By Davis of Harris                                    H.B. No. 1601
         77R6018 DAK-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to exempting certain corporations from the franchise tax.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1. Section 171.002, Tax Code, is amended by amending
 1-5     Subsection (d) and adding Subsection (e) to read as follows:
 1-6           (d)  A corporation is not required to pay any tax and is not
 1-7     considered to owe any tax for a period if:
 1-8                 (1)  the amount of tax computed for the corporation is
 1-9     less than $100; [or]
1-10                 (2)  the amount of the corporation's gross receipts:
1-11                       (A)  from its entire business under Section
1-12     171.105 is less than $150,000; and
1-13                       (B)  from its entire business under Section
1-14     171.1051, including the amount excepted under Section 171.1051(a),
1-15     is less than $150,000; or
1-16                 (3)  the corporation is a newly formed corporation in a
1-17     county with a population of less than 75,000 and the amount of the
1-18     corporation's gross receipts:
1-19                       (A)  from its entire business under Section
1-20     171.105 is less than $10 million; and
1-21                       (B)  from its entire business under Section
1-22     171.1051, including the amount excepted under Section 171.1051(a),
1-23     is less than $10 million.
1-24           (e)  In this section, "newly formed corporation" means a
 2-1     corporation that the comptroller determines is:
 2-2                 (1)  chartered in this state;
 2-3                 (2)  the result of an original business effort in the
 2-4     county in which the corporation is located; and
 2-5                 (3)  not the result of a relocation from outside the
 2-6     county in which the corporation is located of an ongoing business
 2-7     effort that existed before the date the corporation's charter took
 2-8     effect.
 2-9           SECTION 2. This Act takes effect January 1, 2002, and applies
2-10     only to a corporation whose charter takes effect on or after that
2-11     date.