Title 15 . Revenue

Chapter 20 . (Repealed)

Section 140. Determination of net capital gain or loss

15 AAC 20.140. Determination of net capital gain or loss

(a) A taxpayer's net capital gain may be taxed at the alternative tax rate as provided in AS 43.20.021 (c). A taxpayer may not deduct its net capital loss in determining taxable income. A taxpayer shall carry back or carry forward its net capital loss in accordance with Internal Revenue Code section 1212 (26 U.S.C. 1212).

(b) A taxpayer shall determine its net capital gain and net capital loss by applying Internal Revenue Code sections 1201 - 1259 (26 U.S.C. 1201 - 26 U.S.C. 1259) to its gains and losses as apportioned and allocated to Alaska.

(c) For purposes of illustrating the method of determining the taxpayer's net capital gain and loss under (b) of this section, the following example is offered:

EXAMPLE

Taxpayer A realized $100 of business capital gain and $200 of non-business capital loss, which is allocable to another state. Taxpayer A's Alaska apportionment factor is 15 percent. Taxpayer A has no federal or Alaska capital loss carryforward from prior years. Taxpayer A has a federal net capital gain of zero, and a federal excess capital loss of $100. Taxpayer A's apportioned business capital gain is $15 ($100 X 15 percent). Its Alaska net capital gain is $15, the sum of its Alaska allocated capital gain or loss of zero and its apportioned business capital gain of $15.

(d) For purposes of determining net capital gain or loss, the department will, in its discretion, exclude from the determination the gains and losses realized by all foreign corporations, as defined in Internal Revenue Code section 7701(a) (26 U.S.C. 7701(a)), that are included in the combined report if a taxpayer cannot substantiate with reasonable certainty a full and accurate accounting for gains and losses of each foreign corporation sufficient to determine the taxpayer's net capital gain or loss under this section. A taxpayer may elect to treat the capital gains and losses of all foreign corporations that are included in its combined report as ordinary gains and losses. An election to treat the capital gains and losses of all foreign corporations as ordinary gains and losses shall be deemed to have been made by the taxpayer if the taxpayer fails to maintain records sufficient for the department to determine with reasonable certainty that there has been a full and accurate accounting for the gains and losses of each foreign corporation. An election under this subsection is irrevocable for the current and subsequent tax years without the consent of the department.

History: Eff. 3/6/98, Register 145

Authority: AS 43.05.080

AS 43.20.021