Bill > S1546

This bill clarifies how a corporation's "net worth," which is a measure of its overall value used for calculating a corporate excise tax, is determined. Specifically, it states that how a company 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 method used doesn't follow established financial reporting standards like generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS). The bill also gives the commissioner the power to adjust or disallow any reserves for assets if they are deemed unreasonable. Furthermore, it adds a provision to the tax law to include certain income earned by foreign corporations that is exempt from U.S. federal income tax due to treaties or other reasons. This clarification is intended to reflect the original intent of the law and applies to all open tax years.