(For Effective Date, See note.) Taxation of Corporations

1. Law
2. Georgia Code
3. Revenue and Taxation
4. Income Taxes
5. Imposition, Rate, and Computation; Exemptions
6. (For Effective Date, See note.) Taxation of Corporations

1. (For effective date, see note.) Every domestic corporation and every foreign corporation shall pay annually an income tax equivalent to 5.75 percent of its Georgia taxable net income. Georgia taxable net income of a corporation shall be the corporation's taxable income from property owned or from business done in this state. A corporation's taxable income from property owned or from business done in this state shall consist of the corporation's taxable income as defined in the Internal Revenue Code of 1986, with the adjustments provided for in subsection (b) of this Code section and allocated and apportioned as provided in Code Section 48-7-31.
2. 1. 1. When interest income is derived from obligations of any state or political subdivision except this state and political subdivisions of this state, the interest income shall be added to taxable income to the extent that the interest income is not included in gross income for federal income tax purposes. Interest or dividends on obligations of any authority, commission, instrumentality, territory, or possession of the United States which by the laws of the United States are exempt from federal income tax but not from state income tax shall also be added to taxable income.
      2. There shall be subtracted from taxable income interest or dividends on obligations of the United States and its territories and possessions or of any authority, commission, or instrumentality of the United States to the extent such interest or dividends are includable in gross income for federal income tax purposes but exempt from state income taxes under the laws of the United States. There shall also be subtracted from taxable income any income derived from the authorized activities of a domestic international banking facility operating pursuant to the provisions of Article 5A of Chapter 1 of Title 7, the "Domestic International Banking Facility Act," and any income arising from the conduct of a banking business with persons or entities located outside the United States, its territories, or possessions. Any amount subtracted pursuant to this subparagraph shall be reduced by any interest expenses directly or indirectly attributable to the production of the interest or dividend income.
   2. There shall be added to taxable income any taxes on, or measured by, net income or net profits paid or accrued within the taxable year imposed by the authority of the United States or any foreign country, by any state except the State of Georgia, or by any territory, county, school district, municipality, or other tax subdivision of any state, territory, or foreign country to the extent such taxes are deducted in determining federal taxable income.
   3. No portion of any deductions or losses which occurred in a year in which the taxpayer was not subject to taxation in this state including, but not limited to, net operating losses may be deducted in any tax year. When the federal adjusted gross income or net income of a corporation includes such deductions or losses, an adjustment deleting them shall be made under rules established by the commissioner. The provisions of this subsection shall not prohibit the carry-over of any deductions or losses including, but not limited to, net operating losses of any taxpayer which were incurred in a year or years in which the taxpayer was subject to methods of taxation in this state other than the corporate income tax.
   4. Income, losses, and deductions previously used in computing Georgia taxable income shall not again be used in computing Georgia taxable income. The commissioner shall provide for needed adjustments by regulation.
   5. All elections under Section 338 of the Internal Revenue Code of 1986 shall also apply under this article.
   6. This article shall not be construed to repeal any tax exemptions contained in other laws of this state not referred to in this article. Those exemptions and the exemptions provided for by federal law and treaty shall be deducted on forms provided by the commissioner.
   7. All elections made by corporate taxpayers under the Internal Revenue Code of 1954 or the Internal Revenue Code of 1986 shall also apply under this article except elections involving consolidated corporate returns and Subchapter "S" elections which shall be treated as follows:
      1. 1. Affiliated corporations which file a consolidated federal income tax return must file separate income tax returns with this state unless they have prior approval or have been requested to file a consolidated return by the department. The commissioner shall by regulation provide the time period within which the permission must be requested. A request for permission beyond such time period will not be considered and will result in the filing of separate income tax returns for the applicable year.
         2. No depository financial institution shall be deprived of the benefit of any exemption, deduction, or credit authorized by this title as a consequence of its election to file otherwise lawful consolidated returns with its parent organization or any corporate subsidiaries with respect to any state or local tax levied against such depository financial institution as a result of this title. As used in this division, the term:
      2. "Bank" means any financial institution chartered under the laws of this state or under the laws of the United States and domiciled in this state which is authorized to receive deposits in this state and which has a corporate structure authorizing the issuance of capital stock.
      3. "Depository financial institution" means a "bank" or a "savings and loan association."
      4. "Savings and loan association" means any financial institution, other than a credit union, chartered under the laws of this state or under the laws of the United States and domiciled in this state which is authorized to receive deposits in this state and which has a mutual corporate form;
      5. Subchapter "S" elections apply only if all stockholders are subject to tax in this state on their portion of the corporate income. If all nonresident stockholders pay the Georgia income tax on their portion of the corporate income, the election shall be allowed.
   8. There shall be subtracted from taxable income dividends received by:
      1. A corporation from sources outside the United States as defined in the Internal Revenue Code of 1986. For purposes of this subparagraph, dividends received by a corporation from sources outside of the United States shall include amounts treated as a dividend and income deemed to have been received under provisions of the Internal Revenue Code of 1986 by such corporation if such amounts could have been subtracted from taxable income under this paragraph, had such amounts actually been received. The deduction provided by Section 250 shall apply to the extent the same income was included in Georgia taxable net income. The deduction, exclusion, or subtraction provided by Section 245A, Section 965, or any other section of the Internal Revenue Code of 1986 shall not apply to the extent income has been subtracted pursuant to this subparagraph. Amounts to be subtracted under this subparagraph shall include the following unless excluded by this paragraph, as defined by the Internal Revenue Code of 1986:
         1. Qualified electing fund income;
         2. Subpart F income, including income specified in Section 951A of the Internal Revenue Code of 1986; and
         3. Income attributable to an increase in United States property by a controlled foreign corporation.

