PPT Instructions TY 2022.qxp

Form PPT is to be filed by Pass-through Entities only.

BUSINESS PRIVILEGE TAX PAYMENT

Payment of the total tax due must be received on or before the original due

date of the return. Form BPT-V must accompany all business privilege tax pay-

ments, unless payments are made electronically.

General Information – Filing Requirement

for Business Privilege Tax:

Every corporation, limited liability entity, business trust, disregarded entity,

and real estate investment trust (REIT) that is doing business in Alabama or has

qualified with the Alabama Secretary of State to do business in Alabama is

required to file an Alabama Business Privilege Tax Return and Annual Report.

S-corporations, limited liability entities, and disregarded entities must file

Alabama Form PPT.

C-corporations, financial institution groups, insurance companies, REITs,

and business trusts must file Alabama Form CPT. Limited liabilities taxed as

corporations for federal income tax purposes must also file Alabama Form CPT.

“Limited liability entity (LLE)” is defined in Section 40-14A-1, Code of

Alabama 1975, as:

“…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 obli-

gations 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…”

“Corporation” is defined in Section 40-14A-1, Code of Alabama 1975, as:

“…Any 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…”

“S-corporation” is defined in Section 40-14A-1, Code of Alabama 1975, as:

“… An S corporation defined under Section 40-18-160…”

Nexus. Act 2015-505 establishes a factor presence nexus standard for non-

resident business activity. Substantial nexus in Alabama is established if any of

the following thresholds are exceeded during the tax period: $54,000 of proper-

ty, $54,000 of payroll, $538,000 of sales, or 25% of total property, total payroll

or total sales.

Required Attachments to the Alabama Form PPT:

– A copy of pages 1 through 4 of the federal tax Form 1120S or pages 1

through 5 of the federal tax Form 1065.

– For taxpayers doing business in Alabama and outside the State of

Alabama (multistate taxpayers), a copy of the Alabama apportionment schedule

(from Form 20S or Form 65 for the taxpayer’s determination period).

– Documentation to thoroughly support any exclusion or deduction claimed

in the computation of the taxpayer’s net worth.

– A copy of the balance sheet used to compute the taxpayer’s net worth, if

not provided with the copy of the federal tax return.

Due date for the Alabama Form PPT:

Act 2017-363 passed the Alabama Legislature during the 2017 Regular

Session. The act provides for the due dates of business privilege tax returns

to correspond to the due dates of federal income tax returns and provides for

payments to be made on the original due date of the return. For taxable year /

Form Year 2018 or after and determination periods beginning on or after

December 31, 2017, the due date of Alabama business privilege tax return for

pass through entities (S corporations, Limited Liability Entities, LLE taxed as S

corporation and disregarded entities) shall correspond to the due date of the

corresponding federal income tax returns as provided by federal law. The tax

liability is due at the due date of the original return.

Mailing Address for the Form PPT:

If you are not making a payment, mail your return to:

Alabama Department of Revenue

Business Privilege Tax Section

PO Box 327431

Montgomery, AL 36132-7431

If you are making a payment, mail your return, Form BPT-V, and payment

to:

Alabama Department of Revenue

Business Privilege Tax Section

PO Box 327320

Montgomery, AL 36132-7320

Determination Period Used to

Compute the Business Privilege Tax:

Taxable Year Information: Enter the beginning and ending date of the

determination period. The determination period is defined in Section 40-14A-1,

Code of Alabama 1975, as the taxpayer’s taxable year next preceding the tax-

payer’s current taxable year (Generally, it is the taxable year that just ended).

The net worth computations required to compute the Alabama business

privilege tax for a business privilege taxable year are performed on information

extracted from the balance sheet prepared as of the last day of the determina-

tion period (Generally, the last day of the determination period is the last day of

the taxable year that just ended, and is the date of the balance sheet prepared

that coincides with the taxable year that just ended).

Line 1a. Calendar Year Indicator – Check this box if the taxpayer has a

December 31st tax year end. Then enter the determination period begin date in

the spaces provided.

Line 1b. Fiscal Year Indicator – Check this box if the taxpayer has a tax

year end date other than a calendar year end. Then enter the determination

period begin date and end date in the spaces provided.

Short Year – The taxpayer should file a short year return only if there is a

change in the tax year end (For example, the taxpayer converts from a calendar

year end to a fiscal year end). Do NOT file a short year return as a result of an

acquisition or merger. The entity will use the calendar year or fiscal year check-

box and complete the spaces provided for short year returns. Check the calendar

year indicator if the entity’s determination period end date is 12/31/2021. Check

the fiscal year indicator if the entity’s determination period end date occurs in

2022 and enter the beginning and ending dates in the spaces provided.

