Section 105-120.2 - Franchise or privilege tax on holding companies(a)(Effective until January 1, 2017) Every corporation, domestic and foreign, incorporated or, by an act, domesticated under the laws of this State or doing business in this State that, at the close of its taxable year, is a holding company as defined in subsection (c) of this section, shall, pursuant to the provisions of G.S. 105-122, do all of the following: (2) Determine the total amount of its issued and outstanding capital stock, surplus and undivided profits.(3) Apportion such outstanding capital stock, surplus and undivided profits to this State.(a)(Effective January 1, 2017, for taxes due on or after that date) Every corporation, domestic and foreign, incorporated or, by an act, domesticated under the laws of this State or doing business in this State that, at the close of its taxable year, is a holding company as defined in subsection (c) of this section, shall, pursuant to the provisions of G.S. 105-122, do all of the following: (2) Determine the total amount of its net worth.(3) Apportion its net worth to this State.(b)(1)(Effective until January 1, 2017) Every corporation taxed under this section shall annually pay to the Secretary of Revenue, at the time the return is due, a franchise or privilege tax at the rate of one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of the amount determined under subsection (a) of this section, but in no case shall the tax be more than seventy-five thousand dollars ($75,000) nor less than thirty-five dollars ($35.00).(2) Notwithstanding the provisions of subdivision (1) of this subsection, if the tax produced pursuant to application of this paragraph (2) exceeds the tax produced pursuant to application of subdivision (1), then the tax is levied at the rate of one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) on the greater of the following: a. Fifty-five percent (55%) of the appraised value as determined for ad valorem taxation of all the real and tangible personal property in this State of each such corporation plus the total appraised value of intangible property returned for taxation of intangible personal property as computed under G.S. 105-122(d).b. The total actual investment in tangible property in this State of such corporation as computed under G.S. 105-122(d).(b)(Effective January 1, 2017, for taxes due on or after that date) Tax Rate. - Every corporation taxed under this section shall annually pay to the Secretary of Revenue, at the time the return is due, the greater of the following: (1) A franchise or privilege tax at the rate of one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of the amount determined under subsection (a) of this section, but in no case shall the tax be more than one hundred fifty thousand dollars ($150,000) nor less than two hundred dollars ($200.00).(2) If the tax calculated under this subdivision exceeds the tax calculated under subdivision (1) of this subsection, then the tax is levied at the rate of one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) on the greater of the following: a. Fifty-five percent (55%) of the appraised value as determined for ad valorem taxation of all the real and tangible personal property in this State of each such corporation plus the total appraised value of intangible property returned for taxation of intangible personal property as computed under G.S. 105-122(d).b. The total actual investment in tangible property in this State of such corporation as computed under G.S. 105-122(d).(b)(Effective for taxable years beginning on or after January 1, 2023, and applicable to the calculation of franchise tax reported on the 2022 and later corporate income tax return)Tax Rate. - Every corporation taxed under this section shall annually pay to the Secretary of Revenue, at the time the return is due, a franchise or privilege tax at the rate of one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of its tax base with a maximum of five hundred dollars ($500.00) for the first one million dollars ($1,000,000) of the corporation's tax base as determined under subsection (a) of this section, but in no case shall the tax be more than one hundred fifty thousand dollars ($150,000) nor less than two hundred dollars ($200.00).(b)(Effective for taxable years beginning on or after January 1, 2025, and applicable to the calculation of franchise tax reported on the 2024 and later corporate income tax return)Tax Rate. - Every corporation taxed under this section shall annually pay to the Secretary of Revenue, at the time the return is due, a franchise or privilege tax at the rate of five hundred dollars ($500.00) for the first one million dollars ($1,000,000) of the corporation's tax base as determined under subsection (a) of this section and one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of its tax base that exceeds one million dollars ($1,000,000), but in no case shall the tax be more than one hundred fifty thousand dollars ($150,000) nor less than two hundred dollars ($200.00).(c)(Effective for taxable years beginning before January 1, 2020) For purposes of this section, a "holding company" is a corporation that satisfies at least one of the following conditions: (1) It has no assets other than ownership interests in corporations in which it owns, directly or indirectly, more than fifty percent (50%) of the outstanding voting stock or voting capital interests. (2) It receives during its taxable year more than eighty percent (80%) of its gross income from corporations in which it owns directly or indirectly more than fifty percent (50%) of the outstanding voting stock, voting capital interests, or ownership interests. (c) For purposes of this section, a "holding company" is a corporation that satisfies at least one of the following conditions: (1) It has no assets other than ownership interests in corporations in which it owns, directly or indirectly, more than fifty percent (50%) of the outstanding voting stock or voting capital interests.(2) It receives during its taxable year more than eighty percent (80%) of its gross income from corporations in which it owns directly or indirectly more than fifty percent (50%) of the outstanding voting stock, voting capital interests, or ownership interests.(3)(Effective for taxable years beginning on or after January 1, 2020)It owns copyrights, patents, or trademarks that represent more than eighty percent (80%) of its total assets, or receives royalties and license fees that represent more than eighty percent (80%) of its gross income, and it is one hundred percent (100%) directly owned by a corporation that meets all of the following conditions: a. Is a manufacturer, as defined by NAICS codes 31 through 33.b. Generates revenues in excess of five billion dollars ($5,000,000,000) for income tax purposes from goods that it manufactures.c. Includes in its net worth, as determined under G.S. 105-122(b), an investment in a subsidiary that owns copyrights, patents, or trademarks.(d) Repealed by Session Laws 1985, c. 656, s. 39.(e) Counties, cities and towns shall not levy a franchise tax on corporations taxed under this section. The tax imposed under the provisions of G.S. 105-122 shall not apply to businesses taxed under the provisions of this section.(f) Repealed by Session Laws 2011-330, s. 3, effective June 27, 2011.N.C. Gen. Stat. § 105-120.2
Amended by 2024 N.C. Sess. Laws 1,s. 11.2-b, eff. 7/1/2023.Amended by 2023 N.C. Sess. Laws 134,s. 42.6A-b, eff. 9/22/2023.Amended by 2021 N.C. Sess. Laws 180, s. 42.3-c, eff. 7/1/2021, and applicable to the calculation of franchise tax reported on the 2022 and later corporate income tax return.Amended by 2019 N.C. Sess. Laws 246, s. 2-a, eff. 11/8/2019, effective for taxable years beginning on or after January 1, 2020, and applicable to the calculation of franchise tax reported on the 2019 and later corporate income tax returns.Amended by 2017 N.C. Sess. Laws 204, s. 1.2, eff. 8/11/2017.Amended by 2015 N.C. Sess. Laws 241, s. 32.15-b, eff. 1/1/2017.Amended by 2013 N.C. Sess. Laws 414, s. 1-b, eff. 8/23/2013.Amended by 2012 N.C. Sess. Laws 79, s. 2.3, eff. 6/26/2012.Amended by 2011 N.C. Sess. Laws 330, s. 3, eff. 6/27/2011.Amended by 2006 N.C. Sess. Laws 196, s. 9, eff. 1/1/2007. 1975 , c. 130, s. 1; 1985 , c. 656, s. 39; 1985 (Reg. Sess., 1986), c. 854, s. 1; 1987 (Reg. Sess., 1988), c. 882, s. 4.2; 1991 , c. 30, s. 4; 1998-98, s. 72.