         The amount subtracted under this subparagraph shall be reduced by any expenses directly attributable to the dividend income; and

      2. Corporations from affiliated corporations within the United States, when the corporation receiving the dividends is engaged in business in this state and is subject to the payment of taxes under the income tax laws of this state, to the extent that the dividends have been included in net income under this Code section. Dividends from affiliates shall be reduced by any expenses directly attributable to the dividend income.
   9. Where a corporation's salary and wage deductions are reduced in computing federal taxable income because the corporation has taken a federal jobs tax credit which required, as a condition to using the federal jobs tax credit, the elimination of salary and wage deductions, the eliminated salary and wage deductions shall be subtracted from taxable income.
   10. Georgia taxable income shall be adjusted as provided in Code Section 48-7-28.3.

       (10.1) Net operating losses for corporations shall be treated as follows:

       1. For any taxable year in which the taxpayer takes a federal net operating loss deduction on its federal income tax return, the amount of such deduction shall be added back to federal taxable income, and Georgia taxable net income for such taxable year shall be computed from the taxpayer's federal taxable income as so adjusted. There shall be allowed as a separate deduction from Georgia taxable net income so computed an amount equal to the aggregate of the Georgia net operating loss carryovers to such year, plus the Georgia net operating loss carrybacks to such year if such carrybacks are allowed by the Internal Revenue Code of 1986. Any limitations included in the Internal Revenue Code of 1986 on the amount of net operating loss that can be used in a taxable year shall be applied for purposes of this Code section; provided, however, that such limitations, including, but not limited to, the 80 percent limitation, shall be applied to Georgia taxable net income;
       2. The Georgia net operating loss for such taxable year shall be computed by making the adjustments to federal taxable income required by this article and in the case of corporations doing business both within and outside Georgia, by apportioning and allocating to Georgia, as provided in Code Section 48-7-31, only the amount of the loss attributable to operations within Georgia. The term "Georgia net operating loss" shall mean the loss computed as provided in this paragraph. In the event the net Georgia adjustments completely offset a federal net operating loss, there shall be no Georgia net operating loss for the taxable year, and any excess of net Georgia adjustments over the federal net operating loss shall constitute Georgia taxable net income after any such excess has been allocated and apportioned to Georgia as provided in Code Section 48-7-31.The procedural sequence of taxable years to which a Georgia net operating loss may be carried back or carried over, and the number of years for which a net operating loss may be carried back or carried over, shall be the same as provided in the Internal Revenue Code.The terms "Georgia net operating loss carryback" and "Georgia net operating loss carryover" shall mean the Georgia net operating loss for the applicable year carried back or carried over in the manner and for the number of years as provided in this paragraph;
       3. In the event the taxpayer elects to forgo the carryback period for the federal net operating loss as allowed under the Internal Revenue Code, the taxpayer shall also forgo the carryback period for Georgia purposes.If the taxpayer does not elect to forgo the carryback period for the federal net operating loss, the election to forgo the net operating loss period shall not be allowed for Georgia purposes.If the taxpayer does not have a federal net operating loss, the taxpayer may make an irrevocable election to forgo the carryback period for the Georgia net operating loss, provided that an affirmative statement is attached to the Georgia return for the year of the loss.Such election must be made on or before the due date for filing the income tax return for the taxable year wherein the loss was incurred, including any extensions which have been granted;