EXAMPLES FOR ENTITIES CHANGING THEIR DETERMINATION PERI

OD END DATE

COMPANY A changes from a calendar year end (12/31/2021) to a fiscal

year end (e.g. 03/31/2022). Company A should file the 2022 Business Privilege

Tax Return and report the determination period begin date as 01/01/2022 and

end date as 03/31/2022.

COMPANY B changes from a fiscal year end (e.g. 06/30/2021) to a calen-

dar year end (12/31/2021). Company B should file the 2022 Business Privilege

ALABAMA DEPARTMENT OF REVENUE

Alabama Business Privilege Tax Return

and Annual Report Instructions

FORM

PPT

INSTRUCTIONS

2022

Tax Return and report the determination period begin date as 07/01/2021 and

end date as 12/31/2021.

Privilege Tax Prorated for Short Taxable Years – The business privilege

tax is prorated when taxpayers have a short taxable year – See the instructions

for line 17, Part B, page 2, Form PPT.

Amended Return Indicator – Check this box if the return is an amended

return. Attach a full explanation for filing the amended return, supporting docu-

mentation for the changes, and a computation of the additional amount due or

the additional refund due.

52- 53 Week Filer – Check this box if the company is a 52-53 week filer. If

this box is checked, the fiscal year box must also be checked. A 52-53 week tax

year is a tax year that varies from 52 to 53 weeks but does not have to end on

the last day of the month.

Type of Taxpayer:

Indicate the type of taxpayer by checking one of the boxes on line 2a

through line 2d.

Taxpayer Information:

Line 3a. Enter the legal name of the business entity. Do not enter the

owner’s name or “doing business as” name.

Line 3b. The taxpayer’s Federal Employer Identification Number (FEIN) is

required to complete Form CPT, Form PPT, and Form BPT-IN. Enter “applied

for” if an FEIN will be assigned to the taxpayer. Check the box (FEIN Not

Required) if an FEIN will not be assigned to the taxpayer. Single member lim-

ited liability companies should NOT use their owner’s FEIN or social secu-

rity number.

Line 3c. Street Address – Enter the taxpayer’s mailing address or street

address.

Line 3d. BPT Account Number – Enter the taxpayer’s BPT (Business

Privilege Tax) account number only if the taxpayer does not have an FEIN

(Federal Employer Identification Number). The account number is issued when

the account is opened and is provided in the notice advising the taxpayer of the

Business Privilege Tax liability. The account number is also provided in the let-

ter notifying the taxpayer of a Sign-On ID and an Access Code for using the

electronic Funds Transfer (EFT) System. Contact the Business Privilege Tax

Section (334-242-1170, option 8) for any questions regarding the BPT account

number.

Line 3e. City – Enter the taxpayer’s city.

Line 3f. State – Enter the taxpayer’s state.

Line 3g. Zip Code – Enter the taxpayer’s 9-digit zip code.

Line 3h. Enter the taxpayer’s federal business code number. This number is

the North American Industry Classification System (NAICS) reported on the fed-

eral income tax return. The federal business code number (NAICS) is also locat-

ed at www.census.gov

or by contacting the U.S. Census Bureau (800-923-

8282).

Line 3i. Contact Person Concerning This Form – Enter the name of the

person who can answer questions concerning the preparation of this form.

Line 3j. Contact Person’s Phone Number – Enter the telephone number

of the person who can answer questions concerning the preparation of this

form.

Line 3k. Taxpayer’s E-mail Address – Enter the entity’s e-mail address.

Return Information:

Line 4a. Check this box only if the taxpayer is an S-corporation and if there

is a change in the taxpayer’s corporate president information reported on the

accompanying Alabama Schedule AL-CAR, Alabama Secretary of State

Corporation Annual Report. Line 4a does not apply to other pass-through

entities.

Line 4b. Check the box only if the taxpayer is an S-corporation and if there

is a change in the taxpayer’s corporate secretary information reported on the

accompanying Alabama Schedule AL-CAR, Alabama Secretary of State

Corporation Annual Report. Line 4b does not apply to other pass-through

entities.

Line 5a. Date of Incorporation or Organization – Enter the date the entity

was incorporated or organized.

Line 5b. State of Incorporation or Organization – Enter the state in which

the entity was incorporated or organized.

Line 5c. County of Incorporation or Organization – Enter the county in

which the entity was incorporated or organized.

