GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2009

SESSION LAW 2009-422

SENATE BILL 367

AN ACT to remove billings in excess of costs from the franchise tax capital base for taxpayers using the percentage of completion method of revenue recognition.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 105-122(b) is amended by adding a new subdivision in the list of exclusions from surplus and undivided profits to read:

"(b)      Determination of Capital Base. - A corporation taxed under this section shall determine the total amount of its issued and outstanding capital stock, surplus, and undivided profits. No reservation or allocation from surplus or undivided profits is allowed except as provided below:

…

(1a) Billings in excess of costs that are considered a deferred liability under the percentage of completion method of revenue recognition."

SECTION 2.  This act is effective for taxable years beginning on or after January 1, 2010.

In the General Assembly read three times and ratified this the 27^th day of July, 2009.

                                                                    s/  Walter H. Dalton

                                                                         President of the Senate

                                                                    s/  Joe Hackney

                                                                         Speaker of the House of Representatives

                                                                    s/  Beverly E. Perdue

                                                                         Governor

Approved 2:35 p.m. this 5^th day of August, 2009