Chapter 5703-5 Franchise Tax

5703-5-01 Definitions applicable to rules 5703-5-01 to 5703-5-05 of the Administrative Code.

As used in rules 5703-5-01 to 5703-5-05 of the Administrative Code:

(A) "Annual accounting period" means the annual period on the basis of which the taxpayer regularly computes its income in keeping its books.

(B) "Corporate franchise tax" means the tax imposed under section 5733.06 of the Revised Code.

(C) "Corporation" includes, to the extent not exempted from the corporate franchise tax under section 5733.09 , 5733.10 , or division (J) of section 5733.04 of the Revised Code, corporations organized for profit under the laws of any state or country; nonprofit corporations organized under Chapter 1729. of the Revised Code or organized or operating, in the same or similar manner as nonprofit corporations organized under Chapter 1729. of the Revised Code, under the laws of any state or country other than Ohio; business trusts as defined in division (A) of section 1746.01 of the Revised Code; and financial institutions as defined in division (A) of section 5725.01 of the Revised Code.

(D) "Domestic corporation" includes corporations organized under the laws of this state, and federally chartered financial institutions having their principal offices within this state.

(E) "Foreign corporation" includes corporations, except federally chartered financial institutions, organized under the laws of any state or country other than Ohio, and federally chartered financial institutions having their principal offices without this state.

(F) "Internal Revenue Code" means the Internal Revenue Code of 1986, 100 Stat. 2085, 26 U.S.C. 1 , as now or hereafter amended.

(G) "Net income basis" means the base or measure of corporate franchise tax under division (B) of section 5733.05 of the Revised Code.

(H) "Net worth basis" means the base or measure of corporate franchise tax under division (A) of section 5733.05 of the Revised Code.

(I) "New taxpayer" means a domestic corporation that, during the calendar year immediately preceding the tax year, becomes chartered under the laws of this state, or a foreign corporation that, during the calendar year immediately preceding the tax year, begins doing business in this state, owning or using a part or all of its capital or property in this state, or holding a certificate of compliance with the laws of this state authorizing it to do business in this state. A domestic corporation becomes a new taxpayer on the date that it is chartered, and a foreign corporation becomes a new taxpayer on the earlier of the date that it begins doing business in this state, owning or using a part or all of its capital or property in this state, or holding a certificate of compliance with the laws of this state authorizing it to do business in this state.

(J) "Ohio net income for the period" means the total net income for the period that has been allocated and apportioned to Ohio prior to allowance of any Ohio net operating loss deduction.

(K) "Prior taxable year" means the taxable year used to measure the taxpayer's corporation franchise tax for the immediately preceding tax year.

(L) "Tax year" means the calendar year in and for which the corporate franchise tax is required to be paid.

(M) "Taxable year" means:

(1) For purposes of the net income basis, the year or portion of a year upon whose net income the value of the taxpayer's issued and outstanding shares of stock is determined;

(2) For purposes of the net worth basis, the year or portion of a year at the end of which the value of the taxpayer's issued and outstanding shares of stock is determined.

(N) "Taxpayer" means a corporation subject to the corporate franchise tax.

Eff 12-30-89
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5733.031 , 5733.04 , 5733.05

5703-5-02 Date as of which the value of a taxpayer's issued and outstanding shares of stock is determined.

(A) This rule first applies for tax year 1990. It prescribes the date as of which the value of a taxpayer's issued and outstanding shares of stock is determined. The date for valuing a taxpayer's issued and outstanding shares is governed by the taxpayer's taxable year. Rule 5703-5-03 of the Administrative Code prescribes the dates on which a taxpayer's taxable year begins and ends. Rule 5703-5-01 of the Administrative Code defines terms used in this rule.

(B) The value of a taxpayer's issued and outstanding shares of stock under the net income basis shall be determined as of the end of the taxable year prescribed in rule 5703-5-03 of the Administrative Code. The determination of such value shall be based upon income for, and property, payroll, and sales during, the taxable year.

(C) The value of a taxpayer's issued and outstanding shares of stock under the net worth basis shall be determined as of the date immediately following the end of the taxable year prescribed in rule 5703-5-03 of the Administrative Code. The determination of such value shall be based upon net worth and property on the date following, and business done during, the taxable year.

(D) The following examples illustrate the application of this rule:

(1) CORP-A has a taxable year prescribed in rule 5703-5-03 of the Administrative Code that begins on July 1, 1988 and ends on June 30, 1989.

