Capital-Stock Tax Law and Legal Definition
The capital-stock tax is a property tax imposed on joint-stock associations, limited liability companies, business trusts and other entities. It is a property tax applicable to all domestic corporations of a state. The capital-stock tax is computed based upon the capital stock value or properties or assets of a corporation. It is an adjunct of the excess-profits tax.
In Isthmian S.S. Co. v. United States, 33 F. Supp. 1007, 1009 (D. Del. 1940), the court held that a capital stock tax is an excise levied upon the privilege of doing business as a corporation. The declared value or the adjusted declared value is the basis for determining the amount of tax to be paid.