Ala. Code § 40-18-166 (1975) - 'Accumulated adjustments account' defined; application generally; 'S period' defined; applicability of subdivision (c)(1) of Section 40-18-165 to certain distributions; 'affected shareholder' defined

Cite as:Ala. Code § 40-18-166 (1975)
Currency:Current through Act 579 of the 2018 Legislative Session
 
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(a)

(1) Except as provided in subsection (b), for purposes of this article, the term "accumulated adjustments account" means an account of the Alabama S corporation which is adjusted for the S period in a manner similar to the adjustments under Section 40-18-164 hereof including subdivision (4) of subsection (c), except that no adjustment shall be made for income and related expenses which are exempt from tax under this chapter and the phrase "but not below zero" shall be disregarded in Section 40-18-164(c)(2)a.

(2) In the case of any redemption which is treated as an exchange under Section 40-18-36, the adjustment in the accumulated adjustments account shall be an amount which bears the same ratio to the balance in the account as the number of shares redeemed in such redemption bears to the number of shares of stock in the corporation immediately before the redemption.

(3) In applying this section to distributions during any taxable year, the amount of the accumulated adjustments account as of the close of the taxable year shall be determined without regard to any net negative adjustment for the taxable year. The term "net negative adjustment" means, with respect to any taxable year, the excess, if any, of the reductions in the account for the taxable year, other than for distributions, over the increases in such account for the taxable year.

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