(a) For tax year 1990, the value of CORP-A's issued and outstanding shares of stock under the net income basis is based upon net income for, and property, payroll and sales during, the period July 1, 1988 to June 30, 1989.

(b) For tax year 1990, the value of CORP-A's issued and outstanding shares of stock under the net worth basis is based upon net worth and property on July 1, 1989 and business done during the period July 1, 1988 to June 30, 1989.

(2) CORP-B has a taxable year prescribed in rule 5703-5-03 of the Administrative Code that begins on January 1, 1989 and ends on December 31, 1989. CORP-B acquires business assets from an unrelated corporation in an acquisition effective immediately following the close of business on December 31, 1989. CORP-B's closing books and records as of December 31, 1989 do not reflect the acquisition, but its opening books and records as of January 1, 1990 do.

(a) For tax year 1990, the value of CORP-B's issued and outstanding shares of stock under the net income basis is based upon net income for, and property, payroll and sales during, 1989.

(b) For tax year 1990, the value of CORP-B's issued and outstanding shares of stock under the net worth basis is based upon net worth and property on January 1, 1990 and business done during 1989.

Replaces part of rule 5703-5-03 ; Eff 1-1-72; 12-30-89
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5733.031 , 5733.04 , 5733.05

5703-5-03 Dates on which a taxpayer's taxable year begins and ends.

(A) This rule first applies for tax year 1990. It prescribes the dates on which a taxpayer's taxable year begins and ends and is subject to any modifications required by rule 5703-5-04 of the Administrative Code concerning changes of a taxpayer's annual accounting period. Rule 5703-5-01 of the Administrative Code defines terms used in this rule.

(B) A taxpayer's taxable year shall begin as follows:

(1) Unless the taxpayer is a new taxpayer, the taxable year shall begin on the date immediately following the end of the taxpayer's prior taxable year.

(2) If the taxpayer is a new taxpayer, the taxable year shall begin on the date that the taxpayer becomes a new taxpayer.

(C) A taxpayer's taxable year shall end as follows:

(1) Unless paragraph (C)(2) of this rule applies, the taxable year shall end on the date immediately preceding the beginning of the taxpayer's annual accounting period that includes the first day of January of the tax year.

(2) If the taxpayer becomes a new taxpayer at or after the beginning of the taxpayer's annual accounting period that includes the first day of January of the tax year, the taxable year shall end on the thirty-first day of December immediately preceding the tax year.

(D) For purposes of this rule, if a taxpayer has an annual accounting period that varies between fifty-two and fifty-three weeks in length, the accounting period shall be deemed to close on the last day of the calendar month nearest to the last day of the accounting period.

(E) The following examples illustrate the application of this rule:

(1) CORP-C is chartered as a domestic corporation on June 15, 1989 and adopts a November thirtieth fiscal year end. For tax year 1990, CORP-C's taxable year begins on June 15, 1989 and ends on November 30, 1989. For tax year 1991, CORP-C's taxable year begins on December 1, 1989 and ends on November 30, 1990. For tax year 1992, CORP-C's taxable year begins on December 1, 1990 and ends on November 30, 1991.

(2) CORP-D is chartered as a domestic corporation on June 15, 1989 and adopts a March thirty-first fiscal year end. For tax year 1990, CORP-D's taxable year begins on June 15, 1989 and ends on December 31, 1989. For tax year 1991, CORP-D's taxable year begins on January 1, 1990 and ends on March 31, 1990. For tax year 1992, CORP-D's taxable year begins on April 1, 1990 and ends on March 31, 1991.

(3) CORP-E, a foreign corporation having no previous taxable nexus with Ohio, obtains a certificate to do business in this state on August 2, 1989. CORP-E has an October thirty-first fiscal year end. For tax year 1990, CORP-E's taxable year begins on August 2, 1989 and ends on October 31, 1989. For tax year 1991, CORP-E's taxable year begins on November 1, 1989 and ends on October 31, 1990. For tax year 1992, CORP-E's taxable year begins on November 1, 1990 and ends on October 31, 1991.

(4) CORP-F, a foreign corporation having no previous taxable nexus with Ohio, obtains a certificate to do business in this state on August 2, 1989. CORP-F has an April thirtieth fiscal year end. For tax year 1990, CORP-F's taxable year begins on August 2, 1989 and ends on December 31, 1989. For tax year 1991, CORP-F's taxable year begins on January 1, 1990 and ends on April 30, 1990. For tax year 1992, CORP-F's taxable year begins on May 1, 1990 and ends on April 30, 1991.

