporations, joint stock companies, unincorporated professional associations, real estate investment trusts, limited liability companies electing to be taxed as corporations for federal income tax purposes, and all associations classified as corporations for federal income tax purposes. The term 'corporation' shall not include any county, municipal corporation, political subdivision of the state, governmental corporation, instrumentality or agency thereof.

(e) DEPARTMENT. The Department of Revenue created by Chapter 2.

(f) DETERMINATION PERIOD. The taxpayer's taxable year next preceding or, if different, the fiscal year next preceding the taxpayer's current taxable year. If the constitutional amendment proposed by Act 99-600 is ratified by the qualified electors of the state and proclaimed by the Governor as provided in Sections 284 and 285 of the Constitution of Alabama 1901, then for all tax years beginning after December 31, 2000, the term 'determination period' means the taxpayer's taxable year next preceding the taxpayer's current taxable year.

(g) DISREGARDED ENTITY. A limited liability company that is disregarded for purposes of federal income tax, or a qualified subchapter S subsidiary, as defined in 26 U.S.C. §1361.

(h) ELECTING FAMILY LIMITED LIABILITY ENTITY. A limited liability entity that meets the following requirements:

(1) 80 percent or more of the profits and capital interests are directly or constructively owned by an individual and the members of the individual's family, as defined in subdivision (4);

(2) Elects annually (on or before the due date, including extensions, of the return for the tax levied by this chapter) in a manner prescribed by the department to be taxed for the taxable year as a family limited liability entity; and

(3) Either: The Gross Receipts Test in a. or the Assets Test in b.

a. Gross Receipts Test. 90% or more of the gross receipts of the entity for the taxable year consist of any combination of the following:

(i) Interest; (ii) dividends or other distributions or payments made with respect to stock or securities; (iii) rents, license fees, or other fees for the use of property where the entity does not render direct substantial services in connection with such use; (iv) receipts described in 26 U.S.C. §631(b) from the sale or leasing of timber or timberlands; (v) royalties; (vi) annuity payments; (vii) proceeds from the sale of an asset other than in the ordinary course of the entity's trade or business; or

b. Assets Test. The aggregate adjusted basis of the following categories of assets constitutes at least 90% of the aggregate adjusted basis of all of the entity's assets: (i) Cash or cash equivalents; (ii) stocks, bonds, debentures, notes, or other securities; (iii) timber or timberlands; (iv) annuities; (v) assets held principally for appreciation rather than production of income; (vi) mutual funds; (vii) assets not used directly in the active conduct of the entity's trade or business of the entity; or (viii) royalty interests.

The Assets Test in b. shall be computed: Without regard to any increase or decrease in adjusted basis on account of an election under 26 U.S.C. §754; as of the first day of the taxable year; without including assets held primarily for sale to customers in the ordinary course of the entity's trade or business in the numerator; and using the adjusted basis as determined for federal income tax purposes.

(4) For purposes of this subsection, 'members of the individual's family' shall include the individual's spouse, grandparents, and the lineal descendents of the grandparents and their spouses. Whether interests are constructively owned shall be determined using the attribution rules set forth in 26 U.S.C. §318 as if the profits and capital interests of the family limited liability entity were stock and without regard to the fifty percent (50%) limitations contained in 26 U.S.C. §318(a)(2)(C) and 26 U.S.C. §318(a)(3)(C)).

(i) FEDERAL INCOME TAX. The income tax imposed by the Code, as amended from time to time.

(j) FISCAL YEAR. The annual period used by a taxpayer to determine its federal income tax, financial institution excise tax, or report its financial results.

(k) LIMITED LIABILITY ENTITY. Any entity, other than a corporation, organized under the laws of this or any other jurisdiction through which business may be conducted while offering limited liability to the owners of the entity with respect to some or all of the obligations of the entity and which is taxable under subchapter K of the Code, including, without limitation, limited liability companies, registered limited liability partnerships, and limited partnerships.

(l) RELATED PARTY. Any member of a controlled group of corporations as defined in 26 U.S.C. §1563, or a limited liability entity that would be a member of a controlled group if rules similar to those of 26 U.S.C. §1563 were applied to limited liability entities.

(m) TAXABLE INCOME. In the case of a C corporation, the amount of its federal taxable income. In the case of an Alabama S corporation, other than a qualified subchapter S subsidiary, the amount taken into account by its owners pursuant to 26 U.S.C. §1366. In the case of a limited liability entity, the amounts taken into account by its owners pursuant to 26 U.S.C. §702. In the case of a real estate investment trust, the real estate investment trust taxable income determined pursuant to 26 U.S.C. §857. In the case of a disregarded entity, the amount taken into account by its owner pursuant to 26 U.S.C. §1361 or §61. In each case, taxable income of the entity subject to tax shall mean its taxable income for the determination period. In each case, taxable income shall be apportioned and allocated to Alabama in accordance with Chapter 18 or in the case of a financial institution, Chapter 16, or in accordance with Title 27 relating to insurance companies.

(n) TAXABLE YEAR. The calendar year for which a tax levied by this chapter is being determined. For all tax years beginning after December 31, 2000, the term 'taxable year' means the fiscal year used by the taxpayer to file returns required under the income tax levied by Chapter 18 or the financial institution excise tax levied by Chapter 16, or, in the case of an insurance company subject to the premium tax levied by Chapter 4A of Title 27, the calendar year.

(o) TAXPAYER. A corporation, limited liability entity, or disregarded entity, subject to a tax levied by this chapter.

(p) U.S.C. The United States Code, as amended from time to time.

(a) The taxpayer's net worth shall be determined for purposes of the taxes levied by this chapter in accordance with the accounting principles used in preparing the taxpayer's financial statements reported to its owners. If the taxpayer's financial statements are not prepared in accordance with generally accepted accounting principles, then net worth for such purposes shall be determined either on the same basis as it prepares its federal income tax return or as required by the appropriate regulatory agencies having jurisdiction. However, in the case of a taxpayer that is an insurer holding a certificate of authority to conduct an insurance business within the State of Alabama, net worth for such purposes shall be computed on the same basis as its financial statements are prepared in accordance with the requirements of the State of Alabama Insurance Department.

