By Homer H.B. No. 1483
77R2951 CBH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to franchise tax incentives for recycling.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter C, Chapter 171, Tax Code, is amended by
1-5 adding Section 171.1045 to read as follows:
1-6 Sec. 171.1045. GROSS RECEIPTS: DEDUCTION FOR RECYCLED
1-7 PRODUCTS. (a) In this section, "recycled product" has the meaning
1-8 assigned by Section 361.421, Health and Safety Code.
1-9 (b) A corporation may exclude from its receipts includable
1-10 under Sections 171.103(1), 171.1032(a)(1), 171.105(a)(1), and
1-11 171.1051(a)(1) the amount of the corporation's receipts from sales
1-12 of recycled products manufactured by the corporation. A
1-13 corporation that chooses to exclude receipts as provided by this
1-14 section shall exclude those receipts from each computation of gross
1-15 receipts required by this chapter.
1-16 SECTION 2. Section 171.110, Tax Code, is amended by amending
1-17 Subsection (a) and adding Subsection (k) to read as follows:
1-18 (a) The net taxable earned surplus of a corporation is
1-19 computed by:
1-20 (1) determining the corporation's reportable federal
1-21 taxable income, subtracting from that amount any amount included in
1-22 reportable federal taxable income under Section 78 or Sections
1-23 951-964, Internal Revenue Code, any amount derived from the sale of
1-24 recycled products manufactured by the corporation, and dividends
2-1 received from a subsidiary, associate, or affiliated corporation
2-2 that does not transact a substantial portion of its business or
2-3 regularly maintain a substantial portion of its assets in the
2-4 United States, and adding to that amount any compensation of
2-5 officers or directors, or if a bank, any compensation of directors
2-6 and executive officers, to the extent excluded in determining
2-7 federal taxable income to determine the corporation's taxable
2-8 earned surplus;
2-9 (2) apportioning the corporation's taxable earned
2-10 surplus to this state as provided by Section 171.106(b) or (c), as
2-11 applicable, to determine the corporation's apportioned taxable
2-12 earned surplus;
2-13 (3) adding the corporation's taxable earned surplus
2-14 allocated to this state as provided by Section 171.1061; and
2-15 (4) subtracting from that amount any allowable
2-16 deductions and any business loss that is carried forward to the tax
2-17 reporting period and deductible under Subsection (e).
2-18 (k) In this section, "recycled product" has the meaning
2-19 assigned by Section 361.421, Health and Safety Code.
2-20 SECTION 3. Chapter 171, Tax Code, is amended by adding
2-21 Subchapter S to read as follows:
2-22 SUBCHAPTER S. TAX CREDIT FOR CAPITAL EXPENDITURES FOR CERTAIN
2-23 RECYCLING EQUIPMENT
2-24 Sec. 171.851. DEFINITION. In this subchapter, "recycling
2-25 equipment" means equipment necessary to assist a corporation in
2-26 recycling waste and used predominantly for that purpose.
2-27 Sec. 171.852. ELIGIBILITY. A corporation is eligible for a
3-1 credit against the tax imposed under this chapter in the amount and
3-2 under the conditions and limitations provided by this subchapter.
3-3 Sec. 171.853. CREDIT FOR CAPITAL EXPENDITURE FOR RECYCLING
3-4 EQUIPMENT. A corporation may claim a credit under this subchapter
3-5 only for a capital expenditure made toward purchasing recycling
3-6 equipment.
3-7 Sec. 171.854. AMOUNTS; LIMITATIONS. (a) The amount of the
3-8 credit is equal to the lesser of:
3-9 (1) the total amount of the capital expenditure made
3-10 during the reporting period; or
3-11 (2) $50,000.
3-12 (b) The corporation may claim the credit only in five equal
3-13 installments of one-fifth the credit amount over five consecutive
3-14 reports beginning with the report based on the period during which
3-15 the capital expenditure was made.
3-16 (c) The total credit claimed under this subchapter for a
3-17 period may not exceed the amount of franchise tax due for the
3-18 report after any other applicable tax credits.
3-19 Sec. 171.855. APPLICATION FOR CREDIT. (a) A corporation
3-20 must apply for a credit under this subchapter on or with the tax
3-21 report for the period for which the credit is claimed.
3-22 (b) The comptroller shall adopt a form for the application
3-23 for the credit. A corporation must use this form in applying for
3-24 the credit.
3-25 Sec. 171.856. ASSIGNMENT PROHIBITED. A corporation may not
3-26 convey, assign, or transfer the credit allowed under this
3-27 subchapter to another entity unless all of the assets of the
4-1 corporation are conveyed, assigned, or transferred in the same
4-2 transaction.
4-3 SECTION 4. (a) This Act takes effect January 1, 2002, and
4-4 applies only to a report due on or after that date.
4-5 (b) A corporation may claim a credit under Subchapter S,
4-6 Chapter 171, Tax Code, as added by this Act, only for an
4-7 expenditure made on or after January 1, 2002.