§ 105-114. Nature of taxes; definitions. - North Carolina Statutes

Article 3.

Franchise Tax.

§ 105‑114.  Nature oftaxes; definitions.

(a)        Nature of Taxes. – Thetaxes levied in this Article upon persons and partnerships are for theprivilege of engaging in business or doing the act named.

(a1)      Scope. – The taxeslevied in this Article upon corporations are privilege or excise taxes leviedupon:

(1)        Corporationsorganized under the laws of this State for the existence of the corporaterights and privileges granted by their charters, and the enjoyment, under theprotection of the laws of this State, of the powers, rights, privileges andimmunities derived from the State by the form of such existence; and

(2)        Corporations notorganized under the laws of this State for doing business in this State and forthe benefit and protection which these corporations receive from the governmentand laws of this State in doing business in this State.

(a2)      Condition for DoingBusiness. – If the corporation is organized under the laws of this State, thepayment of the taxes levied by this Article is a condition precedent to theright to continue in the corporate form of organization. If the corporation isnot organized under the laws of this State, payment of these taxes is acondition precedent to the right to continue to engage in doing business inthis State.

(a3)      Tax Year. – Thetaxes levied in this Article are for the fiscal year of the State in which thetaxes become due, except that the taxes levied in G.S. 105‑122 are forthe income year of the corporation in which the taxes become due.

(a4)      No Double Taxation.– G.S. 105‑122 does not apply to holding companies taxed under G.S. 105‑120.2.G.S. 105‑122 applies to a corporation taxed under another section of thisArticle only to the extent the taxes levied on the corporation in G.S. 105‑122exceed the taxes levied in other sections of this Article on the corporation oron a limited liability company whose assets must be included in thecorporation's tax base under G.S. 105‑114.1.

(b)        Definitions. – Thefollowing definitions apply in this Article:

(1)        City. – Defined inG.S. 105‑228.90.

(1a)      Code. – Defined inG.S. 105‑228.90.

(2)        (Effective fortaxable years beginning before January 1, 2009) Corporation. – A domesticcorporation, a foreign corporation, an electric membership corporation organizedunder Chapter 117 of the General Statutes or doing business in this State, oran association that is organized for pecuniary gain, has capital stockrepresented by shares, whether with or without par value, and has privilegesnot possessed by individuals or partnerships. The term includes a mutual orcapital stock savings and loan association or building and loan associationchartered under the laws of any state or of the United States. The termincludes a limited liability company that elects to be taxed as a C Corporationunder the Code, but does not otherwise include a limited liability company.

(2)        (Effective fortaxable years beginning on or after January 1, 2009) Corporation. – Adomestic corporation, a foreign corporation, an electric membership corporationorganized under Chapter 117 of the General Statutes or doing business in thisState, or an association that is organized for pecuniary gain, has capitalstock represented by shares, whether with or without par value, and hasprivileges not possessed by individuals or partnerships. The term includes amutual or capital stock savings and loan association or building and loanassociation chartered under the laws of any state or of the United States. Theterm includes a limited liability company that elects to be taxed as acorporation under the Code, but does not otherwise include a limited liabilitycompany.

(3)        Doing business. – Eachand every act, power, or privilege exercised or enjoyed in this State, as anincident to, or by virtue of the powers and privileges granted by the laws ofthis State.

(4)        Income year. – Definedin G.S. 105‑130.2(4b).

(c)        Recodified as G.S.105‑114.1 by Session Laws 2002‑126, s. 30G.2.(b), effective January1, 2003.  (1939,c. 158, s. 201; 1943, c. 400, s. 3; 1945, c. 708, s. 3; 1965, c. 287, s. 16;1967, c. 286; 1969, c. 541, s. 6; 1973, c. 1287, s. 3; 1983, c. 713, s. 66;1985, c. 656, s. 7; 1985 (Reg. Sess., 1986), c. 853, s. 1; 1987, c. 778, s. 1;1987 (Reg. Sess., 1988), c. 1015, s. 2; 1989, c. 36, s. 2; 1989 (Reg. Sess.,1990), c. 981, s. 2; 1991, c. 30, s. 2; c. 689, s. 250; 1991 (Reg. Sess.,1992), c. 922, s. 3; 1993, c. 12, s. 4; c. 354, s. 11; c. 485, s. 5; 1997‑118,s. 4; 1998‑98, ss. 60, 76; 1999‑337, s. 20; 2000‑173, s. 8;2001‑327, s. 2(b); 2002‑126, s. 30G.2(b); 2005‑435, s.59.2(a); 2006‑66, s. 24A.2(a); 2006‑162, ss. 3(b), 22; 2008‑107,s. 28.7(a).)