(b) Net worth may be determined from the taxpayer's financial statements for its determination period if those financial statements reasonably reflect the financial condition of the taxpayer as of the January 1 following the determination period.

This article shall be known and may be cited as the 'Alabama Business Privilege Tax Act of 1999.'

(a) Levy of tax. There is hereby levied an annual privilege tax on every corporation, limited liability entity, and disregarded entity doing business in Alabama, or organized, incorporated, qualified, or registered under the laws of Alabama. The tax shall accrue as of January 1 of every taxable year, or in the case of a taxpayer organized, incorporated, qualified, or registered during the year, or doing business in Alabama for the first time, as of the date the taxpayer is organized, incorporated, registered, or qualifies to do business, or begins to do business in Alabama, as the case may be. The taxpayer shall be liable for the tax levied by this article for each year beginning before the taxpayer has been dissolved or otherwise ceased to exist or has withdrawn or forfeited its qualification to do business in Alabama. The amount of the tax due shall be determined by multiplying the taxpayer's net worth in Alabama by the rate determined in subsection (b).

(b) Rate of tax. For all taxable years of taxpayers that begin after December 31, 1999, the rate of tax shall be as set forth below.

(c) Minimum tax. Except as provided in subsection (f), the privilege tax levied by this article on certain corporations, business trusts, limited liability entities, and disregarded entities shall not be less than $100.

(d) Maximum tax.

(1) Except as provided in subdivision (2), the privilege tax levied by this article shall not exceed $15,250 for any taxpayer for the taxable year beginning January 1, 2000. For each taxable year thereafter, the maximum tax shall not exceed $15,000 for any taxpayer, except as provided in subdivision (2).

(2) With respect to any (i) financial institution groups as defined in subsection (f) (1); (ii) insurance company that is subject to the premium taxes levied by Chapter 4A of Title 27; and (iii) corporation, company, limited liability entity, or association whose property is assessed for taxation pursuant to the provisions of Chapter 21 and is also obligated to serve the general public, the privilege tax levied by this article shall not exceed $3,000,000, for any taxpayer or, for a financial institution group, for the financial institution group as a whole each year except as provided in subsection (e). With respect to any real estate investment trust as defined in Chapter 13 of Title 10, the privilege tax levied by this article shall not exceed $500,000, for any taxpayer each year except as provided in subsection (e). The privilege tax levied by this article on any electing family limited liability entity shall not exceed $500.

The privilege tax levied by this article on any corporation organized as a not-for-profit corporation that does not engage in any business other than holding title to property and paying the expenses thereof, including, without limitation, a property owners' association or a corporation organized solely to hold title to property on a temporary basis, shall not exceed $100.

(e) Short taxable years. If any taxpayer's taxable year is less than 12 months because the taxpayer is incorporated or organized within the taxable year, or if any foreign corporation or foreign limited liability entity qualifies, registers, or begins to do business in this state within the taxable year or converts to a taxable year other than the calendar year, the amount of the tax levied by this article shall be determined in the manner specified in this article but apportioned to the short taxable year in same proportion as the number of days in the short taxable year bears to 365, but in no event less than $100 nor more than the applicable amount specified in subsection (d).

(f) Minimum taxes for financial institution groups.

(1) For purposes of this subsection, the following terms shall mean:

a. Affiliated Group. (i) One or more chains of corporations or limited liability entities connected through the ownership of stock or ownership interests with a common parent which is a corporation or limited liability entity, but only if the common parent owns directly stock or ownership interests meeting the requirements of item (ii) in at least one of the other corporations or limited liability entities, and only if stock or ownership interests meeting the requirements of item (ii) in each of the corporations or limited liability entities (except the common parent) is owned directly by one or more of the other corporations or limited liability entities. (ii) The ownership of stock or ownership interests of any corporation or limited liability entity meets the requirements of this paragraph if it possesses at least 80 percent of the total voting power or capital and profits interest of the corporation or limited liability entity.

b. Financial Institution. The meaning given in Section 40-16-1.

c. Financial Institution Group. All taxpayers in an affiliated group where at least one member of the group is a financial institution that is subject to the provisions of Chapter 16. In the event a financial institution taxpayer is not a member of an affiliated group, that financial institution shall be treated as a financial institution group.

(2) To the extent that the members of a financial institution group have different taxable years, the group shall be deemed, for purposes of the business privilege tax and corporate shares tax levied by Articles 2 and 3, to have a calendar taxable year.

(3) Taxpayers who are members of a financial institution group shall complete their corporate shares tax and business privilege tax returns without regard to this subsection. Those taxpayers shall submit their returns together, and the minimum tax amount provided in subdivision (5) shall apply to the aggregate business privilege tax and corporate shares tax liability of the group. To the extent that the minimum amount provided in subdivision (5) applies to determine the liability of the group, each taxpayer which is a member of the group shall be liable for that portion of the group liability which is equal to the amount multiplied by the ratio of the taxpayer's liability without regard to this subsection over the liability of the group without regard to this subsection. Upon the annual election of the common parent, a financial institution group may file a single return, executed by the common parent of that financial institution group. The return shall be completed as if the financial institution group were a single taxpayer. Each member of the financial institution group shall be jointly and severally liable for the group's business privilege tax and corporate shares tax liabilities.

(4) For the taxable year beginning January 1, 2000, the tax returns of all members of a financial institution group shall be due July 10, 2000. For taxable years beginning after December 31, 2000, the tax returns for all members of a financial institution group shall be due March 15 of the taxable year. Extensions for filing these returns shall not be granted beyond September 15 of the taxable year. For the return due July 10, 2000, any corporate shares taxes and business privilege taxes accrued and paid by any member of the financial institution group before July 10, 2000, shall be applied against the minimum tax amount provided in subdivision (5).

