Title 15 . Revenue

Chapter 21 . (Repealed)

Section 280. Deduction for uncapitalized interest

15 AAC 21.280. Deduction for uncapitalized interest

(a) Subject to the limitations in (b) of this section, a deduction is allowed in determining a taxpayer's taxable production income during a year for interest paid or incurred to third parties by the taxpayer that year, in connection with oil and gas production in Alaska, which was not capitalized by the taxpayer for financial accounting purposes.

(b) Unless a corporation demonstrates to the satisfaction of the department that it paid or incurred greater actual expenses for interest attributable to deriving income from oil or gas production in the state, the deduction under (a) of this section for interest by a taxpayer for any year may not exceed an amount equal to the total interest paid worldwide that year by the consolidated business of which the taxpayer is a part, multiplied by a fraction whose numerator equals the net book value (as of the end of that year) for financial accounting purposes of the taxpayer's real and tangible personal property of the type described in 15 AAC 21.250 and 15 AAC 21.260 (excluding the estimated value of the taxpayer's remaining oil and gas reserves), and whose denominator is the net book value (as of the end of that year) for financial accounting purposes of all real and tangible personal property (excluding the estimated value of remaining oil and gas reserves) worldwide of the consolidated business of which the taxpayer is a part. In this subsection, "total interest paid by the consolidated business" includes only interest paid to third parties plus the pass-through of interest on third-party borrowings by any member of the consolidated business for the expressed purpose of financing the Alaska business activity of the taxpayer.

History: Eff. 2/22/79, Register 69; am 3/26/82, Register 81

Authority: AS 43.05.080

AS 43.19.010 ,

Art. IV, § 18

AS 43.21.020

AS 43.21.090