Computation of Amount Due or Refund Due:

Line 6. Secretary of State Corporate Annual Report Fee – If the taxpayer

is an S-corporation, enter $10.00, the amount of the Secretary of State’s corpo-

rate annual report fee. Please also attach a completed Alabama Schedule AL-

CAR, Alabama Secretary of State Corporation Annual Report. Limited Liability

Entities taxed as corporations are not subject to the $10 Secretary of State fee

and are not required to complete Schedule AL-CAR. Alabama business privi-

lege tax returns filed for S-corporations will not be considered a complete return

without a properly completed Alabama Schedule AL-CAR, and without payment

of the $10.00 fee.

Pass-through entities other than S-corporations are not subject to the

$10.00 corporate annual report fee, and can leave lines 6, 7 and 8 blank.

Line 7. Less: Annual Report Fee Previously Paid for the Taxable Year

– Enter the amount of Secretary of State’s annual report fee previously paid for

the taxable year (i.e., paid as an automatic extension payment with a Form

BPT-V by the original due date of the return, but prior to the annual return’s filing

on the extended due date of the return). If the return is an amended return,

enter the amount of Secretary of State’s annual report fee shown for the taxable

year on the originally-filed Alabama business privilege tax return.

Line 8. Net Annual Report Fee Due – Subtract the amount on line 7 from

the amount on line 6.

Line 9. Privilege Tax Due – Enter the amount from page 2, Part B, line 19

(Privilege Tax Due). The Alabama business privilege tax is due, in full, by the

original due date of the business privilege tax return, without consideration for

any filing extensions. There is no provision in the Alabama business privilege

tax law to allow an extension of time to pay the amount of tax due.

Line 10. Less: Privilege Tax Previously Paid for the Taxable Year –

Enter the amount of privilege tax previously paid for the taxable year (i.e., paid

as an automatic extension payment with a Form BPT-V by the original due date

of the return, but prior to the annual return’s filing on the extended due date of

the return). If the return is an amended return, enter the amount of business

privilege tax shown paid for the taxable year on the originally-filed Alabama

business privilege tax return. Do Not include previous year overpayments as

privilege tax previously paid for the taxable year.

Line 11. Net Privilege Tax Due – Subtract the amount on line 10 from the

amount on line 9.

Line 12. Penalty Due – Enter the total amount of the penalty for failure to

timely file the return and the penalty for failure to timely pay the tax shown due

on the return, as specified in Section 40-2A-11, Code of Alabama 1975. The

penalty for failure to timely file an Alabama business privilege tax return by the

due date is 10% of the tax shown due with the return or $50, whichever is

greater. The penalty for failure to timely pay the amount of tax shown due on an

Alabama business privilege tax return equals to 1% of the amount of tax shown

due on the return for each month the tax is unpaid – not to exceed 25% of the

amount shown due on the return.

Line 13. Interest Due – Enter the amount of interest due on any business

privilege tax unpaid as of the original due date of the business privilege tax

return. Section 40-1-44(a), Code of Alabama 1975, specifies the interest rate

to be used in computing the amount of interest due (Section 40-1-44 references

Internal Revenue Code Section 6621 for the interest rates to be used for

underpayments).

Line 14. Total Privilege Tax Due – Add the amounts shown on lines 11,

12, and 13.

Line 15. Net Tax Due – Add the amounts shown on line 8 and line 14. A

positive amount represents an amount due, and that amount should be entered

on line 16 (Payment Due with Return). A negative amount represents a refund

due to the taxpayer, and that amount should be entered on line 17 (Amount to

be Refunded to Taxpayer).

Line 16. Payment Due with Return – Enter the amount from line 15, but

only if the amount is positive.

Line 17. Amount to be Refunded to Taxpayer – Enter the amount from

line 15, but only if the amount is negative.

Line 18. Family LLE Election Indicator – Check the box if the Family LLE

Election Schedule is completed and attached. The Family Limited Liability

Election must be made annually on or before the due date, including exten-

sions, of the return in accordance with Section 40-14A-1(h)(2), Code of

Alabama 1975. Failure to attach Schedule BPT-E and sign Page 1 of Form

PPT will result in the disallowance of the election. Single-member LLCs that are

treated as a disregarded entity for federal income tax purposes do not qualify

as an electing family limited liability entity, in accordance with Section 40-14A-

1(h), Code of Alabama 1975.

Line 19. Indicate Payment Type – Check the box if the payment was remit-

ted electronically.

How to Make EFT Payments:

ACH Credit Method Payment:

In order to pay the Alabama business privilege tax using EFT, (ACH Credit

Method Payment), the taxpayer must first be a registered EFT taxpayer. To reg-

ister for EFT taxpayers must complete Form EFT: 001, EFT Authorization

Agreement Form, and submit it to the Alabama Department of Revenue’s EFT

Unit. Form EFT: 001 and instructions can be downloaded from the

Department’s website at www.revenue.alabama.gov/forms

My Alabama Taxes Payment:

The Department of Revenue mails each newly incorporated/organized com-

pany a letter with a Sign On ID and Access Code to access My Alabama Taxes

for electronic payments. All existing companies are mailed Sign On ID and

Access Code letters. For more information or to make a payment, refer to the

website at www.revenue.alabama.gov

or www.myalabamataxes.alabama.gov.

