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Yes. Federal income tax may be deducted for the taxable year in which paid or accrued, according to the method of accounting used in computing taxable income. The federal income tax allowable as a deduction is the net tax liability as accrued and subsequently paid, that is, the amount after subtracting all deductible and/or refundable credits.


The federal income tax deduction for any taxable year for members of an affiliated group filing a consolidated federal income tax return, shall be determined in accordance with the method elected under 26 U.S.C. §1552 (without regard to any election under 26 U.S.C. §1502) for its consolidated federal return.

Corporations which do business in Alabama are allowed to deduct federal income taxes attributable to their Alabama income (Code of Alabama, 1975, §40-18-35(a)(2), and Rule 810-3-35-.01(1)(b).