(5) For taxable years beginning on or after January 1, 2000, the minimum aggregate business privilege and corporate shares taxes levied by Articles 2 and 3 on all members of a financial institution group shall be:

a. For financial institutions with total deposits inside Alabama of less than one billion dollars ($1,000,000,000) within that financial institution group, as reported to the FDIC, OTS, or the NCUSIF as of June 30 of the immediately preceding taxable year, the tax rate shall be $.125 per one thousand dollars ($1,000) of such deposits. For deposit rate purposes for all future periods, the deposits shall in no event be less than the deposits listed as of June 30, 1999.

b. For financial institutions with total deposits inside Alabama of one billion dollars ($1,000,000,000) or greater up to and including six billion dollars ($6,000,000,000) within that financial institution group, as reported to the FDIC, OTS, or the NCUSIF as of June 30 of the immediately preceding taxable year, the tax rate shall be $.17 per one thousand dollars ($1,000) of such deposits. For deposit rate purposes for all future periods, the deposits shall in no event be less than the deposits listed as of June 30, 1999.

c. For financial institutions with total deposits inside Alabama greater than six billion dollars ($6,000,000,000) within that financial institution group, as reported to the FDIC, OTS, or the NCUSIF as of June 30 of the immediately preceding taxable year, the tax rate shall be $.225 per one thousand dollars ($1,000) of such deposits. For deposit rate purposes for all future periods, the deposits shall in no event be less than the deposits listed as of June 30, 1999.

d. Provided, however, that in the case of a financial institution group that, as of June 30, 1999, (i) had total deposits of less than one billion dollars ($1,000,000,000) and (ii) derived at least a majority of its deposits, as reported to FDIC, OTS, or NCUSIF, that were booked to one or more branches or offices located within Alabama from account holders whose addresses of record on the books of the financial institution group were outside the State of Alabama, the phrase 'total deposits in Alabama,' for purposes of calculating the minimum aggregate business privilege and shares tax levied by Articles 2 and 3 for all taxable years beginning on and after January 1, 2000, shall only include deposits of account holders whose addresses of record on the books of the financial institution group are inside the State of Alabama.

e. In the event a financial institution group sells Alabama deposits to another financial institution group that reports those deposits in Alabama for purposes of Act 2000-705, those deposits shall not be taxed more than once pursuant to the provisions of Act 2000-705 in the same taxable year. The liability for such taxes shall be the responsibility of the purchaser, and the tax base for the selling group shall be adjusted accordingly.

f. In the event an existing financial institution group reports deposits in any year less than 96.5 percent of the deposits reported as of June 30, 1999, the alternative minimum tax shall be based on the deposits reported as of June 30, 1999. In the event an existing financial institution group reports deposits in any year more than 96.5 percent of the deposits reported as of June 30, 1999, the alternative minimum tax shall be based on the deposits reported for that taxable year. For financial institutions coming into existence after June 30, 1999, the deposits upon which the alternative minimum tax is based shall not be less than the deposits reported the first full year that financial institution reported deposits to the FDIC, OTS, or NCUSIF.

(a) Net worth of corporation. The net worth of a corporation shall equal the aggregate net amount of the following items determined as of the first day of the corporation's taxable year and adjusted as required in this article:

(1) In the case of a corporation, the sum of the following:

a. The issued capital stock and any additional paid-in capital, without reduction for treasury stock; and

b. Retained earnings, but not less than zero, which shall include any amounts designated for the payment of dividends until the amounts are definitely and irrevocably placed to the credit of stockholders subject to withdrawal on demand, and

(2) In the case of an entity taxed as a corporation under this article that does not issue stock, the difference between the book value of the entity's assets and liabilities, but not less than zero.

(b) Net worth of limited liability entities. The net worth of a limited liability entity shall be an amount equal to the sum, but not less than zero, of the capital accounts of the owners of the limited liability entity determined as of the first day of the taxable year of the entity and as further adjusted pursuant to this article.

(c) All the items that would enter into determining a disregarded entity's net worth shall be instead taken into account in determining the net worth of its owner, and the net worth of the disregarded entity shall be zero. Provided, however, that if the owner of the disregarded entity is an individual, general partnership, or other entity not subject to this tax, the net worth of the disregarded entity shall be equal to the assets minus the liabilities of the disregarded entity.

(d) Net worth of business trusts classified as corporations. The net worth of a business trust classified as an association taxable as a corporation for federal income tax purposes shall be equal to the book value of the assets minus the liabilities of the business trust but not less than zero.

(e) Additions to net worth.

(1) Additions to net worth may be positive amounts only.

(2) Net worth shall include related-party debt in certain situations as follows:

a. If a taxpayer is indebted to related parties in an amount that exceeds the net worth of the taxpayer determined under subsections (a), (b), or (c), then the amount of the excess shall be included in the net worth of the taxpayer.

b. For purposes of this subsection, the terms 'debt,' 'indebted,' and 'indebtedness' shall not include trade debt, accounts payable, or deposit liabilities to related parties that are doing business in Alabama.

(f) There shall be added to net worth, as determined above, compensation and distributions paid or accrued in certain situations.

(1) CORPORATIONS OTHER THAN ALABAMA S CORPORATIONS.

a. For a C corporation, net worth shall include compensation or similar amounts paid or accrued to a direct or indirect shareholder if such shareholder owns at least a 5% capital, profits, or voting interest in such corporation, to the extent such amount exceeds $500,000 with respect to each shareholder in the determination period. The rules of 26 U.S.C. §267(c) shall apply in determining whether an individual is a direct or indirect shareholder who owns at least a 5% capital, profits, or voting interest in such corporation.

b. All compensation or similar amounts paid or accrued to shareholders described in paragraph a. shall be aggregated if such shareholders are members of the same family as described in 26 U.S.C. §267(b)(1), unless the shareholders are 21 years of age or older and materially participate in the business.

c. Compensation or similar amounts paid or accrued to a person not described in paragraphs a. and b. shall be included in such aggregate amount if such person is related to any of the shareholders described in paragraphs a. and b., in accordance with the rules of 26 U.S.C. §267(b)(1), unless the person is 21 years of age or older and materially participates in the business.

