Example 1. The taxpayer acquired treasury stock on July 1. The value of the treasury stock is $300,000. The stockholder equity at the end of the tax year (December 31) is $1,000,000.
The revised stockholder equity is computed as follows:
Stockholder equity | $1,000,000 |
Acquisition of Treasury | |
Stock ($300,000 x 181/365) | 148,767 |
_________ | |
$1,148,767 |
The revised stockholder equity is $1,148,767.
Example 2. The taxpayer issued common stock on July 1. The value of the common stock issued is $300,000. The stockholder equity at the end of the tax year (December 31) is $1,000,000. The revised stockholder equity is computed as follows:
Stockholder equity | $1,000,000 |
Issuance of Common Stock | |
($300,000 x 181/365) | 148,767 |
_________ | |
$ 851,233 |
The revised stockholder equity is $851,233.
61 Pa. Code § 155.23
This section cited in 61 Pa. Code § 155.21 (relaitng to general); 61 Pa. Code § 155.22 (relating to definitions); 61 Pa. Code § 155.24 (relating to valuation methods); and 61 Pa. Code § 155.28 (relating to capital stock value methods-fixed formula).