North Carolina § 105-125 - Exempt corporations.

§ 105-125. Exempt corporations.

Exemptions. - The following corporations are exempt from the taxes levied by this Article. Upon request of the Secretary, an exempt corporation must establish its claim for exemption in writing: A charitable, religious, fraternal, benevolent, scientific, or educational corporation not operated for profit. An insurance company subject to tax under Article 8B of this Chapter. A mutual ditch or irrigation association, a mutual or cooperative telephone association or company, a mutual canning association, a cooperative breeding association, or a similar corporation of a purely local character deriving receipts solely from assessments, dues, or fees collected from members for the sole purpose of meeting expenses. A cooperative marketing association that operates solely for the purpose of marketing the products of members or other farmers and returns to the members and farmers the proceeds of sales, less the association's necessary operating expenses, including interest and dividends on capital stock, on the basis of the quantity of product furnished by them. The association's operations may include activities directly related to these marketing activities. A production credit association organized under the federal Farm Credit Act of 1933. A club organized and operated exclusively for pleasure, recreation, or other nonprofit purposes, a civic league operated exclusively for the promotion of social welfare, a business league, or a board of trade. A chamber of commerce or merchants' association not organized for profit, no part of the net earnings of which inures to the benefit of a private stockholder, an individual, or another corporation. An organization, such as a condominium association, a homeowners' association, or a cooperative housing corporation not organized for profit, the membership of which is limited to the owners or occupants of residential units in the condominium, housing development, or cooperative housing corporation. To qualify for the exemption, the organization must be operated exclusively for the management, operation, preservation, maintenance, or landscaping of the residential units owned by the organization or its members or of the common areas and facilities that are contiguous to the residential units and owned by the organization or by its members. To qualify for the exemption, no part of the net earnings of the organization may inure, other than through the performance of related services for the members of the organization, to the benefit of any person. Except as otherwise provided by law, an organization exempt from federal income tax under the Code. (Effective for taxable years beginning before January 1, 2017) Certain Investment Companies. - A corporation doing business in North Carolina that meets one or more of the following conditions may, in determining its capital stock, surplus, and undivided profits base for franchise tax, deduct the aggregate market value of its investments in the stocks, bonds, debentures, or other securities or evidences of debt of other corporations, partnerships, individuals, municipalities, governmental agencies, or governments: A regulated investment company. - A regulated investment company is an entity that qualifies as a regulated investment company under section 851 of the Code. A REIT, unless the REIT is a captive REIT. - The terms "REIT" and "captive REIT" have the same meanings as defined in G.S. 105-130.12. (Effective for taxable years beginning on or after January 1, 2017, and applicable to the calculation of franchise tax reported on the 2016 and later corporate income tax return) Certain Investment Companies. - A corporation doing business in North Carolina that meets one or more of the following conditions may, in determining its net worth base for franchise tax, deduct the aggregate market value of its investments in the stocks, bonds, debentures, or other securities or evidences of debt of other corporations, partnerships, individuals, municipalities, governmental agencies, or governments: A regulated investment company. - A regulated investment company is an entity that qualifies as a regulated investment company under section 851 of the Code. A REIT, unless the REIT is a captive REIT. - The terms "REIT" and "captive REIT" have the same meanings as defined in G.S. 105-130.12. Provided, that an entity that qualifies as a real estate mortgage investment conduit, as defined in section 860D of the Code, is exempt from all of the taxes levied in this Article. Upon request by the Secretary of Revenue, a real estate mortgage investment conduit must establish in writing its qualification for this exemption. History (1939, c. 158, s. 213; 1951, c. 937, s. 3; 1955, c. 1313, s. 1; 1957, c. 1340, s. 3; 1963, c. 601, s. 3; c. 1169, s. 1; 1967, c. 1110, s. 2; 1971, c. 820, s. 3; c. 833, s. 1; 1973, c. 476, s. 193; c. 1053, s. 2; c. 1287, s. 3; 1975, c. 591, s. 1; 1983, c. 28, s. 2; c. 713, s. 67; 1985 (Reg. Sess., 1986), c. 826, s. 4; 1991, c. 30, s. 6; 1993, c. 485, s. 4; c. 494, s. 1; 2008-107, s. 28.7(c); 2011-330, s. 8; 2015-241, s. 32.15(f); 2016-5, s. 1.7(a).) Subsection (b) Set Out Twice. - The first version of subsection (b) set out above is effective for taxable years beginning before January 1, 2017. The second version of subsection (b) set out above is effective for taxable years beginning on or after January 1, 2017, and applicable to the calculation of franchise tax reported on the 2016 and later corporate income tax return. Editor's Note. - Session Laws 1993, c. 494, s. 1, added the proviso at the end of subsection (a). The amendment, however, was made to the version of the section in effect before its complete revision by Session Laws 1993, c. 485, s. 4. This section has been set out in the form above at the direction of the Revisor of Statutes. Session Laws 2015-241, s. 32.15(g), as amended by Session Laws 2016-5, s. 1.7(a), made the amendments to subsection (b) by Session Laws 2015-241, s. 32.15(f), applicable to the calculation of franchise tax reported on the 2016 and later corporate income tax return. Session Laws 2015-241, s. 1.1, provides: "This act shall be known as 'The Current Operations and Capital Improvements Appropriations Act of 2015.'" Session Laws 2015-241, s. 33.6, is a severability clause. Effect of Amendments. - Session Laws 2008-107, s. 28.7(c), effective for taxable years beginning on or after January 1, 2009, rewrote subsection (b). Session Laws 2011-330, s. 8, effective June 27, 2011, substituted "determining its capital stock, surplus, and undivided profits base for franchise tax" for "determining its basis for franchise tax" in the introductory paragraph of subsection (b). Session Laws 2015-241, s. 32.15(f), as amended by Session Laws 2016-5, s. 1.7(a), effective for taxable years beginning on or after January 1, 2017, substituted "net worth base" for "capital stock, surplus, and undivided profits base" in the introductory paragraph of subsection (b). See editor's note for applicability. § 105-126: Repealed by Session Laws 1959, c. 1259, s. 9.