(2) ALABAMA S CORPORATIONS.

a. For an Alabama S corporation, add to the above net worth the sum of compensation, distributions or similar amounts paid or accrued to a direct or indirect shareholder if that shareholder owns at least a 5% capital, profits, or voting interest in the corporation, to the extent such amounts exceed $500,000 with respect to each shareholder in the determination period. The rules of 26 U.S.C. §267(c) shall apply in determining whether an individual is a direct or indirect shareholder who owns at least a 5% capital, profits, or voting interest in the corporation.

b. All compensation, distributions, or similar amounts paid or accrued to shareholders described in paragraph a. shall be aggregated if such shareholders are members of the same family as described in 26 U.S.C. §267(b)(1), unless the shareholders are 21 years of age or older and materially participate in the business.

c. Compensation or other similar amounts and distributions paid or accrued to a person not described in paragraphs a. and b. shall be included in such aggregate amount if such person is related to any of the shareholders described in paragraphs a. and b., in accordance with the rules of 26 U. S. C. §267(b)(1), unless the person is 21 years of age or older and materially participates in the business.

(3) LIMITED LIABILITY ENTITIES.

a. For a limited liability entity, net worth shall include compensation, distributions or similar amounts paid or accrued to each direct or indirect partner or member to the extent the amounts exceed $500,000 with respect to each partner or member in the determination period. In determining whether an individual is an indirect partner or member, the principles of 26 U.S.C. §267(c) shall apply.

b. All compensation, distributions, or similar amounts paid or accrued to partners or members described in paragraph a. shall be aggregated if such partners or members are members of the same family as described in 26 U.S.C. §267(b)(1), unless the partners or members are 21 years of age or older and materially participate in the business.

c. Compensation, distributions, or other similar amounts paid or accrued to a person not described in paragraphs a. and b. shall be included in such aggregate amount if such person is related to any of the partners or members described in the paragraphs a. and b., in accordance with the rules of 26 U.S.C. §267(b)(1), unless the person is 21 years of age or older and materially participates in the business.

(4) DISREGARDED ENTITIES.

a. For a disregarded entity, net worth shall include compensation, distributions, or similar amounts paid or accrued to a direct or indirect owner to the extent the amount exceeds $500,000 in the determination period. In determining whether an individual is an indirect owner, the principles of 26 U.S.C. §267(c) shall apply.

b. All compensation, distributions, or similar amounts paid or accrued to an owner or indirect owners described in paragraph a. shall be aggregated if the owner or indirect owners are members of the same family as described in 26 U.S.C. §267(b)(1), unless the owner or indirect owners are 21 years of age or older and materially participate in the business.

c. Compensation, distributions, or similar amounts paid or accrued to persons not described in paragraphs a. and b. shall be included in the aggregate amount if the person is related to any of the owners described in paragraphs a. and b., in accordance with the rules of 26 U.S.C. §267(b)(1), unless the person is 21 years of age or older and materially participates in the business.

(g) From the sum of the items and additions to net worth determined in subsections (a) through (f), the following items shall be subtracted:

(1) The book value of the investment by the taxpayer in the equity of any other taxpayer (including any excess related-party debt described in paragraph (e)(2)a. that is included in the net worth of the taxpayer) that is doing business in Alabama. The subtraction shall not include the book value of any security held by a dealer primarily for sale to customers in the ordinary course of its trade or business pursuant to 26 U.S.C. §1236.

(2) In the case of financial institutions, the investment by the taxpayer in the equity (including any excess related-party debt added to net worth pursuant to paragraph (e)(2)a.) of any other corporation or limited liability entity that is not doing business in Alabama if the taxpayer owns more than 50 percent of the outstanding capital stock of the other corporation or more than 50 percent of the capital and profits interest of the limited liability entity, unless the other corporation or limited liability entity is dormant and not regularly engaged in one or more business activities. A corporation shall not be deemed dormant and shall be considered regularly engaged in one or more business activities if the corporation owns, directly or indirectly, more than 50 percent of the outstanding capital stock of another corporation regularly engaged in one or more business activities. A corporation shall be deemed to directly or indirectly own more than 50 percent of another corporation if both corporations would be part of a controlled group of corporations as defined in 26 U.S.C. §1563 if a 50 percent ownership requirement were applied in lieu of the 80 percent ownership requirement in 26 U.S.C. §1563.

(3) The unamortized portion of goodwill and core deposit intangibles appearing on the taxpayer's balance sheet by reason of a direct purchase of another corporation or limited liability entity.

(4) The unamortized balance of any amount that the taxpayer properly elected, pursuant to Pronouncement 106 of the Financial Accounting Standards Board or any equivalent successor authority, to amortize over a period of years rather than immediately charging that amount to earnings.

(5) In the case of a financial institution, the amount of net worth as adjusted pursuant to this section that exceeds six percent of its assets.

(a) A taxpayer's net worth in Alabama shall be determined by apportioning the taxpayer's net worth computed under Section 40-14A-23 in the same manner as prescribed for apportioning income during the determination period for purposes of the income tax levied by Chapter 18, or the manner in which the income would be apportioned if the taxpayer were subject to the income tax, or for the purposes of the financial institution excise tax levied by Chapter 16; provided, however, that the net worth of insurers subject to the insurance premium tax levied by Chapter 4A of Title 27 shall be apportioned on the basis of the ratio of the insurer's Alabama premium income to its nationwide total direct premiums as reflected on schedule T of the insurer's annual statement filed with the Commissioner of Insurance for the then immediately preceding calendar year.

(b) There shall be deducted from the amount of net worth in Alabama as determined in accordance with subsection (a):

(1) The net amount invested by the taxpayer in any bond or other security issued before January 1, 2000 by the State of Alabama, or any county, municipality or other political subdivision of the State of Alabama, or any public corporation, agency or instrumentality of the foregoing, but only until the year in which occurs the earlier of the final stated maturity thereof or the date on which the principal of the bond or other security shall be called for optional redemption prior to the final maturity thereof. For purposes of this subdivision, 'net amount invested' means the amount of cash, including any premium and net of any discount, paid as the purchase price for the bond or other security, less the amount of any premium amortized and plus the amount of any discount accreted to the date of calculation, reduced by the proportionate amount of principal on the bond or other security that is amortized or otherwise paid or retired. This subdivision shall not apply if the taxpayer is a dealer in securities subject to the rules of 26 U.S.C. §1236.

