By:  Bosse                                             H.B. No. 878
       73R4356 CBH-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the determination of taxable earned surplus of an S
    1-3  corporation.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 171.110(d), Tax Code, is amended to read
    1-6  as follows:
    1-7        (d)  A corporation's reportable federal taxable income is the
    1-8  corporation's federal taxable income after Schedule C special
    1-9  deductions and before net operating loss deductions as computed
   1-10  under the Internal Revenue Code.  An<, except that an> S
   1-11  corporation's reportable federal taxable income is the amount of
   1-12  the income reportable to the Internal Revenue Service as taxable to
   1-13  the corporation's shareholders, minus the amount of income
   1-14  reportable to the Internal Revenue Service as taxable to each
   1-15  shareholder who is an officer or director of the corporation and
   1-16  who renders, without compensation, services for the corporation for
   1-17  which compensation could be authorized.  The amount an S
   1-18  corporation deducts under this subsection may not exceed $45,000.
   1-19        SECTION 2.  This Act takes effect January 1, 1994, and
   1-20  applies to reports originally due on or after that date.  The
   1-21  change in law made by this Act does not affect the obligation for
   1-22  or the payment, computation, and collection of the franchise tax
   1-23  for a period not covered by this section.
   1-24        SECTION 3.  The importance of this legislation and the
    2-1  crowded condition of the calendars in both houses create an
    2-2  emergency   and   an   imperative   public   necessity   that   the
    2-3  constitutional rule requiring bills to be read on three several
    2-4  days in each house be suspended, and this rule is hereby suspended.