Instructions for Form PPT, Page 2

Line 1a. Enter the taxpayer’s Federal Employer Identification Number

(FEIN), if the taxpayer does not have an FEIN, enter the same information as is

entered on page 1, line 3b.

Line 1b. Enter the legal name of the business entity as shown on page 1,

line 3a.

Line 1c. Determination Period End Date/Balance Sheet Date – The

Determination Period End Date is the date of the balance sheet from which the

net worth computations are made.

Part A – Net Worth Computation:

I. S-Corporations

Line 1. Enter the total amount of the taxpayer’s capital stock and additional

paid in capital, but not less than zero. The amount must not be reduced for any

treasury stock owned by the corporation.

Line 2. Enter the amount of retained earnings, but not less than zero.

Include any amounts designated for the payment of dividends until the amounts

are definitely and irrevocably placed to the credit of the stockholders, subject to

withdrawal on demand. The amount entered on line 2 must not be less than

zero.

Line 3. Enter the gross amount of related party debt exceeding the total of

the amounts entered on line 1 and line 2, as required by Section 40-14A-23,

Code of Alabama 1975. This amount will be added to the amounts on line 1

and line 2 in arriving at the taxpayer’s net worth. Related parties are defined in

Section 40-14A-1, Code of Alabama 1975, as any member of a controlled

group of corporations as defined by Internal Revenue Code Section 1563. The

definition of related parties also includes any limited liability entity that would be

a member of a controlled group if rules similar to Section 1563 were applied to

limited liability entities. Note: The amount entered on line 3 must not be less

than zero. Individual shareholders are not considered related parties. Related

party debt and related party receivables are not netted in any circumstances.

Exempt payables are defined as stated in Section 40-14A-23(e)(2)(b). They

include trade debt, accounts payable, or deposit liabilities to related parties that

are doing business in Alabama. Non-Exempt payables are all other related

party debts.

Line 4. Enter the excess amount (the amount in excess of $500,000 for

each shareholder) of compensation or similar amounts paid to (or accrued as a

liability to) certain direct or indirect shareholders during the determination peri-

od, as defined in Section 40-14A-23, Code of Alabama 1975. This amount will

be added to lines 1, 2, and 3 in arriving at the taxpayer’s net worth. Section 40-

14A-23(f), Code of Alabama 1975, should be referred to for a more thorough

explanation of this adjustment.

Line 5. Total S-Corporation Net Worth – Enter the sum of lines 1 through 4.

II. Limited Liability Entities (LLEs)

Line 6. Enter the total amount of the partner/member capital accounts, but

not less than zero.

Line 7. Enter the excess amount (the amount in excess of $500,000 for

each partner/member) of compensation, distributions or similar amounts paid to

(or accrued as a liability to) certain direct or indirect partners/members during

the determination period, as defined in Section 40-14A-23, Code of Alabama

1975. Section 40-14A-23(f), Code of Alabama 1975, should be referred to for

a more thorough explanation of this adjustment.

Line 8. Enter the gross amount of related party debt exceeding the total of

the amount entered on line 6, as required by Section 40-14A-23, Code of

Alabama 1975. This amount will be added to the amount on line 6 in arriving at

the taxpayer’s net worth. Related parties are defined in Section 40-14A-1, Code

of Alabama 1975, as any member of a controlled group of corporations as

defined by Internal Revenue Code Section 1563. The definition of related par-

ties also includes any limited liability entity that would be a member of a con-

trolled group if rules similar to Section 1563 were applied to limited liability enti-

ties. Note: The amount entered on line 8 must not be less than zero. Individual

shareholders are not considered related parties. Related party debt and related

party receivables are not netted in any circumstances. Exempt payables are

defined as stated in Section 40-14A-23(e)(2)(b). They include trade debt,

accounts payable, or deposit liabilities to related parties that are doing business

in Alabama. Non-Exempt payables are all other related party debts.

Line 9. Total LLE Net Worth – Enter the sum of lines 6 through 8.

III. Disregarded Entities

Line 10. Enter the name and Federal Employer Identification Number

(FEIN) or Social Security Number (SSN) of the single member of the disregard-

ed entity.

