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.