Applicable corporation defined
(A) In general
(A)In general#
The term “applicable corporation” means, with respect to any taxable year, any corporation (other than an S corporation, a regulated investment company, or a real estate investment trust) which meets the average annual adjusted financial statement income test of subparagraph (B) for one or more taxable years which—
(i) are prior to such taxable year, and
(ii) end after December 31, 2021 .
(A)(i)#
are prior to such taxable year, and
(A)(ii)#
end after December 31, 2021 .
(B)Average annual adjusted financial statement income test#
For purposes of this subsection—
(i) a corporation meets the average annual adjusted financial statement income test for a taxable year if the average annual adjusted financial statement income of such corporation (determined without regard to section 56A(d)) for the 3-taxable-year period ending with such taxable year exceeds $1,000,000,000, and
(ii) in the case of a corporation described in paragraph (2), such corporation meets the average annual adjusted financial statement income test for a taxable year if— (I) the corporation meets the requirements of clause (i) for such taxable year (determined after the application of paragraph (2)), and (II) the average annual adjusted financial statement income of such corporation (determined without regard to the application of paragraph (2) and without regard to section 56A(d)) for the 3-taxable-year-period ending with such taxable year is $100,000,000 or more.
(B)(i)#
a corporation meets the average annual adjusted financial statement income test for a taxable year if the average annual adjusted financial statement income of such corporation (determined without regard to section 56A(d)) for the 3-taxable-year period ending with such taxable year exceeds $1,000,000,000, and
(B)(ii)#
in the case of a corporation described in paragraph (2), such corporation meets the average annual adjusted financial statement income test for a taxable year if—
(I) the corporation meets the requirements of clause (i) for such taxable year (determined after the application of paragraph (2)), and
(II) the average annual adjusted financial statement income of such corporation (determined without regard to the application of paragraph (2) and without regard to section 56A(d)) for the 3-taxable-year-period ending with such taxable year is $100,000,000 or more.
(C)Exception#
Notwithstanding subparagraph (A), the term “applicable corporation” shall not include any corporation which otherwise meets the requirements of subparagraph (A) if—
(i) such corporation— (I) has a change in ownership, or (II) has a specified number (to be determined by the Secretary and which shall, as appropriate, take into account the facts and circumstances of the taxpayer) of consecutive taxable years, including the most recent taxable year, in which the corporation does not meet the average annual adjusted financial statement income test of subparagraph (B), and
(ii) the Secretary determines that it would not be appropriate to continue to treat such corporation as an applicable corporation.
The preceding sentence shall not apply to any corporation if, after the Secretary makes the determination described in clause (ii), such corporation meets the average annual adjusted financial statement income test of subparagraph (B) for any taxable year beginning after the first taxable year for which such determination applies.
(C)(i)#
such corporation—
(I) has a change in ownership, or
(II) has a specified number (to be determined by the Secretary and which shall, as appropriate, take into account the facts and circumstances of the taxpayer) of consecutive taxable years, including the most recent taxable year, in which the corporation does not meet the average annual adjusted financial statement income test of subparagraph (B), and
(C)(i)(I)#
(D)Special rules for determining applicable corporation status#
Solely for purposes of determining whether a corporation is an applicable corporation under this paragraph, all adjusted financial statement income of persons treated as a single employer with such corporation under subsection (a) or (b) of section 52 shall be treated as adjusted financial statement income of such corporation, and adjusted financial statement income of such corporation shall be determined without regard to paragraphs (2)(D)(i) and (11) of section 56A(c).
(E)Other special rules#
(i) Corporations in existence for less than 3 years If the corporation was in existence for less than 3-taxable years, subparagraph (B) shall be applied on the basis of the period during which such corporation was in existence.
(ii) Short taxable years Adjusted financial statement income for any taxable year of less than 12 months shall be annualized by multiplying the adjusted financial statement income for the short period by 12 and dividing the result by the number of months in the short period.
(iii) Treatment of predecessors Any reference in this subparagraph to a corporation shall include a reference to any predecessor of such corporation.
(E)(i)Corporations in existence for less than 3 years#
If the corporation was in existence for less than 3-taxable years, subparagraph (B) shall be applied on the basis of the period during which such corporation was in existence.
(E)(ii)Short taxable years#
Adjusted financial statement income for any taxable year of less than 12 months shall be annualized by multiplying the adjusted financial statement income for the short period by 12 and dividing the result by the number of months in the short period.