La. Admin. Code tit. 61 § I-302

Current through Register Vol. 50, No. 9, September 20, 2024

Section I-302 - Determination of Taxable Capital

A. Taxable Capital. Every corporation subject to the tax imposed by R.S. 47:601 must determine the total of its capital stock, as defined in R.S. 47:604, its surplus and undivided profits, as defined in R.S. 47:605, and its borrowed capital, as defined in R.S. 47:603, which total amount shall be used as the basis for determining the extent to which its franchise and the rights, powers, and immunities granted by Louisiana are exercised within this state. Determination of the taxable amount thereof shall be made in accordance with the provisions of R.S. 47:606 and R.S. 47:607, and the rules and regulations issued thereunder by the secretary of revenue and taxation.

B. Holding Corporation Deduction. Any corporation which owns at least 80 percent of the capital stock of a banking corporation organized under the laws of the United States or of the state of Louisiana may deduct from its total taxable base, determined as provided in §302.A and before the allocation of taxable base to Louisiana as provided in R.S. 47:606 and R.S. 47:607, the amount by which its investment in and advances to such banking corporation exceeds the excess of total assets of the holding corporation over total taxable capital of the holding corporation, determined as provided in §302 A

C. Any corporation, as defined in R.S. 47:601(C), that is subject to the franchise tax imposed by R.S. 47:601(A) and that is not subject to R.S. 47:602(B), (C), (D), (E), or (F), that has one or more subsidiaries, will be entitled to deduct from its taxable capital its investments in and advances to one or more subsidiaries, whether made directly or indirectly, when computing its franchise tax.

1. The term subsidiaries shall include any corporation, as provided for in R.S. 47:601(C), that is subject to the franchise tax imposed by R.S. 47:601(A), and in which at least 80 percent of the voting and nonvoting power of all classes of their stock, membership, partnership, or other ownership interests are owned, directly or indirectly, by a corporation subject to the franchise tax imposed by R.S. 47:601(A).

2. The amount of deduction allowed will be the sum of the amounts determined by multiplying the parent corporations investments in and advances to each subsidiary by each subsidiarys average ratio, as determined pursuant to R.S. 47:606.

3. Any direct or indirect subsidiary of a regulated company, as provided for in R.S. 47:602(C), that directly owns at least 80 percent of the voting power of the stock, membership, partnership, or other membership interests in a public-utility company, as defined by the Public Utility Holding Company Act of 1935 prior to its repeal, may use the holding corporation deduction with respect to investments in and advances to subsidiary corporations or subsidiary limited liability companies to calculate its taxable capital.

4. Example. Company A is a corporation owning one hundred percent of Company B. Company B is a non-Louisiana corporation qualified to do business in Louisiana. Company B is a one hundred percent member of XYZ LLC. XYZ LLC is an out of state limited liability company that owns property in Louisiana and has elected to be treated as a corporation pursuant to 26 U.S.C. Subtitle A, Chapter 1, Subchapter C, for federal income tax purposes. XYZ LLC would be subject to Louisiana corporation franchise tax. Company B would be subject to Louisiana corporation franchise tax as a one hundred percent member of XYZ LLC. Company A would not be subject to Louisiana corporation franchise tax. Company B would be eligible for the holding company deduction.

5. Nothing in this Subsection shall extend franchise tax liability to any limited liability company at least eighty percent owned, directly or indirectly, by any entity subject to the bank shares tax pursuant to R.S. 47:1967.

D. Public Utility Holding Corporation Deductions. Any corporation registered under the Public Utility Holding Company Act of 1935 that owns at least 80 percent of the voting power of all classes of the stock in another corporation (not including nonvoting stock which is limited and preferred as to dividends) may, after having determined its Louisiana taxable capital as provided in R.S. 47:602(A), R.S. 47:606, and R.S. 47:607, deduct therefrom the amount of investment in and advances to such corporation which was allocated to Louisiana under the provisions of R.S. 47:606(B). The only reduction for investment in and advances to subsidiaries allowed by this Subsection is with respect to those subsidiaries in which the registered public utility holding company owns at least 80 percent of all classes of stock described herein; the reduction is not allowable with respect to other subsidiaries in which the holding company owns less than 80 percent of the stock of the subsidiary, notwithstanding the fact that such investments in and advances to the subsidiary may have been attributed to Louisiana under the provisions of R.S. 47:606(B). In no case shall a reduction be allowed with respect to revenues from the subsidiary. Any repeal of the Public Utility Holding Company Act of 1935 shall not affect the entitlement to deductions under this Subsection of corporations registered under the provisions of the Public Utility Holding Company Act of 1935 prior to its repeal.

La. Admin. Code tit. 61, § I-302

Promulgated by the Department of Revenue and Taxation, Income and Corporation Franchise Taxes Section, Office of Group III, LR 6:25 (January 1980), amended LR 11:108 (February 1985), repromulgated by the Department of Revenue, Policy Services Division, LR 30:449 (March 2004), Amended LR 441636 (9/1/2018).

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:602.