WRITING ASSIGNMENT #3 REQUIREMENT: Review the Lesson 5 Poweroint and Reading from the NC Guidebook. Based on what you read, discuss the reasons why the convenience Stores Corporation ACCEPTABLE LENGTH Submit a paper that is 1 page. Be sure to review the requirements on the Rubric. FORMATTING REQUIREMENTS 12-Point Times New Roman Font Double Space Lines Cite Used Sources If Applicable TO SUBMIT Upload the completed paper in in MS Word document through this assignment link. WHO SHOULD FILE? Unless specifically exempt under G.S. 105-125, all active and inactive domestic corporations, and all foreign corporations with a Certificate of Authority to do business, or which are in fact doing business in this state, are subject to the annual franchise tax levied under G.S. 105-122. If an LLC is treated as a C Corporation for federal tax purposes and a corporate member's only connection to North Carolina is its ownership interest in the LLC, the corporate member(s) is not required to file a North Carolina corporate income and franchise tax return. The corporate member(s) is not required to file in this circumstance because the LLC reports its North Carolina income at the entity level and the apportionment attributes of the LLC do not flow through to the corporate member(s) as is the case when the LLC is disregarded or is treated as a partnership. If an LLC is treated as a C Corporation for federal tax purposes and a corporate member has activities in this state in addition to its ownership interest in the LLC, the corporate member(s) is required to file a corporate income and franchise tax return. WHEN TO FILE? Franchise and income tax returns are due on the 15th day of the fourth month following the close of the income year. An income year ending on any day other than the last day of the month is deemed to end on the last day of the calendar month ending nearest to the last day of the actual income year. Income tax returns for cooperative or mutual associations are due on or before the 15th day of the ninth month following the close of the income year; however, these corporations, if subject to franchise tax, must file a franchise tax return by the 15th day of the fourth month following the close of the income year. Exception to the General Statute of Limitations for Certain Events N.C. Gen. Stat. $ 105-241.6615) provides an exception to the general statute of limitations for obtaining a refund of an overpayment due to a contingent event or an event or condition other than a contingent event. The statute addresses specific situations when the general statute of limitations in N.C. Gen. Stat. 105-241.6(a) may not apply. A contingent event is litigation or a state tax audit initiated prior to the expiration of the statute of limitations which prevents a taxpayer from possessing the information necessary to file an accurate and definite request for refund of an overpayment. An event or condition other than a contingent event is an event or condition other than litigation or a state tax audit that has occurred that prevents the taxpayer from filing an accurate and definite request for refund of an overpayment within the general statute of limitations. CONTINGENT EVENT A taxpayer who is subject to a contingent event must file written notice with the Secretary of Revenue prior to the expiration of the statute of limitations. The notice filed with the Secretary of Revenue must identify and describe the contingent event, identify the type of tax affected by the contingent event, list the return or payment affected by the contingent event, and state in clear terms the basis used to determine the estimated amount of the overpayment. Complete Parts 1 and 2 of Form NC 14. Notice of Contingent Event or Request to Extend Statute of Limitations, to file the notice with the Secretary of Revenue. In lieu of completing Form NC-14, you may mail a letter containing all of the required information identified on Form NC-14. Form NC-14 or a letter sent in lieu of Form NC-14 will not be accepted if it does not include all of the required information or is not filed prior to the expiration of the statute of limitations. The Department will notify you in writing that either (!) the contingent event notice has been received with all reguired information or (2) the contingent event notice has been received without all required information, A request for a refund of an overpayment must be filed within six months after the contingent event concludes. Include a copy of the Department's acknowledgment of an accepted notice. Franchise Tax Bases The taxable franchise tax base is the largest of these tax bases: - Net Worth - Fifty-five percent (55%) of appraised value of real and tangible personal property in N.C Actual investment in tangible property in North Carolina NET WORTH Based on Year End Balance Sheet Net worth is measured as of the end of the taxable year using generally accepted accounting principles ("GAAP"). If the corporation does not use GAAP in maintaining its books and records, then net worth may be computed using the same accounting method used for federal income tax purposes, so long as this method fairly represents the corporation's net worth for franchise tax purposes. Net Worth Defined A corporation's net worth is defined as the total assets of the corporation without regard to deductions for accumulated depreciation, depletion, or amortization minus total liabilities. Investment in Tangible Properties in North Carolina Basis for the Investment In order to calculate the investment in tangible properties in North Carolina, include the original purchase price of tangible properties plus additions and improvements and less reserve for depreciation permitted for income tax purposes of all tangible property, including real estate located in North Carolina at the end of the income year immediately preceding the due date of the return. What is includable in the Investment Calculation (17 NCAC 05B.1302) Include all tangible assets located in North Carolina at original purchase