Line 11. If the taxpayer is a disregarded entity that has as its single member

a taxpayer that IS subject to the Alabama business privilege tax, then the dis-

regarded entity pays only the minimum tax. Enter $100, the amount of the min-

imum business privilege tax, in Part B, line 19. The form can then be completed

from that point, in accordance with the instructions for this form. The name and

FEIN of the single member must be provided on line 10, or the form will be con-

sidered incomplete.

Line 12. Disregarded Entity Net Worth Computation – If the taxpayer is

a disregarded entity that has as its single member a taxpayer that IS NOT sub-

ject to the Alabama business privilege tax, then the disregarded entity must

compute its own net worth, and pay the Alabama business privilege tax accord-

ingly. Enter the amount the taxpayer’s assets exceed its liabilities, but not less

than zero. The name and FEIN/SSN of the single member must be provided on

line 10, or the form will be considered incomplete. A statement must be

attached to the business privilege tax return explaining why the owner is not

subject to the Alabama business privilege tax. Documentation of assets minus

liabilities must be provided.

Disregarded entity owners that are not subject to the Alabama business

privilege tax include, but are not limited to: resident individual taxpayers; non-

resident individual taxpayers; general partnerships; and, foreign business enti-

ties not doing business in the state of Alabama and not registered with the

Alabama Secretary of State’s Office to do business in the state of Alabama.

Line 13. Enter the gross amount of related party debt exceeding the amount

entered on line 12, as required by Section 40-14A-23, Code of Alabama 1975.

This amount will be added to the amount on line 12 in arriving at the taxpayer’s

net worth. Related parties are defined in Section 40-14A-1, Code of Alabama

1975, as any member of a controlled group of corporations as defined by

Internal Revenue Code Section 1563. The definition of related parties also

includes any limited liability entity that would be a member of a controlled group

if rules similar to Section 1563 were applied to limited liability entities. Note: The

amount entered on line 13 must not be less than zero. Individual shareholders

are not considered related parties. Related party debt and related party receiv-

ables are not netted in any circumstances. Exempt payables are defined as

stated in Section 40-14A-23(e)(2)(b). They include trade debt, accounts

payable, or deposit liabilities to related parties that are doing business in

Alabama. Non-Exempt payables are all other related party debts.

Line 14. Enter the excess amount (the amount in excess of $500,000 for the

owner) of compensation, distributions or similar amounts paid to (or accrued as

a liability to) certain direct or indirect owners during the determination period, as

defined in Section 40-14A-23, Code of Alabama 1975. This amount will be

added to the amounts entered on lines 12 and 13 in arriving at the taxpayer’s

net worth. Section 40-14A-23(f), Code of Alabama 1975, should be referred to

for a more thorough explanation of this adjustment.

Line 15. Total Disregarded Entity Net Worth – Enter the sum of lines 12

through 14.

Part B – Privilege Tax Exclusions and Deductions:

Exclusions – Exclusions are allowed by Section 40-14A-23 (g), Code of

Alabama 1975. Attach documentation supporting any exclusion claimed on the

return.

Line 1. Enter the amount of net worth from Part A line 5, line 9 or line 15.

Line 2. Enter the total book value amount for the investment the taxpayer

has in the equity of other taxpayers. Attach a listing providing for each separate

investment, the name of the taxpayer, the taxpayer’s FEIN, the taxpayer’s

address and the book value of the investment. This exclusion is not available

for the book value of security (as defined in Internal Revenue Code Section

1236) held by a dealer in securities (as referred to in Internal Revenue Code

Section 1236) primarily for sale to customers in the ordinary course of its trade

or business.

Line 3. Enter the amount reported on the taxpayer’s balance sheet for the

unamortized portion of goodwill that resulted from a direct purchase of another

corporation or limited liability entity. Attach a listing showing for each direct pur-

chase the goodwill originally acquired, the date the direct purchase occurred,

accumulated amortization, the name and location of the business acquired, and

the name and FEIN of the entity that acquired the business and goodwill. If this

exclusion is taken, the return will not be considered complete without the listing.

Line 4. Enter the amount reported on the taxpayer’s balance sheet for the

unamortized portion of post-retirement benefits, for which the taxpayer elected

to amortize under Financial Accounting Standards Board (FASB) Statement

Number 106. FASB Statement Number 106, Employers’ Accounting for Post-

retirement Benefits Other Than Pensions, was issued in December 1990, and

focuses principally on post-retirement health care benefits. The supporting doc-

umentation should include a description of benefits, amortization schedule, and

the line detail of the post-retirement benefits on the balance sheet.

Line 5. Total Exclusions – Enter the total of lines 2, 3, and 4.

Net Worth Apportionment

Line 6. Net Worth Subject to Apportionment – Enter the difference

between line 1(Total Net Worth) and line 5 (Total Exclusions).

