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  • Can a corporation elect to file a consolidated Alabama corporate income tax return?
View All Corporate Income Tax FAQs

Can a corporation elect to file a consolidated Alabama corporate income tax return?

For tax periods beginning before January 1, 1999 – No. Alabama’s income tax laws and rules specifically required each corporation to file a separate return with the department (§40-18-39(a) and Rules 810-3-39-.01).

For tax period beginning after December 31, 1998 – Yes. Alabama’s Tax Conformity Act (Act 98-502) allows an Alabama “affiliated group” to elect to file a consolidated Alabama tax return, provided the “group” files a consolidated federal return for the same taxable year. An “Alabama affiliated group” means a group of corporations that constitute an affiliated group as defined in 26 U.S.C. §1504, one or more members of which are subject to tax under §40-18-31.

For tax periods beginning after December 31, 2001 – Yes. Act 2001-1089(HB4) revised the Consolidated filing requirements in Alabama Code Section 40-18-39 for tax periods beginning after December 31, 2001. Alabama consolidated returns can only include Alabama “nexus” companies.

Each corporation included in the Alabama consolidated return must compute their Alabama taxable income on a separate company basis. Then, the taxable income of the Alabama group is combined to determine the tax due.

The consolidated filing fee is a maximum of $25,000 due by the extended due date of the return. To make the election, the Alabama Form 20C-CRE must be filed by the due date of the return, including extensions, for the first taxable year for which the election is applicable. The consolidated election is binding for 120 consecutive months (10 years).

For tax periods beginning before January 1, 1999 – No. Alabama’s income tax laws and rules specifically required each corporation to file a separate return with the department (§40-18-39(a) and Rules 810-3-39-.01).

For tax period beginning after December 31, 1998 – Yes. Alabama’s Tax Conformity Act (Act 98-502) allows an Alabama “affiliated group” to elect to file a consolidated Alabama tax return, provided the “group” files a consolidated federal return for the same taxable year. An “Alabama affiliated group” means a group of corporations that constitute an affiliated group as defined in 26 U.S.C. §1504, one or more members of which are subject to tax under §40-18-31.

For tax periods beginning after December 31, 2001 – Yes. Act 2001-1089(HB4) revised the Consolidated filing requirements in Alabama Code Section 40-18-39 for tax periods beginning after December 31, 2001. Alabama consolidated returns can only include Alabama “nexus” companies.

Each corporation included in the Alabama consolidated return must compute their Alabama taxable income on a separate company basis. Then, the taxable income of the Alabama group is combined to determine the tax due.

The consolidated filing fee is a maximum of $25,000 due by the extended due date of the return. To make the election, the Alabama Form 20C-CRE must be filed by the due date of the return, including extensions, for the first taxable year for which the election is applicable. The consolidated election is binding for 120 consecutive months (10 years).

Related FAQs in Corporate Income Tax

View information on the Small Business Health Premiums Deduction (Act 2008-559, amended by Act 2011-155). View Form 4020- Small Business Health Insurance Deduction Information.

View information regarding Alabama Consolidated Income Tax Returns.

C-corporations, and those LLCs that have elected to file as a c-corporation, doing business in Alabama or deriving income from sources within Alabama, including income from property located in Alabama and on every corporation licensed or qualified to transact business in Alabama except for those corporations specifically exempted by §40-18-32.

Yes. If the company has registered or qualified to do business in the state, a Form 20C is required to report no activity and/or business activity as provided by Sections 40-18-2 and 40-18-31, Code of Alabama 1975.

Yes. If an extension has been granted for federal purposes, the extension is also granted for Alabama purposes; the Federal Form 7004 must be submitted with the Form 20C.

NOTE: This is an extension for filing purposes ONLY. The full amount of the tax liability is due by the original due date of the return.

Yes. Alabama Code §40-2A-7(c)(2) states, “A petition for refund shall be filed with the department or an automatic refund issued pursuant to Section 40-29-71, or a credit allowed, within (i) three years from the date that the return was filed, or (ii) two years from the date of payment of the tax, whichever is later, or, if no return was timely filed, two years from the date of payment of the tax.”