       4. The provisions of Sections 108, 381, 382, and 384 of the Internal Revenue Code of 1986, as amended, as they relate to net operating losses also apply for Georgia purposes.The commissioner shall by regulation provide the method of determining how such sections apply;
       5. In the event a taxpayer is entitled to a refund of income taxes by reason of a net operating loss carryback, a claim for such refund must be filed within three years after the due date for filing the income tax return for the taxable year wherein the loss was incurred, including any extensions which have been granted.Such tax refund shall be deemed to have been erroneously assessed and collected, and shall be paid under the provisions of Code Section 48-2-35; provided, however, that no interest shall accrue or be paid for any period prior to the close of the taxable year in which such net operating loss arises and no interest shall be paid if the claim for refund is processed within 90 days from the last day of the month in which the claim for such refund is filed; and
       6. The commissioner shall have the authority to promulgate regulations regarding net operating losses with respect to this paragraph and with respect to consolidated return net operating losses.
   11. There shall be subtracted from taxable income a portion of qualified payments to minority subcontractors, as provided in Code Section 48-7-38.
   12. Georgia taxable income shall, if the taxpayer so elects, be adjusted with respect to federal depreciation deductions as provided in Code Section 48-7-39.
   13. If the taxpayer claims the tax credit provided for in subsection (d) of Code Section 48-7-40.6 with respect to qualified child care property, Georgia taxable income shall be increased by any depreciation deductions attributable to such property to the extent such deductions are used in determining federal taxable income.
   14. There shall be subtracted from taxable income the deduction provided and allowed by Section 179 of the Internal Revenue Code of 1986 as enacted on or before January 1, 2005, to the extent the deduction has not been included in the corporation's taxable income, as defined under the Internal Revenue Code of 1986.
   15. Georgia taxable income shall be increased by the amount of the payments, compensation, or other economic benefit disallowed by Code Section 48-7-21.1.
   16. Georgia taxable income shall be adjusted as provided in Code Section 48-7-28.4.
   17. Georgia taxable net income shall be adjusted as provided in Code Section 48-7-53.

(Ga. L. 1931, Ex. Sess., p. 26, § 4; Code 1933, § 92-3102; Ga. L. 1935, p. 121, § 1; Ga. L. 1937, p. 109, § 3; Ga. L. 1937-38, Ex. Sess., p. 150, § 3; Ga. L. 1949, Ex. Sess., p. 18, § 1; Ga. L. 1953, Jan.-Feb. Sess., p. 625, § 1; Ga. L. 1955, Ex. Sess., p. 27, § 2; Ga. L. 1964, p. 67, § 1; Ga. L. 1969, p. 114, § 1; Ga. L. 1973, p. 924, § 3; Ga. L. 1976, p. 646, § 1; Ga. L. 1976, p. 980, § 1; Ga. L. 1977, p. 1133, § 2; Ga. L. 1979, p. 888, § 1; Code 1933, § 91A-3602, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1979, p. 5, § 63; Ga. L. 1979, p. 888, § 3; Ga. L. 1982, p. 3, § 48; Ga. L. 1983, p. 1350, § 11; Ga. L. 1984, p. 22, § 48; Ga. L. 1984, p. 1644, § 1; Ga. L. 1987, p. 191, § 2; Ga. L. 1988, p. 13, § 48; Ga. L. 1993, p. 1649, § 1; Ga. L. 1996, p. 117, § 8; Ga. L. 1996, p. 130, § 8; Ga. L. 1996, p. 181, § 6; Ga. L. 1999, p. 13, § 1; Ga. L. 2000, p. 1445, § 1; Ga. L. 2005, p. 30, § 2/HB 191; Ga. L. 2005, p. 157, § 1/HB 282; Ga. L. 2005, p. 159, §§ 8-10, 11/HB 488; Ga. L. 2007, p. 271, § 1/SB 184; Ga. L. 2008, p. 898, § 4/HB 1151; Ga. L. 2009, p. 796, § 1/HB 379; Ga. L. 2010, p. 895, § 2/HB 1138; Ga. L. 2018, p. 8, §§ 1-4, 1-5, 1-6/HB 918; Ga. L. 2018, p. 113, § 1/SB 328; Ga. L. 2018, p. 319, § 1/HB 849.)