Line 7. Apportionment Factor – Section 40-14A-24(a), Code of Alabama

1975, establishes the net worth apportionment requirements for the Alabama

business privilege tax. Taxpayers that conducted all of their business in Alabama

during the determination period should enter 100%. No supporting documenta-

tion is required of taxpayers reporting an apportionment factor of 100%.

Taxpayers that conducted business both within and without Alabama (mul-

tistate taxpayers) during the determination period should generally not enter

100%. Multistate taxpayers must enter the same factor as was used by the tax-

payer during the determination period for purposes of apportioning the taxpay-

er’s income in accordance with Alabama’s income tax law (Chapter 18, Title 40,

Code of Alabama 1975), or Alabama’s financial institutions excise tax law

(Chapter 16, Title 40, Code of Alabama 1975). Attach a copy of the computa-

tion of the apportionment factor from the applicable Alabama tax return for the

determination period.

Line 8. Total Alabama Net Worth – Multiply line 6 (Net Worth Subject to

Apportionment) by line 7 (Apportionment Factor).

Deductions

– Deductions are allowed by Section 40-14A-24(b), Code of

Alabama 1975. Attach documentation supporting any deduction claimed on the

return.

Line 9. Enter the net amount invested in bonds and securities issued by the

State of Alabama, or its political subdivisions, prior to January 1, 2000. “Net

amount invested” means the cash, including any premium and net of any dis-

count, 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,

reduced by the proportionate amount of principal on the bond or other security

that is amortized or otherwise paid or retired. The taxpayer must attach a listing

showing the details of the deduction. For each bond or security, the listing

should provide the net amount invested, the issuing agency, issuance date, and

how the investment is reported on the taxpayer’s balance sheet. If this deduc-

tion is taken, the return will not be considered complete without the listing. This

deduction is not available to dealers in securities (those subject to the require-

ments of Internal Revenue Code Section 1236) for the book value of bonds and

securities held by the dealer primarily for sale to customers in the ordinary

course of its trade or business.

Line 10. Enter the net amount invested in, or book value from the taxpayer’s

balance sheet, for all devices, facilities, or structures, and all identifiable com-

ponents 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 radi-

ological hazards result from or would be caused by the taxpayer’s activities in

Alabama.

Line 11. Enter the amount reported on the taxpayer’s balance sheet for 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. Attach docu-

mentation identifying the applicable law or regulation that establishes taxpayer’s

liability, as well as a computation of the liability. The documentation must also

identify the location of the plant, facility, mine or site in Alabama.

Line 12. Enter the total amount reported on the taxpayer’s balance sheet as

the book value of the taxpayer’s investment in low-income, residential real

estate projects that qualify for federal or state income tax credits, loans or

grants. See Section 40-14A-24(b)(7), Code of Alabama 1975. The taxpayer

must attach a listing showing the details of the deduction. For each separate

low-income housing project, the attached documentation must identify the

name of the project, the FEIN of the project, the site of the project, and the net

amount invested in the project. The documentation must also identify how the

investments are reported on the taxpayer’s balance sheet. If this deduction is

taken, the return will not be considered complete without the listing.

Line 13. S-corporations, LLEs and disregarded entities enter 30% of the

federal taxable income apportioned and allocated to Alabama for the determi-

nation period, but not less than zero. This deduction is allowed by Section 40-

14A-24(b)(8) and (9), Code of Alabama 1975.

Taxable income is to include income passed through to the shareholders

and members. Taxable income for an S-corporation, other than a qualified sub-

chapter S subsidiary, is the amount taken into account by its owners pursuant

to Internal Revenue Code Section 1366. Taxable income for an LLE is the

amount taken into account by its owners pursuant to Internal Revenue Code

Section 702. Taxable income for a disregarded entity is the amount taken into

account by the owner pursuant to Internal Revenue Code Section 61 or 1361.

Taxable income shall be apportioned and allocated to Alabama in accordance

with Alabama income tax law (Title 40, Chapter 18, Code of Alabama 1975) or

Alabama financial institutions excise tax law (Title 40, Chapter 16, Code of

Alabama 1975).

Line 14. Total Deductions – Enter the total of lines 9 through 13.

Line 15. Taxable Alabama Net Worth – Enter the difference between line

8 (Total Alabama Net Worth) and Line 14 (Total Deductions).

Computation of Privilege Tax Due

Line 16a. Federal Taxable Income Apportioned to Alabama – Enter the

federal taxable income used to determine the Tax Rate (see the instructions for

line 16b) which is applied to the Taxable Alabama Net Worth (see line 15) to

arrive at the Gross Privilege Tax Calculated (see line 17). The tax rate used to

compute the business privilege tax is based upon the taxpayer’s federal taxable

income during the determination period, as required by Section 40-14A-22,

Code of Alabama 1975.