(5) CORP-G has an annual accounting period that varies between fifty-two and fifty-three weeks in length. One of CORP-G's annual accounting periods ends on January 4, 1990. For tax year 1990, CORP-G's taxable year ends on January 4, 1990, which is deemed equivalent to December 31, 1989.

Replaces part of rule 5703-5-03, 5703-5-05 ; Eff 1-1-72; 2-25-72; 12-30-89
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5733.031 , 5733.04 , 5733.05

5703-5-04 Changes of a taxpayer's annual accounting period.

(A) This rule prescribes the modifications to rule 5703-5-03 of the Administrative Code required to accommodate a change of a taxpayer's annual accounting period. As used in this rule, a change of a taxpayer's annual accounting period involves a change in the year-end of that accounting period. If, as the result of a change of ownership, a taxpayer has two short-period federal taxable years because of the taxpayer's inclusion in one or more consolidated federal income tax returns, and if the year-end of the taxpayer's annual accounting period remains the same after the change of ownership as it was before the change, then there is no change of the taxpayer's annual accounting period for purposes of this rule. Rule 5703-5-01 of the Administrative Code defines terms used in this rule.

(B) Rule 5703-5-03 of the Administrative Code prescribes the dates on which a taxpayer's taxable year begins and ends. Unless the taxpayer is a new taxpayer, the taxable year begins on the date immediately following the end of the taxpayer's prior taxable year and ends on the date immediately preceding the beginning of the taxpayer's annual accounting period that includes the first day of January of the tax year.

The taxpayer's annual accounting period is used for the taxpayer's computation of income for book purposes. It is ordinarily a period of one year in duration (three hundred sixty-five days, or three hundred sixty-six days if the period includes the twenty-ninth day of February), although it may vary between fifty-two and fifty-three weeks in length.

Since the taxable year ends on the date immediately preceding the beginning of the taxpayer's annual accounting period, the taxable year also generally consists of a period of one year. However, as the result of a change of a taxpayer's annual accounting period, the period prescribed in rule 5703-5-03 of the Administrative Code may be less than or more than one year. Furthermore, if the change occurs because of a change in ownership, the period prescribed in rule 5703-5-03 of the Administrative Code may be difficult to determine or inappropriate to use. Therefore, in the case of a change in the taxpayer's annual accounting period, the following shall apply:

(1) If the taxpayer changes its annual accounting period and the change is not in conjunction with a change of ownership, the period prescribed in rule 5703-5-03 of the Administrative Code shall be the taxable year.

(2) If the taxpayer changes its annual accounting period from one year-end (the "old year-end") to another year-end (the "new year-end") in conjunction with a change in ownership during the calendar year immediately preceding the tax year, the tax year shall be based on a taxable year that ends on the following date in lieu of the date specified in paragraph (C)(1) of rule 5703-5-03 of the Administrative Code:

(a) If the taxpayer's old year-end was on or before the date of acquisition, the old year-end shall be the ending date.

(b) If paragraph (B)(2)(a) of this rule does not apply and the taxpayer's new year-end is on or after the date of acquisition, the new year-end shall be the ending date.

(c) If neither paragraph (B)(2)(a) nor (B)(2)(b) of this rule applies, the date of acquisition shall be the ending date.

(d) For purposes of determining the sequence of dates specified in paragraph (B)(2) of this rule, the old year-end and the new year-end are dates ending in the same calendar year as the date of acquisition.

(C) The following examples illustrate the application of this rule:

(1) For tax year 2004, CORP-H had a taxable year that ended on September 30, 2003. Between September 30, 2003 and June 30, 2004, CORP-H changed the year-end of its annual accounting period from September thirtieth to June thirtieth.

CORP-H's annual accounting period that includes January 1, 2005 begins on July 1, 2004. For tax year 2005, CORP-H's taxable year begins on October 1, 2003 and ends on June 30, 2004 in accordance with paragraph (B)(1) of this rule.

(2) For tax year 2004, CORP-I had a taxable year that ended on June 30, 2003. Between June 30, 2004 and September 30, 2004, CORP-I changed the year-end of its annual accounting period from June thirtieth to September thirtieth.

CORP-I's annual accounting period that includes January 1, 2005 begins on October 1, 2004. For tax year 2005, CORP-I's taxable year begins on July 1, 2003 and ends on September 30, 2004 in accordance with paragraph (B)(1) of this rule.

