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2-10 repealed: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.