Federal Taxable Income for S-Corporations. The federal taxable income

to be used by S-corporations to determine the tax rate for the Alabama business

privilege tax shall be the federal ordinary income or (loss) from trade or busi-

ness activities plus any items of income or applicable deductions passed

through to the shareholders that were determined pursuant to Internal Revenue

Code Section 1366. The income shall be apportioned in accordance with

Chapter 27, Title 40 Code of Alabama 1975, and the accompanying rules.

Deductions shall not be allowed for the federal income tax or any federal or

Alabama net operating loss in computing the federal taxable income for purpos-

es of determining the business privilege tax rate.

Federal Taxable Income for LLEs. The federal taxable income to be used

by LLEs to determine the tax rate for the Alabama business privilege tax shall

be the federal ordinary income or (loss) from trade or business activities adjust-

ed by any items of income or expenses passed through to the members or part-

ners that were determined pursuant to Internal Revenue Code Section 702. The

income shall be apportioned in accordance with Chapter 27, Title 40, Code of

Alabama 1975, and the accompanying rules.

Federal Taxable Income for Disregarded Entities. The federal taxable

income to be used by Disregarded Entities to determine the tax rate for the

Alabama business privilege tax shall be the federal ordinary income or (loss)

from trade or business activities adjusted by any items of income or expenses,

determined pursuant to internal Revenue Code Section 1361 or Internal

Revenue Code Section 61. This income shall be apportioned in accordance

with Chapter 27, Title 40, Code of Alabama 1975, and the accompanying rules.

Line 16b. Tax Rate – Enter on line 16b the taxpayer’s business privilege tax

rate. The tax rate is specified in Section 40-14A-22, Code of Alabama 1975,

and is determined using the following table:

Federal Taxable Income Apportioned and Allocated to Alabama

Amount of tax per

More Than or $1,000 of Taxable

Equal to But Less Than Tax Rate Alabama Net Worth

— $ 1 .00025 $ .25 per $1,000

$ 1 $ 200,000 .00100 $ 1.00 per $1,000

$ 200,000 $ 500,000 .00125 $ 1.25 per $1,000

$ 500,000 $ 2,500,000 .00150 $ 1.50 per $1,000

$ 2,500,000 — .00175 $ 1.75 per $1,000

Line 17. Gross Privilege Tax Calculated –

Multiply the amount on line 15 (Taxable Alabama Net Worth) by the rate on

line 16b (Tax Rate).

Example:

Line 15 – Taxable Alabama Net Worth . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000

Line 16a – Federal Taxable Income Apportioned and

Allocated to Alabama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000

Line 16b – Tax Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .00125

Line 17 – Gross Privilege Tax Calculated. . . . . . . . . . . . . . . . . . . . . . $ 1,250

Special Calculation for Short Taxable Years: If the taxable year is a short

taxable year, the gross privilege tax calculated will be prorated using a fraction,

the numerator of which is the number of calendar days in the short taxable year,

the denominator of which will be 365. The computation of prorated business

privilege tax must be attached to the return. Please note the taxpayer should file

a short year return only if there is a change in the tax year end (For example,

the taxpayer converts from a calendar year end to a fiscal year end).

Example Assuming Facts from Above Example and a Short Year of 180 days:

Taxable Alabama Net Worth

Multiplied by Tax Rate Equals $1,250

Multiplied by 180/365 Short year factor

Line 17 – Gross Privilege Tax Calculated $616

Please note: A determination period that is less than a full year does not

constitute a short year return. If a taxpayer has a change in tax year to a calen-

dar tax year or vice versa, the return for the new tax year is not the short year

return.

Example: Corporation A previously had a tax year ending June 30 but has

changed to a calendar tax year effective January 1, 2022. The corporation pre-

viously filed the 2021 Business Privilege Tax return based on the determination

period ending June 30, 2021. The 2022 return would have as its determination

period July 1, 2021-December 31, 2021. The 2022 return pays the tax for the

full 2022 tax year; therefore it would not be a short year return. The 2021 tax

year was a short tax year. The 2021 return would need to be amended, with the

tax due prorated.

Line 18. Alabama Enterprise Zone Credit – Enter the amount of Alabama

Enterprise Zone Credit to which the taxpayer is entitled. Attach supporting doc-

umentation from the Alabama Department of Economic and Community Affairs

(ADECA) showing the amount of the Alabama Enterprise Zone Credit the tax-

payer is entitled to claim. Contact ADECA for additional information concerning

the Alabama Enterprise Zone Credit.

