(a) Determine the sum of the following as of the first day of the corporation's taxable year:
(1) The outstanding capital stock and any additional paid-in capital, but without reduction for treasury stock; and
(2) Retained earnings, but not less than zero, which shall include any amounts designated for the payment of dividends until the amounts are definitely and irrevocably placed to the credit of stockholders subject to withdrawal on demand.
(b) From the amount determined under subsection (a), deduct:
(1) The book value of goods, wares, and merchandise held for sale;
(2) The book value of the investment by the taxpayer in the equity of other corporations doing business in Alabama. This subdivision shall not apply if the taxpayer is a dealer in securities subject to 26 U.S.C. §1236.
(3) Federal obligations.
a. For a taxpayer who does not hold federal obligations for a tax avoidance purpose, the book value of federal obligations owned by the taxpayer multiplied by a fraction, the numerator of which is the amount determined in subsection (a) and the denominator of which is the sum of the amount determined in subsection (a) and the amount of the taxpayer's debts maturing in more than one year.
b. For a taxpayer that does hold federal obligations for a tax avoidance purpose, an amount determined in accordance with paragraph a. multiplied by a fraction, the numerator of which is the average amount of federal obligations owned during the taxable year and the denominator of which is the average amount of the taxpayer's total assets during the taxable year, both determined on a monthly basis.
c. A taxpayer shall be deemed to hold federal obligations for a tax avoidance purpose if more than 50 percent by value of the taxpayer's federal obligations are purchased within a period beginning 45 days before the end of the determination period and are sold within a period ending 45 days after the end of the determination period.
d. A taxpayer may be found to hold federal obligations for a tax avoidance purpose even if such tax avoidance purpose is not deemed to exist by virtue of paragraph c.
(4) The unamortized balance of any amount that the taxpayer properly elected, pursuant to Pronouncement 106 of the Financial Accounting Standards Board or any successor authority, to amortize over a period of years rather than immediately charging that amount to earnings.
(5) For all industrial development board assets that the corporation was entitled to use pursuant to a lease or other agreement entered into before May 21, 1992, or would be entitled to use at some future time pursuant to an inducement entered into with the industrial development board before May 21, 1992, as provided in Section 40-9B-7(c) (if and to the extent that the corporation includes such industrial development board assets on its balance sheet), the corporation shall file with its shares tax return a separate schedule itemizing the book value of its industrial development board assets and the book value of its industrial development board liabilities. The net balance sheet value of such separately scheduled industrial development board assets and industrial development board liabilities shall be excluded from the calculation of the shares tax if such assets are included in the calculation of net worth under Article 2; provided however, this exclusion shall not exceed $200,000 per determination period.
(c) Nothing in this section shall be construed to allow any item to be deducted more than once or to allow a deduction for any item that is excluded from the initial taxable shares base.