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 2005, paragraph (b)(10) of this Code section, as enacted by Ga. L. 2005, p. 159, § 11, was redesignated as paragraph (b)(10.1).

Editor's notes.

- Ga. L. 1983, p. 1350, § 15, not codified by the General Assembly, effective January 1, 1984, provides that, should subsection (e) of Code Section 48-6-93 or paragraph (11) of subsection (b) of Code Section 48-7-21 be declared invalid or unconstitutional, it is the intent of the General Assembly that the entire Act be held invalid and that the method of taxation affected by the Act revert to the method in effect prior to January 1, 1984.

Ga. L. 1984, p. 1644, § 4, not codified by the General Assembly, provided that that Act would apply to taxable years beginning on or after January 1, 1985.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, provides that this Act is applicable to taxable years ending on or after March 11, 1987, and that a taxpayer with a taxable year ending on or after January 1, 1987, and before March 11, 1987, may elect to have the provisions of that Act apply.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that tax, penalty, and interest liabilities and refund eligibility for prior taxable years shall not be affected by that Act.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that provisions of the federal Tax Reform Act of 1986 and of the Internal Revenue Code of 1986 which as of January 1, 1987, were not yet effective become effective for purposes of Georgia taxation on the same dates as they become effective for federal purposes.

Ga. L. 1996, p. 117, § 9, not codified by the General Assembly, provides that the Act shall not repeal any provision of Ga. L. 1996, p. 130 if Ga. L. 1996, p. 130 is passed at the 1996 regular session of the General Assembly, becomes law, and becomes effective. Ga. L. 1996, p. 130 was passed at the 1996 Session and became effective January 1, 1997.

Ga. L. 1996, p. 130, § 9, not codified by the General Assembly, provided that the 1996 amendment became effective on January 1, 1997, and shall be applicable to all taxable years beginning on or after January 1, 1996, upon the ratification of House Resolution 734 at the November, 1996, general election. House Resolution 734 was ratified in 1996.

Ga. L. 1996, p. 130, § 9, not codified by the General Assembly, provides, in part, that the provisions of the Act shall not repeal but shall supersede and control over any conflicting provisions of any other Act enacted at the 1996 regular session, including, but not limited to, Ga. L. 1996, p. 117.

Ga. L. 1996, p. 181, § 10, not codified by the General Assembly, provides for a study and report by the state revenue commissioner regarding the effect of the Act on revenue received by the state, counties, and cities in 1997 and 1998 from the tax imposed by Article 4 of Chapter 6 of Title 48 of the Code.

Ga. L. 2000, p. 1445, § 5, not codified by the General Assembly, provides that this Act shall apply to all taxable years beginning on or after January 1, 2001.

Ga. L. 2005, p. 30, § 7(a)/HB 191, not codified by the General Assembly, provides that the 2005 amendment to paragraph (b)(10) shall be applicable to all taxable years beginning on or after January 1, 2006.

Ga. L. 2005, p. 157, § 4/HB 282, not codified by the General Assembly, provides that this Act shall apply to all taxable years beginning on or after January 1, 2005.

Ga. L. 2005, p. 159, § 1/HB 488, not codified by the General Assembly, provides that: "This Act shall be known and may be cited as the 'State and Local Tax Revision Act of 2005.'"

Ga. L. 2005, p. 159, § 27(c)/HB 488, not codified by the General Assembly, provides that the 2005 amendments to division (b)(1)(B) and (b)(10.1) shall apply to all taxable years beginning on or after January 1, 2005.

Ga. L. 2005, p. 159, § 27(h)/HB 488, not codified by the General Assembly, provides that the 2005 amendment to paragraph (b)(5) shall apply to all taxable years beginning on or after January 1, 2004.

