HB 548 Summary

• Amends Sections 40-18-14 and 40-18-21 of the Alabama Code to include resident individual owners' proportionate share of income from Subchapter K entities, Alabama S corporations, and estates or trusts in gross income, regardless of geographic source.

• Establishes a tax credit for resident individual owners and beneficiaries equal to their proportionate share of income or gross profits taxes paid to other states or territories on business conducted outside Alabama.

• Allows resident individual taxpayers who are partners, members, shareholders, or beneficiaries to claim a credit for proportionate share of foreign income taxes paid, limited to specific industries under the 2002 North American Industry Classification System (primarily Sector 21 and certain subsectors 324, 325, 482, 483, and 486).

• Credits cannot exceed the Alabama income tax that would be due on the same income, and income taxes are defined to include net income, net profits, or gross profits taxes but exclude net worth, capital, or asset-based taxes.

• Supersedes Department of Revenue Gross Income Regulations inconsistent with the act and becomes effective for tax years beginning after December 31, 2010, with no penalties for retroactive application.