§ 105-130.15. Basis of return of net income. - North Carolina Statutes

§105‑130.15.  Basis of return of net income.

(a)        The net income of acorporation shall be computed in accordance with the method of accounting itregularly employs in keeping its books. The method must be consistent withrespect to both income and deductions. If this method does not clearly reflectthe income, the computation shall be made in accordance with a method that, inthe Secretary's opinion, does clearly reflect the income, but shall follow asnearly as practicable the federal practice, unless contrary to the context andintent of this Part.

The Secretary may adopt therules and regulations and any guidelines administered or established by theInternal Revenue Service unless contrary to any provisions of this Part.

(b)        Change of IncomeYear. –

(1)        A corporation maychange the income year upon which it reports for income tax purposes withoutprior approval by the Secretary of Revenue if such change in income year hasbeen approved by or is acceptable to the Federal Commissioner of InternalRevenue and is used for filing income tax returns under the provisions of theCode.

If acorporation desires to make a change in its income year other than as providedabove, it may make such change in its income year with the approval of theSecretary of Revenue, provided such approval is requested at least 30 daysprior to the end of its new income year.

Acorporation which has changed its income year without requesting the approvalof the Secretary of Revenue as provided in the first paragraph of thissubdivision shall submit to the Secretary of Revenue notification of any changein the income year after the change has been approved by the FederalCommissioner of Internal Revenue or his agent where application for permissionto change is required by the Federal Commissioner of Internal Revenue with suchnotification stating that such approval has been received. Where applicationfor change of the income year is not required by the Federal Commissioner ofInternal Revenue, notification of the change of income year shall be submittedto the Secretary of Revenue with the short period return.

(2)        A return for aperiod of less than 12 months (referred to in this subsection as "shortperiod") shall be made when the corporation changes its income year. Insuch a case, the return shall be made for the short period beginning on the dayafter the close of the former taxable year and ending at the close of the daybefore the day designated as the first day of the new taxable year, except thata corporation changing to, or from, a taxable year varying from 52 to 53 weeksshall not be required to file a short period return if such change results in ashort period of 359 days or more, or less than seven days. Short period incometax returns shall be filed within the same period following the end of suchshort period as is required for full year returns under the provisions of G.S.105‑130.17.

(c)        Any foreigncorporation not domesticated in this State shall not use the installment methodof reporting income to this State unless such corporation files a bond with theSecretary of Revenue in such amount and with such sureties as the Secretaryshall deem necessary to secure the payment of any taxes which were deferredwith respect to any installment transaction.

(d)        Notwithstanding anyother provision of this Part, any corporation which uses the installment methodof reporting income to this State and which is planning to withdraw from thisState, merge, or consolidate its business, or terminate its business in thisState by any other means whatsoever, shall be required to make a report forincome tax purposes, to the Secretary of Revenue, of any unrealized orunreported income from installment sales made while doing business in thisState and to pay any tax which may be due on such income. The manner and formfor making such report and paying the tax shall be as prescribed by theSecretary. (1939, c. 158, s. 318; 1943, c. 400, s. 4; 1945, c.708, s. 4; 1949, c. 392, s. 3; 1955, c. 1313, s. 1; 1957, c. 1340, s. 4; 1963,c. 1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1983, c. 713, s. 82;1998‑98, s. 69; 2000‑140, s. 64(a).)