Bill > H2548

This bill clarifies how corporations determine their "net worth," which is a key factor in calculating their corporate excise tax, a tax levied on businesses. Specifically, it states that how a corporation accounts for an item on its financial records (its "books") will generally be considered the correct way to classify it as either debt or equity, unless the tax commissioner can prove the accounting treatment doesn't follow the standard accounting principles the company uses for its financial reports to shareholders, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). The bill also allows the commissioner to reject any reserves for assets if they are deemed unreasonable. Furthermore, it amends the law to include certain income of foreign corporations that is exempt from U.S. federal income tax, whether due to a tax treaty or other reasons, in the calculation of corporate excise tax. This clarification is intended to reflect the original intent of the law and applies to all open tax years.