price less reserve for depreciation permitted for income tax purposes. In addition to the types of property listed in the schedule, include all other langible property owned such as supplies and tools. Typical items of tangible property include: Inventory (valued at actual cost or by method consistent with the actual flow of goods), consigned inventories to be included by consignor, machinery and equipment, furniture and foxtures, containers, tools and supplies, land, buildings, leasehold improvements, and all other tangible assets. Treatment of Construction In Progress (17 NCAC 05B.1303) Construction in progress is excluded from this base only if such property is not owned by the corporation filing the return. Determination of Inclusion Based on Depreciation Deduction (17 NCAC 05B.1309) When two or more corporations are in doubt as to which should include property, including leased property, in the calculation of the investment in tangible property, such property shall be included by the corporation allowed depreciation under the Federal Code. Holding Company There is no limitation on the franchise tax payable by a holding company on its investment in tangible property in North Carolina Investment in Tangible Properties in North Carolina Base In order to calculate the investment in tangible properties in North Carolina, include the original purchase price of tangible properties plus additions and improvements and less reserve for depreciation permitted for income tax purposes of all tangible property, including real estate located in North Carolina at the end of the income year immediately preceding the due date of the return. Appraised Valuation of Tangible Property Base Tangible property values for this base are computed on fifty- five percent (55%) of the appraised value of all property listed for county ad valorem tax in North Carolina as of January 1 of the calendar year next preceding the due date of the return. Note: Also included in the appraised value of property for county ad valorem taxis the appraised value of all vehicles for which the county tax assessor has issued a billing during the income year. Franchise Tax Rate The franchise tax rate is one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) and is applied as set forth in the law. For tax years beginning on or after January 1, 2017, the minimum franchise tax is two hundred dollars ($200). For tax years beginning prior to January 1, 2017, the minimum franchise tax was thirty-five dollars ($35). Corporation Income Tax An income tax is levied on the net taxable income of all corporations chartered in North Carolina or doing business in North Carolina, unless they are specifically exempt from tax under G.S. 105-130.11. Net taxable income shall be the same as taxable income as defined in the Internal Revenue Code in effect for the income year for which the returns are to be filed, subject to the adjustments provided in G.S. 105-130.5. The corporate income tax rates are as followed: - 2018= 3% 2019=2.5% WRITING ASSIGNMENT #3 REQUIREMENT: Review the Lesson 5 Poweroint and Reading from the NC Guidebook. Based on what you read, discuss the reasons why the convenience Stores Corporation ACCEPTABLE LENGTH Submit a paper that is 1 page. Be sure to review the requirements on the Rubric. FORMATTING REQUIREMENTS 12-Point Times New Roman Font Double Space Lines Cite Used Sources If Applicable TO SUBMIT Upload the completed paper in in MS Word document through this assignment link. WHO SHOULD FILE? Unless specifically exempt under G.S. 105-125, all active and inactive domestic corporations, and all foreign corporations with a Certificate of Authority to do business, or which are in fact doing business in this state, are subject to the annual franchise tax levied under G.S. 105-122. If an LLC is treated as a C Corporation for federal tax purposes and a corporate member's only connection to North Carolina is its ownership interest in the LLC, the corporate member(s) is not required to file a North Carolina corporate income and franchise tax return. The corporate member(s) is not required to file in this circumstance because the LLC reports its North Carolina income at the entity level and the apportionment attributes of the LLC do not flow through to the corporate member(s) as is the case when the LLC is disregarded or is treated as a partnership. If an LLC is treated as a C Corporation for federal tax purposes and a corporate member has activities in this state in addition to its ownership interest in the LLC, the corporate member(s) is required to file a corporate income and franchise tax return. WHEN TO FILE? Franchise and income tax returns are due on the 15th day of the fourth month following the close of the income year. An income year ending on any day other than the last day of the month is deemed to end on the last day of the calendar month ending nearest to the last day of the actual income year. Income tax returns for cooperative or mutual associations are due on or before the 15th day of the ninth month following the close of the income year; however, these corporations, if subject to franchise tax, must file a franchise tax return by the 15th day of the fourth month following the close of the income year. Exception to the General Statute of Limitations for Certain Events N.C. Gen. Stat. $ 105-241.6615) provides an exception to the general statute of limitations for obtaining a refund of an overpayment due to a contingent event or an event or condition other than a contingent event. The statute addresses specific situations when the general statute of limitations in N.C. Gen. Stat. 105-241.6(a) may not apply. A contingent event is litigation or a state tax audit initiated prior to the expiration of the statute of limitations which prevents a taxpayer from possessing the information necessary to file an accurate and definite request for refund of an overpayment. An event or condition other than a contingent event is an event or condition other than litigation or a state tax