Ga. L. 2008, p. 898, § 13/HB 1151, not codified by the General Assembly, provides that the amendment to this Code section shall be applicable to all taxable years beginning on or after January 1, 2008.

Ga. L. 2009, p. 796, § 4/HB 379, not codified by the General Assembly, provides, in part, that the amendment by that Act shall be applicable to all taxable years beginning on or after January 1, 2010.

Ga. L. 2010, p. 895, § 4(c)/HB 1138, not codified by the General Assembly, provides that the 2010 amendment shall apply with respect to stock purchases and sales occurring on or after June 3, 2010.

Ga. L. 2018, p. 8, § 3-1(a), (b)/HB 918, not codified by the General Assembly, provides that: "(a) Sections 1-1, 1-6, and 1-8 of this Act shall become effective upon the approval of this Act by the Governor or upon this Act becoming law without such approval and such sections shall be applicable to all taxable years beginning on or after January 1, 2017.

"(b) Sections 1-2 and 1-4 of this Act shall become effective upon the approval of this Act by the Governor or upon this Act becoming law without such approval and shall be applicable to all taxable years beginning on or after January 1, 2019. Sections 1-2 and 1-4 of this Act shall expire by operation of law on the last moment of December 31, 2025, and revert to the language of paragraph (1) of subsection (b) of Code Section 48-7-20 and subsection (a) of Code Section 48-7-21, respectively, as they existed on the day immediately preceding the effective date of this Act." This Act became effective March 2, 2018. Section 1-4 substituted "5.75 percent" for "6 percent" near the end of the first sentence of subsection (a). Section 1-5 substituted "5.5 percent" for "5.75 percent" near the end of the first sentence of subsection (a).

Ga. L. 2018, p. 113, § 5/SB 328, not codified by the General Assembly, provides that the amendment of this Code section by that Act shall be applicable to all taxable years beginning on or after January 1, 2018.

Ga. L. 2018, p. 113, § 1/SB 328, purported to amend O.C.G.A. § 48-7-21 but actually amended O.C.G.A. § 48-7-21 as amended by Ga. L. 2018, p. 8, §§ 1-4, 1-5, and 1-6/HB 918, signed by the Governor on March 2, 2018, and designated as Act 284.

U.S. Code.

- The Internal Revenue Code, referred to throughout this Code section, is codified as 26 U.S.C. § 1 et seq.

Subchapter "S" of the Internal Revenue Code, referred to in paragraph (b)(7) of this Code section, is codified at 26 U.S.C. § 1361 et seq.

Administrative Rules and Regulations.

- Taxation of corporations, Official Compilation of the Rules and Regulations of the State of Georgia, Department of Revenue, Income Tax Division, § 560-7-3-.06.

Consolidated returns, Official Compilation of the Rules and Regulations of the State of Georgia, Department of Revenue, Income Tax Division, Substantive Regulations, § 560-7-3-.13.

Law reviews.

- For article, "Foreign Corporations in Georgia," see 10 Ga. St. B. J. 243 (1973). For article, "Primary Tax Incentives for Industrial Investment in the Southeastern United States," see 25 Emory L.J. 789 (1976). For article surveying Georgia cases in the area of business associations from June 1977 through May 1978, see 30 Mercer L. Rev. 1 (1978). For article, "Common State Tax Pitfalls in the Acquisition or Disposition of Businesses in Georgia," see 22 Ga. St. B. J. 82 (1985). For article, "Issues and Opportunities Under Georgia's Updated Income Tax Provisions," see 25 Ga. St. B. J. 144 (1989). For article, "Post-Creation Checklist for Georgia Business Entities," see 9 Ga. St. B. J. 24 (2004). For annual survey of law on administrative law, see 62 Mercer L. Rev. 1 (2010). For article, "Revenue and Taxation: Amend Titles 48, 2, 28, 33, 36, 46, and 50 of the Official Code of Georgia Annotated, Relating Respectively to Revenue and Taxation, Agriculture, the General Assembly, Insurance, Local Government, Public Utilities, and State Government," see 28 Georgia St. U.L. Rev. 217 (2011). For note on 1993 amendment of this Code section, see 10 Georgia St. U.L. Rev. 218 (1993). For review of 1996 revenue and taxation legislation, see 13 Georgia St. U.L. Rev. 294 (1996). For comment on Williams v. Stockham Valves & Fittings, Inc., 358 U.S. 450, 79 S. Ct. 357, 3 L. Ed. 2d 421 (1959), upholding constitutionality of state net income tax levied on revenues of foreign corporation derived from interstate commerce where tax is "fairly apportioned," see 22 Ga. B. J. 107 (1959).

