Alabama Corporate Taxpayers and CPAs Beware: House Bill Targets Unitary Combined Reporting, the Section 199 Deduction and Bonus Depreciation

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On February 7, the first day of the Alabama Legislature’s 2012 regular session, Representative Richard Lindsey (D-Cherokee, Cleburne, and DeKalb Counties) introduced a lengthy bill of significant interest to Alabama corporate income taxpayers. House Bill 199 would limit the Domestic Production Activities Deduction (“DPAD”) under IRC Section 199, partially decouple from the 100% bonus depreciation provisions enacted by Congress in 2010, and mandate combined reporting (“MUCR”) for certain unitary business entities. HB 199 has been assigned to the House Ways and Means-Education Committee, and is essentially a combination of three bills sponsored by Rep. Lindsey during the 2011 regular session (HB 299 through 301). It is likely that, as in past years, the Alabama Education Association teachers union is advocating these proposals. A summary of each major provision of HB 199 is provided below.

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This article was initially published in the February 2012 IPT Tax Report and is published here with IPT’s consent.