audit that has occurred that prevents the taxpayer from filing an accurate and definite request for refund of an overpayment within the general statute of limitations. CONTINGENT EVENT A taxpayer who is subject to a contingent event must file written notice with the Secretary of Revenue prior to the expiration of the statute of limitations. The notice filed with the Secretary of Revenue must identify and describe the contingent event, identify the type of tax affected by the contingent event, list the return or payment affected by the contingent event, and state in clear terms the basis used to determine the estimated amount of the overpayment. Complete Parts 1 and 2 of Form NC 14. Notice of Contingent Event or Request to Extend Statute of Limitations, to file the notice with the Secretary of Revenue. In lieu of completing Form NC-14, you may mail a letter containing all of the required information identified on Form NC-14. Form NC-14 or a letter sent in lieu of Form NC-14 will not be accepted if it does not include all of the required information or is not filed prior to the expiration of the statute of limitations. The Department will notify you in writing that either (!) the contingent event notice has been received with all reguired information or (2) the contingent event notice has been received without all required information, A request for a refund of an overpayment must be filed within six months after the contingent event concludes. Include a copy of the Department's acknowledgment of an accepted notice. Franchise Tax Bases The taxable franchise tax base is the largest of these tax bases: - Net Worth - Fifty-five percent (55%) of appraised value of real and tangible personal property in N.C Actual investment in tangible property in North Carolina NET WORTH Based on Year End Balance Sheet Net worth is measured as of the end of the taxable year using generally accepted accounting principles ("GAAP"). If the corporation does not use GAAP in maintaining its books and records, then net worth may be computed using the same accounting method used for federal income tax purposes, so long as this method fairly represents the corporation's net worth for franchise tax purposes. Net Worth Defined A corporation's net worth is defined as the total assets of the corporation without regard to deductions for accumulated depreciation, depletion, or amortization minus total liabilities. Investment in Tangible Properties in North Carolina Basis for the Investment In order to calculate the investment in tangible properties in North Carolina, include the original purchase price of tangible properties plus additions and improvements and less reserve for depreciation permitted for income tax purposes of all tangible property, including real estate located in North Carolina at the end of the income year immediately preceding the due date of the return. What is includable in the Investment Calculation (17 NCAC 05B.1302) Include all tangible assets located in North Carolina at original purchase price less reserve for depreciation permitted for income tax purposes. In addition to the types of property listed in the schedule, include all other langible property owned such as supplies and tools. Typical items of tangible property include: Inventory (valued at actual cost or by method consistent with the actual flow of goods), consigned inventories to be included by consignor, machinery and equipment, furniture and foxtures, containers, tools and supplies, land, buildings, leasehold improvements, and all other tangible assets. Treatment of Construction In Progress (17 NCAC 05B.1303) Construction in progress is excluded from this base only if such property is not owned by the corporation filing the return. Determination of Inclusion Based on Depreciation Deduction (17 NCAC 05B.1309) When two or more corporations are in doubt as to which should include property, including leased property, in the calculation of the investment in tangible property, such property shall be included by the corporation allowed depreciation under the Federal Code. Holding Company There is no limitation on the franchise tax payable by a holding company on its investment in tangible property in North Carolina Investment in Tangible Properties in North Carolina Base In order to calculate the investment in tangible properties in North Carolina, include the original purchase price of tangible properties plus additions and improvements and less reserve for depreciation permitted for income tax purposes of all tangible property, including real estate located in North Carolina at the end of the income year immediately preceding the due date of the return. Appraised Valuation of Tangible Property Base Tangible property values for this base are computed on fifty- five percent (55%) of the appraised value of all property listed for county ad valorem tax in North Carolina as of January 1 of the calendar year next preceding the due date of the return. Note: Also included in the appraised value of property for county ad valorem taxis the appraised value of all vehicles for which the county tax assessor has issued a billing during the income year. Franchise Tax Rate The franchise tax rate is one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) and is applied as set forth in the law. For tax years beginning on or after January 1, 2017, the minimum franchise tax is two hundred dollars ($200). For tax years beginning prior to January 1, 2017, the minimum franchise tax was thirty-five dollars ($35). Corporation Income Tax An income tax is levied on the net taxable income of all corporations chartered in North Carolina or doing business in North Carolina, unless they are specifically exempt from tax under G.S. 105-130.11. Net taxable income shall be the same as taxable income as defined in the Internal Revenue Code in effect for the income year for which the returns are to be filed, subject to the adjustments provided in G.S. 105-130.5. The corporate income tax rates are as followed: - 2018= 3% 2019=2.5%