(3) CORP-J was a wholly owned subsidiary of OLDPARENT, and each had an April thirtieth fiscal year-end. As the result of a sale on July 31, 2004, CORP-J becomes a wholly owned subsidiary of NEWPARENT, who has an November thirtieth fiscal year-end. Accordingly, CORP-J adopts a November thirtieth year-end for its annual accounting period.

CORP-J was included in consolidated federal returns with OLDPARENT for the periods May 1, 2002 to April 30, 2003, May 1, 2003 to April 30, 2004 and May 1, 2004 to July 31, 2004, and is included in consolidated federal returns with NEWPARENT for the periods August 1, 2004 to November 30, 2004, December 1, 2004 to November 30, 2005 and December 1, 2005 to November 30, 2006.

For tax year 2004, CORP-J had a taxable year that ended on April 30, 2003. For tax year 2005, CORP-J's taxable year begins on May 1, 2003; it ends on April 30, 2004 in accordance with paragraph (B)(2)(a) of this rule. For tax year 2006, CORP-J's taxable year begins on May 1, 2004 and ends on November 30, 2005. For tax year 2007, CORP-J's taxable year begins on December 1, 2005 and ends on November 30, 2006.

(4) CORP-K was a wholly owned subsidiary of OLDOWNER, and each had an April thirtieth fiscal year-end. As the result of a sale on January 31, 2004, CORP-K becomes a wholly owned subsidiary of NEWOWNER, who has a November thirtieth fiscal year-end. Accordingly, CORP-K adopts a November thirtieth year-end for its annual accounting period.

CORP-K was included in consolidated federal returns with OLDOWNER for the periods May 1, 2002 to April 30, 2003 and May 1, 2003 to January 31, 2004, and is included in consolidated federal returns with NEWOWNER for the periods February 1, 2004 to November 30, 2004 and December 1, 2004 to November 30, 2005.

For tax year 2004, CORP-K had a taxable year that ended on April 30, 2003. For tax year 2005, CORP-K's taxable year begins on May 1, 2003; it ends on November 30, 2004 in accordance with paragraph (B)(2)(b) of this rule. For tax year 2006, CORP-K's taxable year begins on December 1, 2004 and ends on November 30, 2005.

(5) CORP-L was a wholly owned subsidiary of OLDCORP, and each had a November thirtieth fiscal year-end. As the result of a sale on July 31, 2004, CORP-L becomes a wholly owned subsidiary of NEWCORP, who has an April thirtieth fiscal year-end. Accordingly, CORP-L adopts an April thirtieth year-end for its annual accounting period.

CORP-L was included in consolidated federal returns with OLDCORP for the periods December 1, 2002 to November 30, 2003 and December 1, 2003 to July 31, 2004, and is included in consolidated federal returns with NEWCORP for the periods August 1, 2004 to April 30, 2005 and May 1, 2005 to April 30, 2006.

For tax year 2004, CORP-L had a taxable year that ended on November 30, 2003. For tax year 2005, CORP-L's taxable year begins on December 1, 2003; it ends on July 31, 2004 in accordance with paragraph (B)(2)(c) of this rule. For tax year 2006, CORP-L's taxable year begins on August 1, 2004 and ends on April 30, 2005. For tax year 2007, CORP-L's taxable year begins on May 1, 2005 and ends on April 30, 2006.

(6) CORP-M was a wholly owned subsidiary of PARENT-1, and each had a November thirtieth fiscal year-end. As the result of a sale on July 31, 2004, CORP-M becomes a wholly owned subsidiary of PARENT-2, who also has a November thirtieth fiscal year-end. Accordingly, CORP-M retains a November thirtieth year-end for its annual accounting period and has had no change of its annual accounting period for purposes of this rule.

CORP-M was included in consolidated federal returns with PARENT-1 for the periods December 1, 2002 to November 30, 2003 and December 1, 2003 to July 31, 2004, and is included in consolidated federal returns with PARENT-2 for the periods August 1, 2004 to November 30, 2004 and December 1, 2004 to November 30, 2005.

For tax year 2004, CORP-M had a taxable year that ended on November 30, 2003. For tax year 2005, CORP-M's taxable year begins on December 1, 2003 and ends on November 30, 2004, the period prescribed in rule 5703-5-03 of the Administrative Code. For tax year 2006, CORP-M's taxable year begins on December 1, 2004 and ends on November 30, 2005.

