By:  Smith, Dalton                                     H.B. No. 303
       73R1246 CBH-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to application of the franchise tax to limited liability
    1-3  companies.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 171.001(a), Tax Code, is amended to read
    1-6  as follows:
    1-7        (a)  A franchise tax is imposed on<:>
    1-8              <(1)>  each corporation that does business in this
    1-9  state or that is chartered or authorized to do business in this
   1-10  state<, and>
   1-11              <(2)  each limited liability company that does business
   1-12  in this state or that is organized under the laws of this state or
   1-13  is authorized to do business in this state>.
   1-14        SECTION 2.  Section 171.001(b)(2), Tax Code, is amended to
   1-15  read as follows:
   1-16              (2)  "Corporation" includes<:>
   1-17                    <(A)  a limited liability company, as defined
   1-18  under the Texas Limited Liability Company Act; and>
   1-19                    <(B)>  a state or federal savings and loan
   1-20  association, but does not include a limited liability company, as
   1-21  defined under the Texas Limited Liability Company Act (Article
   1-22  1528n, Vernon's Texas Civil Statutes).
   1-23        SECTION 3.  Section 171.109(a)(1), Tax Code, is amended to
   1-24  read as follows:
    2-1              (1)  "Surplus" means the net assets of a corporation
    2-2  minus its stated capital.  <For a limited liability company,
    2-3  "surplus" means the net assets of the company minus its members'
    2-4  contributions.>  Surplus includes unrealized, estimated, or
    2-5  contingent losses or obligations or any writedown of assets other
    2-6  than those listed in Subsection (i) of this section net of
    2-7  appropriate income tax provisions.  The definition under this
    2-8  subdivision does not apply to earned surplus.
    2-9        SECTION 4.  The following provisions of the Tax Code are
   2-10  repealed:
   2-11              (1)  Sections 171.001(b)(3), (5), and (7); and
   2-12              (2)  Section 171.101(b).
   2-13        SECTION 5.  This Act takes effect January 1, 1994, and
   2-14  applies to a privilege period beginning on or after that date.  The
   2-15  change in law made by this Act does not affect the obligation for
   2-16  or the payment, computation, and collection of the franchise tax
   2-17  for a period not covered by this section.
   2-18        SECTION 6.  The importance of this legislation and the
   2-19  crowded condition of the calendars in both houses create an
   2-20  emergency   and   an   imperative   public   necessity   that   the
   2-21  constitutional rule requiring bills to be read on three several
   2-22  days in each house be suspended, and this rule is hereby suspended.