Ala. Code § 40-18-162 (1975) Determination of Tax of Shareholder

• Library: Alabama Statutes
• Edition: 2023
• Currency: Current with legislation from the 2023 Regular and Special Sessions.
• Year: 2023
• Citation: Ala. Code § 40-18-162 (1975)

(a) In determining the tax of a shareholder for the shareholder's taxable year in which the taxable year of the Alabama S corporation ends, or for the final taxable year of a shareholder who dies or of a trust or estate that terminates before the end of the corporation's taxable year, there shall be taken into account the shareholder's pro rata share of the corporation's:

(1) Items of income, including tax-exempt income, loss, deduction, or credit the separate treatment of which could affect the liability for tax of any shareholder, including charitable contributions, and

(2) Nonseparately computed income or loss. The term "nonseparately computed income or loss" means gross income minus the deductions allowed to the corporation under this article, determined by excluding all items described in subdivision (1) of this subsection.

(b) The character of any item included in a shareholder's pro rata share under subsection (a) of this section shall be determined as if the item were realized directly from the source from which realized by the corporation, or incurred in the same manner as incurred by the corporation.

(c) In any case where it is necessary to determine the gross income of a shareholder for purposes of this article, such gross income shall include the shareholder's pro rata share of the gross income of the corporation.

(d) The following special rules for losses and deductions shall apply:

(1) The aggregate amount of losses and deductions taken into account by a shareholder under subsection (a) of this section for any taxable year shall not exceed the sum of:

a. The adjusted basis of the shareholder's stock in the Alabama S corporation as determined with regard to subsections (a) and (b)(1) of Section 40-18-164 for the taxable year, and

b. The shareholder's adjusted basis of any indebtedness of the Alabama S corporation to the shareholder as determined without regard to any adjustment under subsection (c)(2) of Section 40-18-164 for the taxable year.