By Craddick, Solomons                                  H.B. No. 675
       74R133 CBH-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the computation of the net taxable earned surplus of a
    1-3  limited liability company for franchise tax purposes.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 171.110(a), Tax Code, is amended to read
    1-6  as follows:
    1-7        (a)  The net taxable earned surplus of a corporation is
    1-8  computed by:
    1-9              (1)  determining the corporation's reportable federal
   1-10  taxable income, subtracting from that amount any amount included in
   1-11  reportable federal taxable income under Section 78 or Sections
   1-12  951-964, Internal Revenue Code, <and> dividends received from a
   1-13  subsidiary, associate, or affiliated corporation that does not
   1-14  transact a substantial portion of its business or regularly
   1-15  maintain a substantial portion of its assets in the United States,
   1-16  and, if a limited liability company, income reported as a member's
   1-17  net earnings from self-employment, and adding to that amount any
   1-18  compensation of officers or directors, or if a bank, any
   1-19  compensation of directors and executive officers, to the extent
   1-20  excluded in determining federal taxable income to determine the
   1-21  corporation's taxable earned surplus;
   1-22              (2)  apportioning the corporation's taxable earned
   1-23  surplus to this state as provided by Section 171.106(b) or (c), as
   1-24  applicable, to determine the corporation's apportioned taxable
    2-1  earned surplus;
    2-2              (3)  adding the corporation's taxable earned surplus
    2-3  allocated to this state as provided by Section 171.1061; and
    2-4              (4)  subtracting from that amount any allowable
    2-5  deductions and any business loss that is carried forward to the tax
    2-6  reporting period and deductible under Subsection (e).
    2-7        SECTION 2.  This Act takes effect January 1, 1996, and
    2-8  applies to a report originally due on or after that date.
    2-9        SECTION 3.  The importance of this legislation and the
   2-10  crowded condition of the calendars in both houses create an
   2-11  emergency and an imperative public necessity that the
   2-12  constitutional rule requiring bills to be read on three several
   2-13  days in each house be suspended, and this rule is hereby suspended.