(2) The net amount invested by the taxpayer in all devices, facilities, or structures, and all identifiable components or materials for use therein, that are located in Alabama and are acquired or constructed primarily for the control, reduction, or elimination of air, ground, or water pollution or radiological hazards where such pollution or radiological hazards result from or would be caused by the taxpayer's activities in Alabama.

(3) The net amount invested by the taxpayer in all real and tangible personal property, equipment, facilities, structures, and components including, but not limited to, all aircraft replacement parts, components, systems, supplies, and sundries affixed or used on an aircraft, and ground support equipment and vehicles used by or for the aircraft, when used by certified or licensed air carrier with a hub operation within this state, for use in conducting intrastate, interstate, or foreign commerce for transporting people or property by air. For the purpose of this subdivision (3), the words 'hub operation within this state' shall be construed to have all of the following criteria:

a. There originate from the location 15 or more flight departures and five or more different first-stop destinations five days per week for six or more months during the calendar year; and

b. Passengers or property, or both, are regularly exchanged at the location between flights of the same or a different certificated or licensed air carrier.

(4) During the period beginning December 1, 1997, and ending on the date 20 years thereafter, the amount invested in all new and existing manufacturing facilities in this state by the taxpayer, which amount shall be limited to the investment in all real and tangible personal property, equipment, facilities, structures, components, and inventory in this state, provided that the taxpayer has met the criteria in paragraph a. below, and, in addition, has met the criteria in paragraph b. below:

a. The taxpayer must, not later than December 31, 2000, file with the department a statement of intent to claim the deduction provided under this section. This statement of intent shall contain any information required by the department.

b. During the period commencing with December 1, 1997, and ending on the date six years thereafter, the amount of new investment in all new and existing manufacturing facilities in this state by the taxpayer and, in addition, the number of new employees at all new and existing manufacturing facilities in this state shall meet or exceed the limits described in one of the following brackets:

No deduction shall be available under this subdivision (4) until the criteria defined in paragraph a. above, and, in addition, paragraph b. above have been met. The deduction available under this subdivision (4) shall only be available during those years within the 20 years after December 1, 1997, in which the taxpayer maintains the criteria defined in paragraph b. above.

(5) The amount invested by the taxpayer in the purchase of an existing manufacturing facility in this state, which amount shall be limited to the investment in all real and tangible personal property, equipment, facilities, structures, components, and inventory on or after January 1, 1998, and during the period for 20 years thereafter, provided that the taxpayer has met the criteria in paragraphs a., b., and c.

a. The taxpayer must, within six months of February 19, 1998, file with the department a statement of intent to claim the deduction provided pursuant to this subdivision (5). The statement of intent shall contain any information required by the department.

b. At the time of purchase, the existing manufacturing facility must have at least 1,000 employees, which employment level must be maintained during the period 20 years after the date of acquisition by the taxpayer.

c. At the time of purchase, the existing manufacturing facility must produce aluminum alloy can stock.

(6) The balance of any reserve, account, or trust reasonably determined to satisfy any liability that is imposed by federal, state, or local government laws or regulations for reclamation, storage, disposal, decontamination, retirement, or other related costs associated with a plant, facility, mine, or site in Alabama.

(7) The book value of any residential real estate project in Alabama that qualifies for federal or state income tax credits, loans, or grants on the grounds that it provides housing for low-income individuals.

(8) In the case of an Alabama S corporation, an amount equal to 30 percent of the corporation's taxable income.

(9) In the case of a limited liability entity or a disregarded entity, an amount equal to 30 percent of its taxable income, provided that the deduction provided in this subdivision shall not apply if the shares tax levied by Article 3 is in effect.

(c) Nothing in this section shall be construed to allow any item to be deducted more than once or to allow a deduction for any item that is excluded from net worth.

(a) Every taxpayer shall file a privilege tax return, which shall include the public record disclosures required by Section 10-2B-16.22, with the department for every taxable year for which it is subject to the tax levied by this article. A disregarded entity that is owned by an individual, general partnership, or other entity not subject to the tax levied by this article shall file a return and pay the tax levied on it by this article. Except as provided in Section 40-14A-22(f) (4), the return is due not later than March 15 of the taxable year for all taxpayers except limited liability entities for which the due date of the return shall be April 15 of the taxable year, or, in the case of a taxpayer's initial return, 30 days after the taxpayer comes into existence, qualifies or registers to do business, or commences doing business in Alabama as the case may be. For all taxable years beginning after December 31, 2000, a corporation shall file the return required by this section not later than two and one-half months after the beginning of the corporation's taxable year; a limited liability entity shall file the return required by this section not later than three and one-half months after the beginning of the limited liability entity's taxable year; and a disregarded entity that is required to file a return by this section shall file the return not later than the time its owner is required to file its return. If a taxpayer is required to change its taxable year pursuant to the previous sentence, then it shall file a return for the short taxable year beginning January 1, 2001, and ending on the day before the beginning of its new taxable year, and the return shall be filed not later than two and one-half months, if a corporation, and three and one-half months, if a limited liability entity, after the beginning of its new taxable year. In cases where receivers, trustees in bankruptcy, or assignees are operating the property or business of taxpayers, those receivers, trustees, or assignees shall file returns for the taxpayers in the same manner and form as the taxpayers are required to file returns. Any tax due on the basis of returns filed by receivers, trustees, or assignees shall be collected in the same manner as if collected from the taxpayers for whose business or property they have custody and control. The department may grant a reasonable extension of time for filing returns under rules and regulations prescribed by the department. No extension shall be for more than six months.

(b) The tax provided in this article shall be reported on forms and in the manner as prescribed by the department. The failure to receive a form from the department shall not relieve a taxpayer from liability for any tax, penalty, or interest otherwise due. The tax due, as reported, shall constitute an admitted liability for that amount. The department may compute and assess additional tax, penalty, and interest against a taxpayer as provided in Chapter 2A. Interest on overpayments of business privilege tax will be computed and paid in the manner provided in Section 40-1-44(b)(1)b.

