By Berlanga                                          H.C.R. No. 315

         75R13846 DWS-F                           

                             HOUSE CONCURRENT RESOLUTION

 1-1           WHEREAS, The 73rd Texas Legislature amended the Texas Banking

 1-2     Code to permit state banks to be organized as limited banking

 1-3     associations; and

 1-4           WHEREAS, Limited banking associations were created by the

 1-5     legislature to permit state banks to be organized as unincorporated

 1-6     business organizations eligible to be treated as flow-through

 1-7     entities for federal income tax purposes in the same manner as the

 1-8     limited liability company authorized under the Texas Limited

 1-9     Liability Company Act (Article 1528n, Vernon's Texas Civil

1-10     Statutes); and

1-11           WHEREAS, The Texas Department of Banking issued a legal

1-12     opinion concluding that limited banking associations are not

1-13     required by the Texas Constitution to be incorporated as

1-14     corporations and explaining the history and background of Texas law

1-15     relating to limited banking associations and the state bank system

1-16     under the Texas Constitution; and

1-17           WHEREAS, The Internal Revenue Service has issued a ruling

1-18     denying "pass-through" tax treatment for Texas limited banking

1-19     associations that ignored the conclusion of the Texas Department of

1-20     Banking and has concluded on its own that the Texas Constitution

1-21     requires all state banks to be incorporated as corporations and

1-22     therefore in the view of the Internal Revenue Service limited

1-23     banking associations could not qualify as unincorporated business

1-24     entities; and

 2-1           WHEREAS, The legislature desires to make clear its purpose

 2-2     and intent in authorizing state banks to be organized as limited

 2-3     banking associations; now, therefore, be it

 2-4           RESOLVED by the 75th Legislature of the State of Texas, That

 2-5     it is the joint sense of the senate and the house of

 2-6     representatives that Section 16, Article XVI, Texas Constitution,

 2-7     does not mandate that all state banks must be incorporated as

 2-8     corporate bodies and that limited banking associations are state

 2-9     banks that are not incorporated as corporate entities but are

2-10     organized, chartered, and regulated by the banking commissioner;

2-11     and, be it further

2-12           RESOLVED, That limited banking associations are intended by

2-13     the legislature to have all the other benefits to which state banks

2-14     are entitled, including federal deposit insurance and eligibility

2-15     for membership in the Federal Reserve System.