JUDICIAL DECISIONS

Constitutionality of income tax.

- Right to impose an income tax is an inherent right of the people and there is nothing in the Constitution of Georgia which denies to the General Assembly the power to impose an income tax if the tax is levied without infringing some provision of that instrument. Owens-Illinois Glass Co. v. Oxford, 216 Ga. 316, 116 S.E.2d 293 (1960).

Income tax not violation of due process when corporation accepts and uses state services.

- Having accepted and utilized valuable state services, a corporation cannot consistently contend or successfully assert that the corporation's property, the taxes collected, has been taken from the corporation in violation of the due process clause of the Constitution of Georgia. Owens-Illinois Glass Co. v. Oxford, 216 Ga. 316, 116 S.E.2d 293 (1960).

Legislative intent.

- The General Assembly clearly and plainly showed the legislature's intention to tax the activities or transactions which every corporation carries on within this state for the purpose of financial profit or gain. Owens-Illinois Glass Co. v. Oxford, 216 Ga. 316, 116 S.E.2d 293 (1960).

Exemptions to be strictly construed in state's favor.

- Any and all tax exemptions must be strictly construed, and unless the language clearly grants the exemption, it is the duty of the court to rule in favor of the state and against the corporation. Thompson v. Atlantic Coast Line R.R., 200 Ga. 856, 38 S.E.2d 774 (1946), aff'd sub nom. Atlantic Coast Line R.R. v. Phillips, 332 U.S. 168, 67 S. Ct. 1584, 91 L. Ed. 1977 (1947).

Taxation of foreign corporations.

- Foreign corporation is not permitted to engage in income producing activities or transactions within this state in competition with domestic corporations, and at the same time escape payment of income tax to the very government which makes it possible for the corporation to earn profits from such activities or transactions. Owens-Illinois Glass Co. v. Oxford, 216 Ga. 316, 116 S.E.2d 293 (1960).

State income taxation of interstate operations of a foreign corporation.

- Net income from the interstate operations of a foreign corporation may be subjected to state taxation provided the levy is not discriminatory and is properly apportioned to local activities within the taxing state forming a sufficient nexus to support the taxation. Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 79 S. Ct. 357, 3 L. Ed. 2d 421 (1959).

Sale of whiskey by unlicensed nonresident.

- It is illogical and unreasonable to contend that the sale of whiskey in this state by an unlicensed nonresident upon orders taken in this state and approved by the state revenue commissioner in conformity with regulations is doing business in this state and is subject to income tax on the income arising therefrom. Redwine v. Schenley Indus., Inc., 210 Ga. 769, 83 S.E.2d 16 (1954).

Obligations and duties of domesticated foreign corporations.

- Foreign corporation domesticated under the laws of this state becomes subject to the same obligations, duties, liabilities, and disabilities as if originally created under the laws of Georgia. Montag Bros. v. State Revenue Comm'n, 50 Ga. App. 660, 179 S.E. 563 (1935), aff'd, 182 Ga. 568, 186 S.E. 558 (1936).

Law does not purport to provide a formula for deducting the cost of earning interest.

- Method used in arriving at such cost will and must be examined in the light and circumstances of each case. Any fair means of arriving at such costs is available. State Revenue Comm'n v. Carson Naval Stores Co., 63 Ga. App. 540, 11 S.E.2d 678 (1940).

Construction of definition of "dividend" with other provisions.

- In light of the legislative history of former Code 1933, § 92-3002 and Oxford v. Carter, 216 Ga. 821, 120 S.E.2d 298 (1961), the Court of Appeals was not willing to say that the term "dividend" as used in paragraph (b)(10) of former Code 1933, § 92-3102 incorporated the definition of "dividend" in former Code 1933, § 92-3002 or that "dividend" as used in former Code 1933, § 92-3102 (see now O.C.G.A. § 48-7-21) clearly and distinctly included a final distribution in liquidation. Chilivis v. Cleveland Elec. Co., 142 Ga. App. 751, 236 S.E.2d 872 (1977).