Line 19. Privilege Tax Due – Enter the difference between line 17 and line

18, but not less than $100, the minimum amount of the tax. This amount is also

entered on page 1 of Form PPT on line 9 (Privilege Tax Due) in the

Computation of Amount Due or Refund Due area of page 1.

See the following concerning the minimum and maximum amounts for the

tax.

Maximum Privilege Tax:

S-corporations, LLEs, and disregarded entities have a $15,000 maximum

levy for the Alabama Business Privilege Tax. See Section 40-14A-22(d), Code

of Alabama 1975.

LLEs meeting the definition of “electing family limited liability entity” as stat-

ed in Section 40-14A-1, Code of Alabama 1975, have a maximum levy for the

Alabama Business Privilege Tax of $500.

Minimum Privilege Tax:

Section 40-14A-22(c), Code of Alabama 1975, establishes a minimum

business privilege tax levy of $100 for S-corporations, LLEs, and disregarded

entities – even for business privilege tax years that are short years.

Alabama Schedule AL-CAR

Secretary of State

Corporation Annual Report

Section 10-2B-16.22, Code of Alabama 1975, requires domestic and for-

eign corporations to file an annual report with the Alabama Secretary of State.

The Alabama Schedule AL-CAR, submitted by corporations with Alabama Form

CPT and Alabama Form PPT, is a means for corporations to satisfy that report-

ing requirement.

Preparation Instructions:

Line 1a. FEIN – Enter the Federal Employer Identification Number (FEIN)

of the corporation.

Line 1b. Legal Name of Business Entity – Enter the legal name of the cor-

poration. Please note this schedule cannot be used to change the legal name

of a corporation.

Line 1c. Contact Person Concerning This Form – Enter the name of the

person that is knowledgeable of the information provided on the form. Providing

the contact person’s name and phone number can facilitate the resolution of

possible processing errors.

Line 1d. Contact Person’s Phone Number – Enter the contact person’s

telephone number. Providing the contact person’s name and phone number can

facilitate the resolution of possible processing errors.

Line 1e. Taxpayer’s E-mail Address – Enter the entity’s e-mail address.

Line 2a. County of Incorporation for All Alabama Entities – Enter the

Alabama county of incorporation, if the corporation was incorporated in

Alabama.

Line 2b. State or Country of Incorporation for All Foreign Entities –

Enter the state or country of incorporation, if the corporation is a foreign

corporation.

Line 3a. Date of Qualification in Alabama for Foreign Entities – Enter

the date the corporation qualified to do business in Alabama.

Line 3b. Date of Incorporation for All Entities – Enter the date of

incorporation.

Line 3c. Telephone Number of Taxpayer – Enter the telephone number of

the corporation.

Line 4a. Name of Registered Agent in Alabama – Enter the name of the

registered agent in Alabama. This form cannot be used to change the registered

agent of a corporation.

Line 4b. FEIN or Social Security Number – Enter the FEIN or social secu-

rity number of the registered agent.

Line 4c. Street Address – Enter the street address or mailing address of

the registered agent.

Line 4d. City – Enter the City of the registered agent.

Line 4e. State – Enter the State of the registered agent.

Line 4f. Zip – Enter the Zip of the registered agent.

Line 5a. Name of Corporate President – Enter the name of the current

corporate president.

Line 5b. Social Security Number – Enter the social security number of the

current corporate president.

Line 5c. Street Address – Enter the street address or mailing address of

the current corporate president.

Line 5d. City – Enter the City of the current corporate president

Line 5e. State – Enter the State of the current corporate president

Line 5f. Zip – Enter the Zip of the current corporate president

Line 6a. Name of Corporate Secretary – Enter the name of the current

corporate secretary.

Line 6b. Social Security Number – Enter the social security number of the

current corporate secretary.

Line 6c. Street Address – Enter the street address or mailing address of

the current corporate secretary.

Line 6d. City – Enter the City of the current corporate secretary.

Line 6e. State – Enter the State of the current corporate secretary.

Line 6f. Zip – Enter the Zip of the current corporate secretary.

Line 7. Kind of Business Done in Alabama – Please provide a brief state-

ment of the character of business in which the corporation is engaged in the

State of Alabama.

Line 8. Street Address of the Principal Place of Business in Alabama –

Please provide the street address for the principal place of business in

Alabama.

Line 9. Kind of Business Done Generally – Please provide a brief state-

ment of the general character of business in which the corporation is engaged.

Line 10. Mailing Address of the Principal Office and Place of Business

if Outside the State of Alabama – Please provide the mailing address for the

principal place of business, if it is located outside of Alabama.