72 Pa. Stat. § 7601
"Average net income." The sum of the net income or loss for each of the current and immediately preceding four years, divided by five. If the entity has not been in existence for a period of five years, the average net income shall be the average net income for the number of years that the entity has actually been in existence. In computing average net income, losses shall be entered as computed, but in no case shall average net income be less than zero. The net income or loss of the entity for any taxable year shall be the amount set forth as income per books on the income tax return filed by the entity with the Federal Government for such taxable year, or if no such return is made, as would have been set forth had such a return been made, subject, however, in either case to any correction thereof, for fraud, evasion or error. In the case of any entity which has an investment in another corporation, the net income or loss shall be computed on an unconsolidated basis exclusive of the net income or loss of such other corporation without regard to how the corporation is treated for Federal income tax purposes. In the case of a limited liability company or business trust that is not taxable as a corporation for Federal income tax purposes, the net income or loss of the limited liability company or business trust for any given year shall be reduced by the amount of distributions made by such limited liability company or business trust to any member of such limited liability company or business trust who is deemed to be materially participating in the activities conducted by such limited liability company or business trust for purposes of section 469 of the Internal Revenue Code of 1986 ( Public Law 99-514, 26 U.S.C. § 469 ). In the case of a limited liability company or business trust that for Federal income tax purposes is a disregarded entity of a natural person, the net income or loss of the limited liability company or business trust for any given year shall be reduced by the amount of distributions made by the limited liability company or business trust to a natural person. For this purpose, distributions which are made to a member of a limited liability company or business trust within thirty (30) days of the end of a given year may be treated as having been made in the preceding year and not in the year in which such distribution is actually made.
"Capital stock." The capital stock, certificates, memberships and all other interests in a domestic or foreign entity.
"Capital stock value." The amount computed pursuant to the following formula: the product of one-half times the sum of the average net income capitalized at the rate of nine and one-half per cent plus seventy-five per cent of net worth, from which product shall be subtracted one hundred sixty thousand dollars ($160,000), the algebraic equivalent of which is
(.5 X (average net income/.095 + (.75) (net worth))) -- $160,000
"Corporation."
"Department." The Department of Revenue.
"Domestic entity." A corporation organized under the laws of the Commonwealth.
"Foreign entity." A corporation organized by or under the laws of any jurisdiction other than the Commonwealth which exercises, whether in its own name or through any individual, association, business trust, corporation, joint venture, limited liability company, limited partnership, partnership or other entity, any of the following privileges:
"Holding company." Any corporation (i) at least ninety per cent of the gross income of which for the taxable year is derived from dividends, interest, gains from the sale, exchange or other disposition of stock or securities and the rendition of management and administrative services to subsidiary corporations, and (ii) at least sixty per cent of the actual value of the total assets of which consists of stock securities or indebtedness of subsidiary corporations.
"Net worth."
"Processing." The following activities when engaged in as a business enterprise:
"Research and development." The activities relating to the discovery of new and the refinement of known substances, products, processes, theories and ideas, but not including activities directed primarily to the accumulation or analysis of commercial, financial or mercantile data.
"Student loan assets." The term includes the following assets:
"Subsidiary corporation." Any corporation, a majority of the total issued and outstanding shares of voting stock of which are owned by the taxpayer corporation directly or through one or more intervening subsidiary corporations.
72 P.S. § 7601