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Computation Of Taxable Income For Alabama Business - Privilege Tax (Bpt) Purposes - Alabama Department Of Revenue Page 5

Computation of Taxable Income for Alabama BPT Purposes - June 17, 2009

Step Number Four – Adjustment of Income Apportioned to Alabama for Income

Allocated to Alabama Resulting in Federal Taxable Income Allocated and

Apportioned to Alabama .

The amount computed in Step Number Three is added to income allocated to

Alabama in accordance with Chapter 27 - resulting in Federal Taxable Income

Allocated and Apportioned to Alabama.

The total amount of income allocated to Alabama in accordance with Chapter 27 is

computed on Alabama Form 65, Schedule B, Allocation of Nonbusiness Income,

Loss, and Expense and equals the total of the amounts shown on Alabama Form 65,

Schedule B, Line 1d, Column F, and Line 1h, Column F.

NOTE: Step Number Four is not required if for the determination period the

limited liability entity does not have nonbusiness income subject to allocation in

accordance with the Alabama Multistate Compact.

NOTE: If the limited liability entity does not have income subject to allocation for

the determination period and operates solely in the State of Alabama, then Steps

Number Two, Three and Four are not required. The taxable income for Alabama

business privilege tax purposes would have been fully computed in Step Number

One.

7. Thirty Percent Deduction Available to Pass-through Entities. The amount

available to pass-through entities in accordance with Section 40-14A-24(b)(8) and

(9) is equal to 30% of the Federal Taxable Income Allocated and Apportioned to

Alabama as computed in item 6, above.

Page 5 of 5 Computation of Taxable Income for Alabama BPT Purposes

6/18/2009

Computation Of Taxable Income For Alabama Business - Privilege Tax (Bpt) Purposes - Alabama Department Of Revenue Page 5