Replaces part of rule 5703-5-04; Eff 2-25-72; 1-4-89; 1-1-04
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5733.031 , 5733.04 , 5733.05

5703-5-05 Taxes excludable in computing the corporate franchise tax under the net worth basis.

(A) This rule first applies for tax year 1990. It prescribes those taxes that are excludable in computing the corporate franchise tax under the net worth basis. Rule 5703-5-01 of the Administrative Code defines terms used in this rule.

(B) For purposes of determining the value of a corporation's issued and outstanding shares of stock under the net worth basis, taxes reflected on the books of the corporation may be excluded in accordance with division (A)(2) of section 5733.05 of the Revised Code and "Kroger Co. v. Bowers" (1965), 3 Ohio St. 2d 76, if both of the following conditions are met:

(1) The taxes were occasioned by or accrued because of the activities or operations of the corporation for or during the taxable year.

(2) The taxes are due and payable during the tax year.

(C) Taxes not excludable under paragraph (B) of this rule shall not be excluded as "other valuation reserves" pursuant to division (A)(1) of section 5733.05 of the Revised Code. The term "other valuation reserves" applies solely to those reserves that are regularly and consistently employed by the corporation in the ordinary course of its business and that are recognized and regarded as part of the corporation's accounting records.

Replaces part of rule 5703-5-01 (former 5703-5-02); Eff 1-1-72; 1-4-89
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5733.031 , 5733.04 , 5733.05

5703-5-06 Combined reporting of the corporation franchise tax.

For the purpose of determining the Ohio corporation franchise tax, levied for the corporation's privilege of doing business in this state, owning or using a part or all of its capital or property in this state, or holding a certificate of compliance with the laws of this state authorizing it to do business in this state during the calendar year, two or more taxpayers may elect, or the Tax Commissioner may require corporations to file a combined report pursuant to Section 5733.052 of the Revised Code.

Combined reporting, whether elected, permitted or required, shall reflect combined net incomes, combined apportionment factors, and the elimination of intercorporate transactions and dividends necessary to measure the proper extent of the combined corporations' business activities in Ohio for purposes of the corporation franchise tax.

(A) Taxpayers' Election - Combined Reporting

An election to file combined franchise tax reports may be exercised by two or more corporate taxpayers pursuant to Section 5733.052 , Revised Code, subject to the following:

(1) The elected combination shall include only corporations subject to the Ohio franchise tax imposed by Chapter 5733. of the Revised Code;

(2) The elected combination shall include the taxpayer corporation that owns or controls, directly, indirectly, or through related interests, more than fifty (50) percent of the capital stock with voting rights of the other taxpayer corporation(s) in the combination;

(3) The elected combination shall include one or more other taxpayer corporations more than fifty (50) percent of the capital stock with voting rights of which are owned or controlled, directly, indirectly, or through related interests by another taxpayer corporation in the combination;

(4) The elected combination constitutes a proper measurement of the taxpayer corporations' annual franchise tax as reflected by the use of combined net incomes, combined apportionment factors, elimination of intercorporate transactions and dividends, and the absence of other taxpayer corporations eligible, but excluded, from such combination.

The election to file combined franchise tax reports, once made, shall be binding upon all corporations which so elected or which could have so elected. An election pursuant to Division (A) of this Rule will be considered exercised by the filing of an annual franchise tax report reflecting combined reporting therein. This election shall not be amended or altered by the taxpayer corporations except when specifically required or specifically permitted by the Tax Commissioner.

(B) Tax Commissioner's Authority - Combined Reporting

Pursuant to Section 5733.052 , Revised Code, the Tax Commissioner may, in order to achieve the proper measurement of franchise tax for a taxpayer corporation and interrelated corporations, require or permit:

(1) The addition to or deletion from an elected combined report of any taxpayer corporation or any other corporation that owns, directly, indirectly, or through related interests, more than fifty (50) percent of the capital stock with voting rights of one or more taxpayer corporations in such elected combined report;

(2) The addition to or deletion from an elected combined report of any taxpayer corporation or any other corporation more than fifty (50) percent of the capital stock with voting rights of which is owned, directly, indirectly, or through related interests by one or more taxpayer corporations in such elected combined report;

(3) The combined reporting by or the separate reporting of any taxpayer corporations or any other corporations interrelated by the ownership, directly, indirectly, or through related interests, of more than fifty (50) percent of the capital stock with voting rights;

(4) The modification of combined reporting by the use, if reasonable, of;

(a) separate accounting;

(b) the exclusion of one or more factors;

(c) the inclusion of one or more additional factors.

