§605. Surplus and undivided profits
A. Determination of value. For the purpose of ascertaining the tax imposed in this Chapter, surplus and undivided profits shall be deemed to have such value as is reflected on the books of the corporation, subject to examination and revision by the collector from the information contained in the report filed by the corporation as hereinafter provided and from any other information obtained by the collector; but in no event shall such revision reflect the value of any asset in excess of the cost thereof to the taxpayer at the time of acquisition; in the case of an acquisition which qualifies as a tax free exchange under R.S. 47:131, 132, 133, 135, 136, 137, and 138, cost to the taxpayer at the time of acquisition shall be deemed to be the basis of such property determined under R.S. 47:146, 148, and 152; provided that in no event shall such value be less than is shown on the books of the taxpaying corporation.
In computing surplus and undivided profits there shall be excluded such surplus as may be required by court order to be set aside and segregated in such manner as not to be available for distribution to stockholders or for investment in properties, the earnings from which are distributable to stockholders; provided further that in computing surplus and undivided profits there shall be included all reserves other than those for definitely fixed liabilities, reasonable depreciation (including in reasonable depreciation, at taxpayer's election, amortization of a war, defense or other emergency facility taken by and allowable to a taxpayer for income tax purposes under R.S. 47:65, provided such amortization is recorded on the books of the taxpayer), bad debts and established valuation reserves, such reserves in all cases to be made under rules and regulations to be prescribed by the collector. When, because of regulations of a governmental agency controlling the books of a taxpayer, the taxpayer is unable to record in its books the full amount of depreciation sustained, the taxpayer may apply to the collector of revenue for permission to add to its reserve for depreciation and deduct from its surplus the amount of depreciation sustained but not recorded, and if the collector finds that the amount proposed to be so added represents a reasonable allowance for actual depreciation, he shall grant such permission.
The collector also shall allow inclusion in depreciation reserves (but shall not limit the reserve thereto, if otherwise reasonable) depreciation taken by and allowable to a taxpayer under R.S. 47:65 provided such depreciation is recorded on the books of the taxpayer.
B. Treatment of deficit. If the accounts titled surplus and undivided profits reflect a negative figure or deficit, such deficit shall be deductible from capital stock and borrowed capital for the purpose of computing the tax.
C. Reserves and exclusion from surplus by public utilities. For purposes of this Chapter the term "reserves" includes all accounts appearing on the books of a corporation that represent amounts payable or potentially payable to others; however, the term "reserves" shall not include accounts included in "capital stock" as used in R.S. 47:604 and shall not include accounts that represent indebtedness. In computing the surplus of a public utility regulated by the Louisiana Public Service Commission, the Federal Energy Regulatory Commission or other similar local, state, or federal regulator, there shall be excluded from assets, and a corresponding amount excluded from surplus, accounts that represent assets for which no money has previously been paid and no service or thing of value has been paid, given, or advanced by the public utility other than the regulated service or product. Accounts so excluded shall not include accounts established for the purpose of valuing other asset accounts that do not meet the criteria for exclusion, nor shall excluded accounts represent investments, loans, deposits, goodwill, trade notes, accounts receivable from billings to customers, or accrued unbilled revenue.
Amended by Acts 1950, No. 444, §1; Acts 1956, No. 328, §1; Acts 1962, No. 272, §1; Acts 1992, No. 156, §1, eff. for taxable periods beginning on or after Jan. 1, 1993; Acts 2008, 2nd Ex. Sess., No. 10, §2, eff. May 13, 2008, for taxable periods beginning on or after Jan. 1, 2011.