(c) A corporation that is a member of an Alabama affiliated group that has elected to file a consolidated return pursuant to Section 40-18-39 or Section 40-16-3(b), if it is subject to the tax imposed by this article, shall file a separate return reporting and paying tax on its net worth without regard to other members of the affiliated group.

The tax levied by this article shall be due at the same time the return is due. Remittance of the tax levied by this article shall be made to the department at Montgomery, Alabama, for deposit to the State Treasurer of Alabama. In addition to all other appropriations heretofore or hereinafter made, there is hereby appropriated to the department for the fiscal year ending September 30, 2000, such amount as is reasonably required to offset its conversion costs as a first charge against the revenues from the tax levied by this article. The department and the Secretary of State shall each promulgate a regulation listing those persons who are authorized to execute the privilege tax return and the extension request, and the annual report, respectively, which shall permit the taxpayer's return preparer to execute any of those forms on behalf of the taxpayer. For all subsequent years, there shall be appropriated to the department as a first charge against the revenues from the tax levied by this article an amount that will offset its actual costs in the administration and regulation of this tax. The balance of the tax collected shall be distributed as follows:

(a) For the fiscal year beginning October 1, 1999, and each fiscal year thereafter, each county shall receive an amount that would have been distributed to each county prior to the repayments required by settlement of litigation regarding audits conducted by the Alabama Department of Revenue from the franchise tax distributed under former Section 40-14-43 during the fiscal year ending September 30, 1999. Beginning with the fiscal year ending September 30, 2000, and for each fiscal year thereafter, each county's distribution shall be increased by three-quarters of one percent of the amount received by each county in the preceding year.

(b) For the fiscal year beginning October 1, 1999, and each fiscal year thereafter, each county and each tax recipient agency or fund within the county shall receive an amount equal to the amount it received from the shares tax assessed under the procedures of former Article 4 of Chapter 14 with respect to the fiscal year ending September 30, 1999. Beginning with the fiscal year ending September 30, 2000, and for each fiscal year thereafter, each county's and recipient agency's or fund's distribution shall be increased by three-quarters of one percent of the amount received by each entity in the preceding year.

(c) The balance remaining after the distributions in (a) and (b) above shall be deposited into the State General Fund.

Whenever a corporation or a limited liability entity organized under the laws of this state is dissolved, terminated, liquidated, or otherwise wound-up, by an agreement or notice of the stockholders or owners of the limited liability entity filed in the office of the judge of probate of the county wherein the corporation or limited liability entity was organized, the judge of probate shall at once give notice to the department and Secretary of State of the dissolution event, with the name of the taxpayer and the date of dissolution, termination, liquidation, or other winding-up. When a dissolution of a corporation or limited liability entity organized under the laws of this state takes place by judgment of a court, upon the filing of a complaint under the laws of this state by the creditors, stockholders, the owners of the limited liability entity, or others, the clerk of the court shall at once notify the department and Secretary of State of such dissolution, termination, liquidation, or other winding-up. In any case where petitions are filed in any court by the creditors, stockholders, owners of the limited liability entity, or others for the dissolution, termination, liquidation, or other winding-up of the entity in case of insolvency of the taxpayer, the clerk of the court shall give notice of the civil action to the department so that the department may file a petition in the case in the court for the purpose of collecting any unpaid privilege tax owing by the taxpayer.

The payment of the tax levied by this article shall not exempt any taxpayer from the payment of any regular license or privilege tax required by law for engaging in or carrying on any business for which a license or privilege tax is required of individuals, firms or corporations.

(a) By domestic entities. Each corporation, limited liability entity, and disregarded entity organized under the laws of Alabama shall, within two and one-half months after its organization, file with the department an initial report setting out its name, address, and the name and address of its agent for service of process in Alabama and a return including payment of the tax levied by this article for the year of its organization. The report and return required by this section shall be made on forms prescribed by the department.

(b) By foreign entities. Every corporation, limited liability entity, and disregarded entity organized under the laws of a jurisdiction other than Alabama shall, within two and one-half months after qualifying to do business in Alabama, file with the department an initial report setting forth its name and address, its principal place of business where organized, its principal place of business in Alabama, and the name and address of its agent for service of process in Alabama and a return including payment of the tax levied by this article for the first year of the taxpayer's qualification to do business in Alabama. The report and return required by this section shall be made on forms prescribed by the department.

(a) There is hereby levied an annual shares tax on all corporations incorporated or organized under the laws of Alabama, qualifying or registering to do business, or doing business in Alabama, unless otherwise exempted in this article; provided that all assets and other items of a disregarded entity shall be taken into account in determining the shares tax base of its owner and the disregarded entity shall not be subject to the tax levied by this article. The tax shall accrue as of January 1, 2000, and on January 1 of every taxable year thereafter, or in the case of a taxpayer incorporated or organized during the year, qualifying to do business during the year, or beginning to do business in Alabama for the first time during the year, as of the date the taxpayer incorporated, organized, qualifies, or begins to do business in Alabama, as the case may be. Except as provided in the following sentence, the tax levied by this article for taxable years beginning on or after January 1, 2000, shall be levied at the rate of $5.30 per $1,000 of the taxable shares base and shall not be less than $0 nor exceed $500,000 for any taxpayer. The amount of tax levied by this section for the taxable year beginning January 1, 2001, shall be levied at the rate of $1.33 per $1,000 of the taxable shares base and shall not exceed $125,000 for any taxpayer.

(b) If any taxpayer's first taxable year is less than 12 months because the taxpayer is organized or incorporated during the taxable year, or if any foreign corporation qualifies or registers or if the taxpayer begins to do business in this state during the taxable year, the amount of the tax levied by this article shall be determined in the manner specified in this article but apportioned to the short taxable year in the same proportion as the number of days in the short taxable year bears to 365, but in no event more than $500,000.

