Alabama State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Alabama, with full citations and the original source on every page.
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If a company owns Industrial Development Board bonds that financed its own leased facility, can it still deduct that bond investment from its franchise-tax capital, and exclude the bond interest from income tax — even after paying big dividends to its parent and even though it borrowed the money to buy the bonds?
Yes to all. In a large Industrial Development Board (IDB) bond-financed manufacturing deal, the Taxpayer owned the IDB's bonds (bought with capital contributed — and partly borrowed — by its parent) a…
If an out-of-state pension fund invests in Alabama only as a limited partner — and registers as a foreign corporation just to make its contracts enforceable — is it 'doing business' so as to owe Alabama franchise and income tax?
No to both taxes. Entity A, an out-of-state public-school retirement fund (a trust with 'corporate powers,' investing ~$64.35 million as a limited partner in a tiered partnership that owns an Alabama …
If a company buys or builds equipment mainly to control air and water pollution — vapor recovery systems, leak detectors, cathodic protection, double-wall tanks, cleanup gear — is that equipment exempt from Alabama sales, use, and property tax, and deductible for franchise and income tax?
Mostly yes. Company A, an Alabama petroleum business, planned to buy or self-construct five kinds of environmental equipment (vapor recovery systems, in-line leak detectors, cathodic protection, doubl…
When a company ships everything into Alabama from out of state and makes few Alabama sales, does the corporate income tax 'throwback rule' overstate its Alabama sales factor — and can it apportion on a destination basis instead? And how is it classified for franchise tax?
The Department granted relief. Company A (an out-of-state corporation with a new Alabama distribution facility) showed that Alabama's income-tax 'throwback rule' — which attributes a sale to Alabama w…
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These are official tax letter rulings and advisory opinions issued by Alabama's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.