By Telford                                      H.B. No. 2732

      75R7573 DAK-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the apportionment of certain taxable capital and

 1-3     taxable earned surplus to the state.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 171.106, Tax Code, is amended by adding

 1-6     Subsection (d) to read as follows:

 1-7           (d)  A corporation's taxable capital or earned surplus that

 1-8     is derived, directly or indirectly, from the sale of management,

 1-9     administration, or investment services to an employee retirement

1-10     plan is apportioned to this state to determine the amount of the

1-11     tax imposed under Section 171.002 by multiplying the corporation's

1-12     total taxable capital or earned surplus from the sale of services

1-13     to an employee retirement plan company by a fraction, the numerator

1-14     of  which is the average of the sum of beneficiaries domiciled in

1-15     Texas at the beginning of the year and the sum of beneficiaries

1-16     domiciled in Texas at the end of the year, and the denominator of

1-17     which is the average of the sum of all beneficiaries at the

1-18     beginning of the year and the sum of all beneficiaries at the end

1-19     of the year.  The corporation shall make a separate computation to

1-20     allocate taxable capital and earned surplus.  In this subsection,

1-21     "employee retirement plan" means a plan or other arrangement that

1-22     is qualified under Section 401(a), Internal Revenue Code of 1986,

1-23     or satisfies the requirements of Section 403, Internal Revenue Code

1-24     of 1986, or a government plan described in Section 414(d), Internal

 2-1     Revenue Code of 1986.  The term does not include an individual

 2-2     retirement account or individual retirement annuity within the

 2-3     meaning of Section 408, Internal Revenue Code.

 2-4           SECTION 2.  This Act takes effect January 1, 1998, and

 2-5     applies to a report originally due on or after that date.

 2-6           SECTION 3.  The importance of this legislation and the

 2-7     crowded condition of the calendars in both houses create an

 2-8     emergency and an imperative public necessity that the

 2-9     constitutional rule requiring bills to be read on three several

2-10     days in each house be suspended, and this rule is hereby suspended.