Distribution of earnings and profits does not qualify as dividend.

- It is the Internal Revenue Code of 1954 definition of dividends received from sources outside the United States, not the treatment by the federal tax authorities, that is controlling. Under the Internal Revenue Code of 1954, the distribution of earnings and profits does not qualify as a dividend. Chilivis v. Cleveland Elec. Co., 142 Ga. App. 751, 236 S.E.2d 872 (1977).

Constitutional provision revoking perpetual corporate charter is void.

- When a perpetual corporate charter granted by the General Assembly confers tax exemptions upon the corporation, the exemption is irrevocable. Accordingly, former Ga. Const. 1945, Art. I, Sec. III, Para. III (see now Ga. Const. 1983, Art. I, Sec. I, Para. X) purporting to revoke such charter provisions, is void and of no effect. Thompson v. Atlantic Coast Line R.R., 200 Ga. 856, 38 S.E.2d 774 (1946), aff'd sub nom. Atlantic Coast Line R.R. v. Phillips, 332 U.S. 168, 67 S. Ct. 1584, 91 L. Ed. 1977 (1947).

Effect of charter provision limiting tax on stock of corporation.

- Charter provision which limits the tax on the stock of the corporation to a certain percentage of the net proceeds of their investments is a property tax and constitutes no bar to the collection by the state of an income tax from a lessee of the corporation on the lessee's net income derived from the use of the corporate property on which the charter thus limits the property tax. Thompson v. Atlantic Coast Line R.R., 200 Ga. 856, 38 S.E.2d 774 (1946), aff'd sub nom. Atlantic Coast Line R.R. v. Phillips, 332 U.S. 168, 67 S. Ct. 1584, 91 L. Ed. 1977 (1947).

Effect of tax exemption found in charter enacted before existence of income tax.

- When there existed in Georgia no corporate income tax law at the time a corporate charter exemption was enacted and in the exemption clause it was expressly stated that the limitation there provided was upon the taxation of stock of the corporation, the General Assembly in enacting this exemption clause did not intend to include exemption from an income tax. Such limitation or exemption was not necessary because no income tax, under the law as the law then existed, would have been exacted of the corporation. Thompson v. Atlantic Coast Line R.R., 200 Ga. 856, 38 S.E.2d 774 (1946), aff'd sub nom. Atlantic Coast Line R.R. v. Phillips, 332 U.S. 168, 67 S. Ct. 1584, 91 L. Ed. 1977 (1947).

Research tax credit.

- Trial court erred in finding invalid a regulation which interpreted a research tax credit codified in a statute; the regulation's requirement that a business enterprise have a positive state taxable net income for each of the preceding three years in order to be eligible for the tax credit was authorized by statute and was reasonable because the regulation reflected the legislature's intent that research activities be increased, which was most likely to occur when a business enterprise was able to generate income through the enterprise's activities rather than when a business had a negative income or, in other words, a net operating loss. Ga. Dep't of Revenue v. Ga. Chemistry Council, Inc., 270 Ga. App. 615, 607 S.E.2d 207 (2004).

Cited in Graham v. Hanna, 297 Ga. App. 542, 677 S.E.2d 686 (2009).

OPINIONS OF THE ATTORNEY GENERAL

What activity constitutes doing business in this state.

- When an out-of-state lending institution intermittently merely purchases from a Georgia real estate and mortgage company notes secured by mortgages on Georgia real estate, such activity is not enough to constitute doing business in this state for purposes of income tax liability under former Code 1933, §§ 92-3102 and 92-3113 (see now O.C.G.A. §§ 48-7-21 and48-7-31). 1960-61 Op. Att'y Gen. p. 501.

When a foreign corporation merely qualifies as a fiduciary or merely holds a fiduciary title to property located in this state, and engages in no other activity in this state with respect to such property, it is not engaged in sufficient activity in this state to constitute its personally doing business in this state. Such corporation, as a fiduciary, would have an income tax liability on account of income or gains derived from such property. 1960-61 Op. Att'y Gen. p. 497.

RESEARCH REFERENCES

Am. Jur. 2d.

- 71 Am. Jur. 2d, State and Local Taxation, §§ 345, 378, 381 et seq., 391.

Business Bad Debt, 5 POF2d 89.

C.J.S.

- 85 C.J.S., Taxation, §§ 1970 et seq., 1998 et seq.

