By Nelson S.B. No. 492
76R4487 DAK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to franchise tax incentives for corporations conducting
1-3 certain research and development activities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 171, Tax Code, is amended by adding
1-6 Subchapter Q to read as follows:
1-7 SUBCHAPTER Q. SALE OF BUSINESS LOSS CARRYOVERS AND CREDITS FOR
1-8 CERTAIN RESEARCH AND DEVELOPMENT ACTIVITIES
1-9 Sec. 171.781. DEFINITIONS. In this subchapter:
1-10 (1) "Advanced computing technology" means the
1-11 technology used in designing and developing computing hardware and
1-12 software, including innovations in designing the full spectrum of
1-13 hardware from handheld calculators to supercomputers, and
1-14 peripheral equipment associated with the hardware.
1-15 (2) "Advanced materials technology" means the
1-16 specialized processing and synthesis technology used to create
1-17 materials with engineered properties, including ceramics, high
1-18 value-added metals, electronic materials, composites, polymers, and
1-19 biomaterials.
1-20 (3) "Basic research payment" and "qualified research
1-21 expense" have the meanings assigned those terms by Section 41,
1-22 Internal Revenue Code.
1-23 (4) "Biotechnology" means the technology, including
1-24 products, services, and subtechnologies, involving the functioning
2-1 of biological systems from the macro level to the molecular and
2-2 subatomic levels.
2-3 (5) "Electronic device technology" means the
2-4 technology involving:
2-5 (A) microelectronics;
2-6 (B) semiconductors;
2-7 (C) electronic equipment and instrumentation;
2-8 (D) radio frequency, microwave, and millimeter
2-9 electronics;
2-10 (E) optical and optic-electrical devices; and
2-11 (F) data and digital communications and imaging
2-12 devices.
2-13 (6) "Environmental technology" means the technology
2-14 used:
2-15 (A) to assess and prevent threats or damage to
2-16 human health or the environment;
2-17 (B) for environmental cleanup; and
2-18 (C) to develop alternative energy sources.
2-19 (7) "Medical device technology" means the technology
2-20 involving any medical equipment or product that:
2-21 (A) is not a pharmaceutical product;
2-22 (B) has a therapeutic value, diagnostic value,
2-23 or both; and
2-24 (C) is regulated by the federal Food and Drug
2-25 Administration.
2-26 Sec. 171.782. BUSINESS LOSS CARRYOVER. Notwithstanding
2-27 Section 171.110(e), a corporation that has a business loss for a
3-1 privilege period may carry the loss forward for not more than 15
3-2 consecutive privilege periods if:
3-3 (1) during the privilege period the corporation
3-4 incurred or paid qualified research expenses for research
3-5 conducted in this state; and
3-6 (2) the qualified research expenses were in the fields
3-7 of:
3-8 (A) advanced computing technology;
3-9 (B) advanced materials technology;
3-10 (C) biotechnology;
3-11 (D) electronic device technology;
3-12 (E) environmental technology; or
3-13 (F) medical device technology.
3-14 Sec. 171.783. SALE OF CREDIT PROVIDED UNDER OTHER LAW. A
3-15 corporation that under other law is entitled to a credit against
3-16 the tax imposed under this chapter for a privilege period may sell
3-17 the credit as provided by Section 171.784 if the credit is for
3-18 basic research payments or qualified research expenses made during
3-19 the privilege period in the fields specified in Section 171.782(2).
3-20 Sec. 171.784. SALE OF BUSINESS LOSS OR CREDIT. (a) A
3-21 corporation that has a business loss described by Section 171.782
3-22 or a credit described by Section 171.783 may apply to the
3-23 comptroller to sell the business loss or credit to another
3-24 corporation. The acquiring corporation must apply to the
3-25 comptroller to purchase a business loss or a credit.
3-26 (b) The comptroller shall review applications under this
3-27 section and may not approve the sale or purchase of a business
4-1 loss or credit unless the comptroller determines that:
4-2 (1) the loss or credit is being purchased for money or
4-3 financial assistance in an amount equal to at least 75 percent of
4-4 its value;
4-5 (2) there is an agreement between the seller and
4-6 purchaser specifying the means and amount of payment or financial
4-7 assistance; and
4-8 (3) the payment or financial assistance will be used
4-9 to fund expenses incurred in connection with the operation of new
4-10 or expanding emerging technology in the fields specified in Section
4-11 171.782(2), including expenses relating to the acquisition and
4-12 development of real estate or other fixed assets, materials,
4-13 start-up, tenant fit-out, working capital, salaries, and research
4-14 and development.
4-15 Sec. 171.785. RULES. The comptroller shall adopt rules
4-16 necessary to implement this subchapter.
4-17 SECTION 2. This Act takes effect January 1, 2000, and
4-18 applies only to:
4-19 (1) a report originally due on or after that date; and
4-20 (2) an expense or business loss incurred on or after
4-21 that date.
4-22 SECTION 3. The importance of this legislation and the
4-23 crowded condition of the calendars in both houses create an
4-24 emergency and an imperative public necessity that the
4-25 constitutional rule requiring bills to be read on three several
4-26 days in each house be suspended, and this rule is hereby suspended.