The tax levied by this article shall not apply to:

(1) Financial institutions, as defined in Section 40-16-1, that are subject to the provisions of Chapter 16 as to the excise taxes levied on financial institutions;

(2) Insurance companies that are subject to the premium taxes levied by Chapter 4A of Title 27;

(3) Corporations, limited liability entities, companies, or associations whose property is assessed for taxation pursuant to the provisions of Chapter 21 and are also obligated to serve the general public;

(4) Real estate investment trusts as defined in Chapter 13 of Title 10; and

(5) Any corporation organized as a not-for-profit corporation that does not engage in any business other than holding title to property and paying the expenses thereof, including, without limitation, a property owner's association or a corporation organized solely to hold title to property on a temporary basis.

(a) Determine the sum of the following as of the first day of the corporation's taxable year:

(1) The outstanding capital stock and any additional paid-in capital, but without reduction for treasury stock; and

(2) Retained earnings, but not less than zero, which shall include any amounts designated for the payment of dividends until the amounts are definitely and irrevocably placed to the credit of stockholders subject to withdrawal on demand.

(b) From the amount determined under subsection (a), deduct:

(1) The book value of goods, wares, and merchandise held for sale;

(2) The book value of the investment by the taxpayer in the equity of other corporations doing business in Alabama. This subdivision shall not apply if the taxpayer is a dealer in securities subject to 26 U.S.C. §1236.

(3) Federal obligations.

a. For a taxpayer who does not hold federal obligations for a tax avoidance purpose, the book value of federal obligations owned by the taxpayer multiplied by a fraction, the numerator of which is the amount determined in subsection (a) and the denominator of which is the sum of the amount determined in subsection (a) and the amount of the taxpayer's debts maturing in more than one year.

b. For a taxpayer that does hold federal obligations for a tax avoidance purpose, an amount determined in accordance with paragraph a. multiplied by a fraction, the numerator of which is the average amount of federal obligations owned during the taxable year and the denominator of which is the average amount of the taxpayer's total assets during the taxable year, both determined on a monthly basis.

c. A taxpayer shall be deemed to hold federal obligations for a tax avoidance purpose if more than 50 percent by value of the taxpayer's federal obligations are purchased within a period beginning forty-five days before the end of the determination period and are sold within a period ending forty-five days after the end of the determination period.

d. A taxpayer may be found to hold federal obligations for a tax avoidance purpose even if such tax avoidance purpose is not deemed to exist by virtue of paragraph c.

(4) The unamortized balance of any amount that the taxpayer properly elected, pursuant to Pronouncement 106 of the Financial Accounting Standards Board or any successor authority, to amortize over a period of years rather than immediately charging that amount to earnings.

(5) For all industrial development board assets that the corporation was entitled to use pursuant to a lease or other agreement entered into before May 21, 1992, or would be entitled to use at some future time pursuant to an inducement entered into with the industrial development board before May 21, 1992, as provided in Section 40-9B-7(c) (if and to the extent that the corporation includes such industrial development board assets on its balance sheet), the corporation shall file with its shares tax return a separate schedule itemizing the book value of its industrial development board assets and the book value of its industrial development board liabilities. The net balance sheet value of such separately scheduled industrial development board assets and industrial development board liabilities shall be excluded from the calculation of the shares tax if such assets are included in the calculation of net worth under Article 2; provided however, this exclusion shall not exceed $200,000 per determination period.

(c) Nothing in this section shall be construed to allow any item to be deducted more than once or to allow a deduction for any item that is excluded from the initial taxable shares base.

The taxable shares base shall be determined as follows:

(a) Multiply the corporation's initial taxable shares base by the apportionment factor used to apportion the corporation's income to Alabama for purposes of the Alabama income tax in accordance with Chapter 18 or that would be used if the corporation were subject to income tax under Chapter 18.

(b) From the amount determined in subsection (a), deduct the following:

(1) The book value of all devices, facilities, or structures, and all identifiable components or materials for use therein, that are located in Alabama and are acquired or constructed primarily for the control, reduction, or elimination of air, ground, or water pollution or radiological hazards where such pollution or radiological hazards result from or would be caused by activities of the taxpayer in Alabama;

(2) The net amount invested by the taxpayer in any bond or other security issued before January 1, 2000, by the State of Alabama, or any county, municipality, or other political subdivision of the State of Alabama, or any public corporation agency or instrumentality of the foregoing but only until the year in which occurs the earlier of the final maturity date thereof or the date on which the principal of the bond or security shall be called for optional redemption prior to the final maturity thereof. For purposes of this subdivision, 'net amount invested' means the amount of cash, including any premium and net of any discount, paid as the purchase price for the bond or other security, less the amount of any premium amortized and plus the amount of any discount accreted to the date of calculation, reduced by the proportionate amount of principal on the bond or other security that is amortized or otherwise paid or retired. This subdivision shall not apply if the taxpayer is a dealer in securities subject to the rules of 26 U.S.C. §1236;

(3) The balance of any reserve, account, or trust reasonably determined to satisfy any liability that is imposed by federal, state, or local government laws or regulations for reclamation, storage, disposal, decontamination, retirement, or other related costs associated with a plant, facility, mine, or site in Alabama;

(4) During the period beginning December 1, 1997, and ending on the date twenty years thereafter, the amount invested in all new and existing manufacturing facilities in this state by the taxpayer, which amount shall be limited to the investment in all real and tangible personal property, equipment, facilities, structures, components, and inventory in this state, provided that the taxpayer has met the criteria in paragraph a. below, and, in addition, has met the criteria in paragraph b. below:

a. The taxpayer must, not later than December 31, 2000, file with the department a statement of intent to claim the deduction provided under this section. This statement of intent shall contain any information required by the department.

b. During the period commencing with December 1, 1997, and ending on the date six years thereafter, the amount of new investment in all new and existing manufacturing facilities in this state by the taxpayer and, in addition, the number of new employees at all new and existing manufacturing facilities in this state shall meet or exceed the limits described in one of the following brackets:

No deduction shall be available under this subdivision (4) until the criteria defined in paragraph a. above, and, in addition, paragraph b. above have been met. The deduction available under this subdivision (4) shall only be available during those years within the 20 years after December 1, 1997, in which the taxpayer maintains the criteria defined in paragraph b. above.

