§602. Determination of taxable capital
A. Taxable capital.
(1) Taxable capital shall be the amount of a corporation's issued and outstanding
capital stock, surplus, and undivided profits.
(2) Every corporation taxed under this Chapter shall determine the amount of its
issued and outstanding capital stock, surplus, and undivided profits as the basis for
computing the franchise tax levied under this Chapter and determining the extent of the use
of its franchise in this state.
B. Holding corporation deduction. Any corporation having as a subsidiary a banking
corporation as defined below shall be entitled to deduct from its taxable capital, as defined
in this Chapter, its investments in and advances to such subsidiary banking corporation to
the extent that such investments and advances exceed the difference between the total assets
and the taxable capital of the holding corporation. "Subsidiary banking corporation" is
defined to be a banking corporation organized under the laws of the United States of America
or of the state of Louisiana the capital stock of which to an extent of at least eighty percent
is owned by a holding corporation.
C. Public utility holding corporation deductions. Any corporation registered under
the Public Utility Holding Company Act of 1935* having subsidiary corporations as defined
hereinbelow, shall be entitled to deduct from the amount of its Louisiana taxable capital the
amount of its investments in and advances to subsidiary corporations allocated to Louisiana
as provided herein. The amount of the deduction allowed shall be determined by multiplying
the sum of the regulated company's investments in and advances to all of its subsidiary
corporations wherever located, by the parent corporation's average ratio as determined
pursuant to R.S. 47:606. If the amount of its franchise tax calculated by utilizing the
applicable formula provided for in R.S. 47:601 is less than one hundred thousand dollars for
any tax year, then the tax for such year shall be one hundred thousand dollars. "Subsidiary
corporation" is defined to be a corporation in which at least eighty percent of the voting
power of all classes of its stock, not including nonvoting stock which is limited and preferred
as to dividends, is owned by a registered public utility holding corporation. Any repeal of
the Public Utility Holding Company Act of 1935 shall not affect the entitlement to
deductions under this Subsection of corporations registered under the provisions of the
Public Utility Holding Company Act of 1935 prior to its repeal.
D. Holding corporation deductions. (1) Any corporation having one or more
subsidiary public water utility corporations as defined herein shall be entitled to deduct from
the amount of its taxable capital the amount of its investments in and advances to the
subsidiary public water utility corporation in computing its franchise tax.
(2) "Subsidiary public water utility corporation" is defined to be any public utility
corporation organized under the laws of the state of Louisiana, subject to the jurisdiction of
the Public Service Commission under R.S. 45:1161 et seq., engaged in operating a
waterworks or in furnishing water and related services, and in which at least eighty percent
of the voting power of all classes of its stock, not including nonvoting stock which is limited
and preferred as to dividends and stock which is otherwise nonvoting during the taxable year,
is owned by a holding corporation.
E. Deduction for members of certain controlled groups.
(1) Any corporation in a controlled group, having as a member of such group a
telephone corporation regulated by the Louisiana Public Service Commission, shall be
entitled to deduct from its taxable capital, as defined in this Chapter, its investment in and
advances to any member of the controlled group.
(2) For purposes of this Subsection, "controlled group" is defined to be a group of
affiliated corporations at least one of which is regulated by the Louisiana Public Service
Commission and holds a certificate of public convenience and necessity issued by the
Louisiana Public Service Commission to provide local exchange telephone service and other
members of which are engaged in providing telephone, cellular, microwave, paging, data-transmission, or other telecommunications services and includes subsidiary, brother-sister,
or tier corporations engaged in the sale, manufacture, maintenance, financing, or installation
of equipment to facilitate the providing of telephone and other related services, and the
capital stock of which, to an extent of at least eighty percent, is owned by another member
of the controlled group. This Subsection shall not apply to any corporation primarily
engaged in activity unrelated to the telecommunications services referred to in the
Subsection.
F. Insurance holding corporation deduction. For tax years beginning on and after
July 1, 2002 and before January 1, 2005, any corporation owning at least eighty percent of
the capital stock of a subsidiary property and casualty insurance corporation, such subsidiary
having capital and surplus of less than twenty million dollars, shall be entitled to deduct from
the amount of its taxable capital the amount of its investments in and advances to such
subsidiary insurance corporation that was allocated to Louisiana under R.S. 47:606(B).
G. Holding company deduction.
(1) Any corporation, as defined in R.S. 47:601(C), that is subject to the franchise tax
imposed by R.S. 47:601(A) and that is not subject to Subsection B, C, D, E, or F of this
Section, that has one or more subsidiaries as defined hereinbelow, shall be entitled to deduct
from its taxable capital, as defined in this Chapter, its investments in and advances to one or
more subsidiaries, whether made directly or indirectly, in computing its franchise tax as
provided herein.
(2) For purposes of this Subsection, "subsidiaries" shall be defined as any
corporation, as provided for in R.S. 47:601(C), that is subject to the franchise tax imposed
by R.S. 47:601(A), and in which at least eighty percent of the voting and nonvoting power
of all classes of their stock, membership, partnership, or other ownership interests are owned,
directly or indirectly, by a corporation subject to the franchise tax imposed by R.S.
47:601(A).
(3) The amount of the deductions allowed by this Subsection shall be the sum of the
amounts determined by multiplying parent corporation's investments in and advances to each
subsidiary by each subsidiary's average ratio, as determined pursuant to R.S. 47:606.
(4) Any direct or indirect subsidiary of a regulated company, as provided for in
Subsection C of this Section, that directly owns at least eighty percent of the voting power
of the stock, membership, partnership, or other ownership interests in a "public-utility
company", as defined by the Public Utility Holding Company Act of 1935 prior to its repeal,
may use the holding corporation deduction provided in this Subsection with respect to
investments in and advances to subsidiary corporations or subsidiary limited liability
companies to calculate its taxable capital.
H. The deduction for "investments in and advances to" as provided for in this Section
shall only include amounts included in the taxable capital of the recipient.
Acts 1970, No. 385, §1; Acts 1973, No. 119, §1; Acts 1982, No. 34, §1; Acts 1990,
No. 385, §1, eff. Jan. 1, 1991; Acts 1994, No. 40, §1, eff. for all taxable periods beginning
after Dec. 31, 1994; Acts 1994, 3rd Ex. Sess., No. 134, §1, eff. July 7, 1994, applicable to
any taxable period beginning on or after Jan. 1, 1994; Acts 2002, No. 59, §1, eff. for taxable
years beginning after June 30, 2002, and before Jan. 1, 2005; Acts 2004, 1st Ex. Sess., No.
2, §1, eff. Jan. 1, 2006; Acts 2008, 2nd Ex. Sess., No. 10, §1, eff. May 13, 2008, for taxable
periods beginning on or after July 1, 2008, and §2, eff. for taxable periods beginning on or
after Jan. 1, 2011; Acts 2016, 1st Ex. Sess., No. 12, §2, eff. March 10, 2016.
*15 U.S.C.A. §79 et seq.
NOTE: See Acts 2016, 1st Ex. Sess., No. 12, §3, regarding applicability.