Any combined or separate reporting required by the Tax Commissioner pursuant to Division (B) of this Rule shall be effective only upon written notice to that effect served upon the subject corporations.

(C) Procedures for Permission or Alteration - Combined Reporting

Requests for permission to file combined reports that do not qualify for election under Division (A) of this Rule, or requests to amend existing elected, required, or permitted combined reports must be filed with the Tax Commissioner, using form FT-COM prescribed for such purpose. The filing of a properly completed form FT-COM shall constitute:

(1) For current and future reports, tentative approval to reflect the requested combined reporting, alterations, or amendments in the annual report next due, subject to final approval or rejection by the Tax Commissioner;

(2) For prior reports, an application for refund pursuant to Section 5733.12 , Revised Code, to the extent the requested combined reporting, alterations, or amendments constitute a claim for refund of payments within the statute of limitations period set forth in Section 5733.12 , Revised Code.

(D) Reporting Requirements - Combined Reporting

Under combined reporting, whether elected, permitted, or required, the annual franchise tax report shall include form FT-1120C, prescribed for such purposes. The tax charged on the annual combined report shall be the greater of the sum determined by application of divisions (A) and (B) of Section 5733.06 , Revised Code, to the combined value of the issued and outstanding stock of the combined corporations as reflected by the net income of such corporations apportioned and allocated to Ohio or by application of division (C) of Section 5733.06 to the value of the issued and outstanding stock of the combined corporations as determined under division (A) of Section 5733.05 of the Revised Code.

Each corporation in a combined franchise tax report must compute the value of its issued and outstanding shares of stock pursuant to divisions (A) and (B) of Section 5733.05 , Revised Code, as of the year end and for the period required by Rule 5703-5-03foreachcorporation.

In addition, the annual franchise tax combined report shall include:

(1) An identification of and a description of any interrelated ownership interests between taxpayer corporations in the combined report and any eligible taxpayer corporations not participating in the combined report;

(2) Where an election to file combined reports was made by less than all eligible taxpayer corporations, an explanation of the reason for the nonparticipation by such eligible taxpayer corporations;

(3) A summary of the types of intercorporate transactions occurring between taxpayer corporations in the combined report and eligible, nonparticipating taxpayer corporations.

(former TX-43-08); Eff 2-29-76
Rule promulgated under: RC 5703.14

5703-5-07 Allowance for expenditures to remove architectural barriers in determining the value of issued and outstanding shares of stock on the net income basis of the corporation franchise tax.

Pursuant to the provisions of Amended Substitute Senate Bill No. 162, effective July 23, 1976, and federal Public Law 94-455, effective October 4, 1976, a deduction of expenditures for modifying architectural barriers to the handicapped may be reflected in the determination of the value of issued and outstanding shares of stock on the net income basis of the corporation franchise tax.

Such deduction shall be available to taxpayers making the election afforded by section 190 of the Internal Revenue Code, and shall consist of those expenditures qualified under and limited by section 190 and the regulations prescribed thereunder.

This rule and the deduction permitted hereunder shall first apply to taxable years beginning after 1976.

Eff 2-7-77
Rule promulgated under: RC 5703.14
Rule amplifies: RC 5733.04

5703-5-08 Books from which the value of issued and outstanding shares of stock is determined under the net worth basis of the corporation franchise tax.

If a taxpayer keeps books both in accordance with regulatory accounting principles and in accordance with generally accepted accounting principles, the value of the taxpayer's issued and outstanding shares of stock under division (A) of section 5733.05 of the Revised Code shall be based upon those books kept in accordance with generally accepted accounting principles.

Replaces part of rule 5703-5-08; Eff 12-14-84
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.07
Rule amplifies: RC 5733.05

5703-5-10 Corporate franchise tax; accounts maintained under Statement of Financial Accounting Standards No. 106.

For purposes of determining the value of its issued and outstanding shares of stock under division (A) of section 5733.05 of the Revised Code, a taxpayer is not required to add to its net worth as a reserve any account, whether shown on the taxpayer's books as a liability or a reserve, that results from and is maintained in accordance with "Statement of Financial Accounting Standards No. 106" issued by the "Financial Accounting Standards Board."

This rule does not apply to any account for taxes. Rule 5703-5-05 of the Administrative Code prescribes the excludability of taxes.

Eff 11-27-94
Rule promulgated under: RC 5703.14
Rule authorized by: RC 5703.05
Rule amplifies: RC 5733.05