77R11071 SMJ-D                           
         By Delisi, Hupp                                       H.B. No. 2234
         Substitute the following for H.B. No. 2234:
         By McCall                                         C.S.H.B. No. 2234
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to franchise tax deductions and exemptions for certain
 1-3     business activities involving wind energy devices.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Subchapter B, Chapter 171, Tax Code, is amended by
 1-6     adding Section 171.088 to read as follows:
 1-7           Sec. 171.088.  EXEMPTION--CORPORATION ENGAGED IN BUSINESS
 1-8     INVOLVING WIND ENERGY DEVICES. (a)  In this section, "wind energy
 1-9     device" means a system or a series of mechanisms designed primarily
1-10     to provide heating or cooling or to produce electrical or
1-11     mechanical power by collecting and transferring wind-generated
1-12     energy.
1-13           (b)  A corporation engaged solely in the business of
1-14     manufacturing, selling, or installing wind energy devices is
1-15     exempted from the franchise tax.
1-16           SECTION 2. Subchapter C, Chapter 171, Tax Code, is amended by
1-17     adding Section 171.108 to read as follows:
1-18           Sec. 171.108.  DEDUCTION OF COST OF WIND ENERGY DEVICE. (a)
1-19     In this section, "wind energy device" has the meaning assigned by
1-20     Section 171.088.
1-21           (b)  A corporation may deduct from its apportioned taxable
1-22     capital the amortized cost of a wind energy device or from its
1-23     apportioned taxable earned surplus 10 percent of the amortized cost
1-24     of a wind energy device if:
 2-1                 (1)  the device is acquired by the corporation for
 2-2     heating or cooling or for the production of power;
 2-3                 (2)  the device is used in this state by the
 2-4     corporation; and
 2-5                 (3)  the cost of the device is amortized:
 2-6                       (A)  beginning in the month in which the device
 2-7     is placed in service in this state;
 2-8                       (B)  in equal monthly amounts for a period of at
 2-9     least 60 months; and
2-10                       (C)  only for a period in which the device is
2-11     used in this state.
2-12           (c)  A corporation that makes a deduction under this section
2-13     shall file with the comptroller an amortization schedule showing
2-14     the period in which a deduction will be made.  On the request of
2-15     the comptroller, the corporation shall file with the comptroller
2-16     proof of the cost of the wind energy device or of the device's
2-17     operation in this state.
2-18           (d)  A corporation may elect to make the deduction under this
2-19     section either from apportioned taxable capital or apportioned
2-20     taxable earned surplus for each regular annual period.  An election
2-21     for an initial tax period applies to the second tax period and to
2-22     the first regular annual period.
2-23           SECTION 3. This Act takes effect January 1, 2002, and applies
2-24     to a report originally due on or after that date.