By Wohlgemuth                                         H.B. No. 1812
         77R6502 CBH-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to a franchise tax credit for expenditures made toward the
 1-3     cost of long-term care insurance policies for certain employees.
 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 S to read as follows:
 1-7        SUBCHAPTER S.  TAX CREDIT FOR EXPENDITURES FOR LONG-TERM CARE
 1-8                              INSURANCE POLICY
 1-9           Sec. 171.851.  DEFINITION.  In this subchapter, "long-term
1-10     care insurance policy" has the meaning assigned by Section 2,
1-11     Article 3.70-12, Insurance Code.
1-12           Sec. 171.852.  ELIGIBILITY.  A corporation is eligible for a
1-13     credit against the tax imposed under this chapter in the amount and
1-14     under the conditions and limitations provided by this subchapter.
1-15           Sec. 171.853.  CREDIT FOR PURCHASE OF LONG-TERM CARE
1-16     INSURANCE POLICY.  A corporation may claim a credit under this
1-17     subchapter only for an expenditure made toward the cost of a
1-18     long-term care insurance policy for an employee or the employee's
1-19     parent.
1-20           Sec. 171.854.  AMOUNTS; LIMITATIONS.  (a)  The amount of the
1-21     credit in relation to an employee and the employee's spouse or
1-22     parent is equal to:
1-23                 (1)  the lesser of 30 percent of the cost incurred by
1-24     the employer or $150; or
 2-1                 (2)  the lesser of 40 percent of the cost incurred by
 2-2     the employer or $200 if the policy allows individuals to build
 2-3     equity in the policy.
 2-4           (b)  The total credit under this subchapter for a report may
 2-5     not exceed $10,000.
 2-6           (c)  The total credit claimed under this subchapter for a
 2-7     period may not exceed the amount of franchise tax due for the
 2-8     report after any other applicable tax credits.
 2-9           (d)  A corporation may claim a credit under this subchapter
2-10     for an expenditure made during an accounting period only against
2-11     the tax owed for the corresponding reporting period.
2-12           Sec. 171.855.  APPLICATION FOR CREDIT.  (a)  A corporation
2-13     must apply for a credit under this subchapter on or with the tax
2-14     report for the period for which the credit is claimed.
2-15           (b)  The comptroller shall adopt a form for the application
2-16     for the credit.  A corporation must use this form in applying for
2-17     the credit.
2-18           Sec. 171.856.  ASSIGNMENT PROHIBITED.  A corporation may not
2-19     convey, assign, or transfer the credit allowed under this
2-20     subchapter to another entity unless all of the assets of the
2-21     corporation are conveyed, assigned, or transferred in the same
2-22     transaction.
2-23           SECTION 2. (a)  This Act takes effect January 1, 2002, and
2-24     applies only to a report due on or after that date.
2-25           (b)  A corporation may claim a credit under Subchapter S,
2-26     Chapter 171, Tax Code, as added by this Act, only for an
2-27     expenditure made on or after January 1, 2002.