ALR.

- Deduction of salaries in computing excise or income tax of corporations, 15 A.L.R. 1316; 145 A.L.R. 834.

Constitutionality of taxing statute which refuses to corporation deduction of credits allowed to individual taxpayer, 42 A.L.R. 1049.

Income tax: deduction for loss or depreciation of good will, 49 A.L.R. 469.

Deduction on account of exempt securities in taxation of corporations or their shareholders, 57 A.L.R. 899; 65 A.L.R. 878.

What is a personal service corporation within Internal Revenue Act, 59 A.L.R. 1279.

Deduction on account of exempt securities in taxation of corporations or their shareholders, 65 A.L.R. 878.

Deduction of salaries in computing excise or income tax on corporations, 68 A.L.R. 705; 145 A.L.R. 834.

Income tax: deductibility as business expense of contributions by corporation for benevolent, charitable, or religious purposes, 68 A.L.R. 742; 111 A.L.R. 1226.

Constitutionality of tax on corporations in nature of, or purporting to be, excise or privilege tax measured by income or receipts, 71 A.L.R. 256.

Deduction of fixed periodical percentage ("straight-line method") as proper method of determining depreciation for purposes of property or income taxes, 71 A.L.R. 971.

"Business situs" for purposes of property taxation of intangibles in state other than domicile of owner, 76 A.L.R. 806; 143 A.L.R. 361.

Discrimination by state against foreign corporations in imposition of taxes and license fees, 77 A.L.R. 1490.

Taxation of insurance reserves, 78 A.L.R. 562.

Building and loan associations as within contemplation of constitutional or statutory provisions relating to taxation of corporation or stockholders, 86 A.L.R. 826.

What amounts to "reorganization" of corporation within income tax statutes, 97 A.L.R. 1359; 173 A.L.R. 912.

Holding companies as within contemplation of statutes taxing franchises or property of certain classes of corporations, 98 A.L.R. 1511.

Subjection to public supervision because of public service nature of business as basis of classification for purposes of taxation, 99 A.L.R. 1164.

Right of bank in computing income tax to deduction corresponding to amount which it has been required by banking authorities to write down or charge off in respect of securities held by it, 100 A.L.R. 702.

State excise, privilege, or franchise tax upon foreign corporation as affected by commerce clause, 105 A.L.R. 11; 139 A.L.R. 950.

Premium or discount at which a corporation issues or sells, or purchases or retires, its stock, bonds, or other obligations as income, or as deductible in computing income tax of corporation, 112 A.L.R. 186.

Tax on corporations as affected by fact that corporation is not actually engaged in or carrying on business for which it was incorporated, 124 A.L.R. 1109.

Transactions between affiliated corporations as basis of "bad debt" deduction in computing income tax or corporate franchise tax, 128 A.L.R. 1251.

State income tax in respect of business that extends into other states, 130 A.L.R. 1183.

Express limitations on deduction of interest paid to stockholders or their families, in computing state income tax or franchise tax of corporation, 140 A.L.R. 1350.

Validity and construction of state statutes as applied to the taxation of income derived from dividends on stock of foreign corporations, 143 A.L.R. 147.

Constitutionality, construction, and application of privilege dividend tax, 146 A.L.R. 1214.

Stock contemplated by statute imposing tax upon, or measuring it by, capital stock, 153 A.L.R. 693.

Meaning of association or joint-stock company within statutes taxing associations or joint-stock companies as corporations ("Massachusetts" or business trusts), 166 A.L.R. 1461.

Income of subsidiary as taxable to it or to parent corporation, 10 A.L.R.2d 576.

Constitutionality, construction, and application provisions of state tax law for conformity with federal income tax law or administrative and judicial interpretation, 42 A.L.R.2d 797.

Validity, under federal Constitution, of state tax on, or measured by, income of foreign corporation, 67 A.L.R.2d 1322.

Reasonableness of compensation paid to officers or employees, so as to warrant deduction thereof in computing employer's income tax, 10 A.L.R.3d 125.

Construction and application of state corporate income tax statutes allowing net operation loss deductions, 33 A.L.R.5th 509.

State income tax treatment of intangible holding companies, 11 A.L.R.6th 543.

State corporate income taxation of foreign dividends, 17 A.L.R.6th 623.

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