(5) The amount invested by the taxpayer in the purchase of an existing manufacturing facility in this state, which amount shall be limited to the investment in all real and tangible personal property, equipment, facilities, structures, components, and inventory on or after January 1, 1998, and during the period for 20 years thereafter, provided that the taxpayer has met the criteria in paragraphs a., b., and c.

a. The taxpayer must, within six months of February 19, 1998, file with the department a statement of intent to claim the deduction provided pursuant to this subdivision (5). The statement of intent shall contain any information required by the department.

b. At the time of purchase, the existing manufacturing facility must have at least 1,000 employees, which employment level must be maintained during the period 20 years after the date of acquisition by the taxpayer.

c. At the time of purchase, the existing manufacturing facility must produce aluminum alloy can stock.

(6) At the election of the taxpayer,

a. The market value, or current use value if applicable, of the real property as last determined by the county assessing official on which the taxpayer is subject to the tax levied by Chapter 8, or,

b. The book value of the real property.

(7) The book value of personal property subject to the tax levied by Chapter 8.

(8) In the case of an Alabama S corporation, an amount equal to 30 percent of the corporation's taxable income, or, if greater, the amount that would have been the corporation's income tax liability if it were subject to income tax, computed according to the same method used to determine the amounts required to be included in the shareholders' incomes and in accordance with generally accepted accounting principles.

(c) Nothing in this section shall be construed to allow any item to be deducted more than once or to allow a deduction for any item that is excluded from the initial taxable shares base.

(a) Every corporation organized, incorporated, qualified, or registered under Alabama law or doing business in Alabama as of the first day of a calendar year shall file a return with the department. The return is due not later than March 15 of each year or, in the case of a taxpayer not in existence, not qualifying to do business, or not doing business in Alabama on January 1 of the taxable year, two and one-half months after the taxpayer either comes into existence, qualifies or registers to do business, or commences doing business in Alabama. In cases where receivers, trustees in bankruptcy, or assignees are operating the property or business of taxpayers, those receivers, trustees, or assignees shall file returns for the taxpayers in the same manner and form as the taxpayers are required to file returns. Any tax due on the basis of returns filed by receivers, trustees, or assignees shall be collected in the same manner as if collected from the taxpayers for whose business or property they have custody and control. The department may grant a reasonable extension of time for filing returns under rules and regulations prescribed by the department. No extension shall be for more than six months.

(b) The shares tax provided in this article shall be reported on forms and in the manner as prescribed by the department. The failure to receive a form from the department shall not relieve a taxpayer from liability for any tax, penalty, or interest otherwise due. The tax due, as reported, shall constitute an admitted liability for that amount. The department may compute and assess additional tax, penalty, and interest against a taxpayer as provided in Chapter 2A. Interest on overpayments of shares tax will be computed and paid in the manner provided in Section 40-1-44(b)(1)b.

(c) A corporation that is a member of an Alabama affiliated group that has elected to file a consolidated return pursuant to Section 40-18-39, if it is subject to the shares tax imposed by this article, shall file a separate return reporting and paying the tax as provided in this article without regard to other members of the affiliated group.

The tax levied by this article shall be due at the same time the return is due. Remittance of the shares tax required by the above sections shall be made to the department at Montgomery, Alabama, for deposit to the State Treasurer of Alabama. In addition to all other appropriations heretofore or hereinafter made, there is hereby appropriated to the department for the fiscal year ending September 30, 2000, such amount as is reasonably required to offset its conversion costs as a first charge against the revenues from the tax levied by this article. For all subsequent years, there shall be appropriated to the department as a first charge against the revenues from the tax levied by this article an amount that will offset its actual costs in the administration and regulation of this tax.

The balance of the shares tax collected shall be distributed each fiscal year to the State General Fund.

Whenever a corporation organized or incorporated under the laws of this state is dissolved, terminated, liquidated, or otherwise wound-up, by an agreement of the stockholders filed in the office of the judge of probate of the county wherein the corporation was organized, the judge of probate shall at once give notice to the department and Secretary of State of the dissolution event, with name of the taxpayer and the date of dissolution, termination, liquidation, or other winding-up. When a dissolution of a corporation organized or incorporated under the laws of this state takes place by judgment of a court, upon the filing of a complaint under the laws of this state by the creditors, stockholders, or others, the clerk of the court shall at once notify the department and Secretary of State of such dissolution, termination, liquidation, or other winding up. In any cases where petitions are filed in any court by the creditors, stockholders, or others for the dissolution, termination, liquidation, or other winding-up of a taxpayer in case of insolvency of the taxpayer, the clerk of the court shall give notice of the civil action to the department so that the department may file a petition in the case in the court for the purpose of collecting any unpaid shares tax owing by the taxpayer.

The payment of the shares tax levied by this article shall not exempt any taxpayer from the payment of any regular license or privilege tax required by law for the engaging in or carrying on any business for which a license or privilege tax is required of individuals, firms, or corporations.

The taxes levied by this chapter shall not apply to any entity that was organized before January 1, 1999, was not subject to the franchise tax levied by former Chapter 14 of this title, and is entitled, pursuant to a contract entered into before January 1, 1999, to be indemnified for taxes upon net worth resulting from transactions or activities contemplated in the contract.

The taxes levied by this chapter shall not apply to any corporation that is wholly or partially exempt from the franchise tax imposed by former Chapter 14 of this title because it is a party to a contract with the Department of Economic and Community Affairs under the authority of Section 41-23-30.

The taxes levied by this chapter shall not apply to any organization described in 26 U.S.C. §501(a), any county, municipality, municipal corporation, or the State of Alabama, or any corporation or association owned solely by counties, municipalities, or the State of Alabama, any community chest, fund, or foundation, or any entity organized and operated exclusively for religious purposes, any homeowners association, any political party, political action committee, political campaign committee, or any agricultural cooperative.