By Delisi H.B. No. 2234 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to franchise tax incentives for wind energy devices. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. The Tax Code is amended to include Section 171.088 1-5 to read as follows: 1-6 Sec. 171.088. EXEMPTION - CORPORATION WITH BUSINESS INTEREST 1-7 IN WIND ENERGY DEVICES. (a) In this section, "wind energy device" 1-8 means a system or series of mechanisms designed primarily to 1-9 provide heating or cooling or to produce electrical or mechanical 1-10 power by collecting and transferring wind-generated energy. The 1-11 term includes a mechanical or chemical device that has the ability 1-12 to store wind-generated energy for use in heating or cooling or in 1-13 the production of power. 1-14 (b) A corporation engaged solely in the business of 1-15 manufacturing, selling, or installing wind energy devices is 1-16 exempted from the franchise tax. 1-17 SECTION 2. The Tax Code is amended to include Section 1-18 171.108 to read as follows: 1-19 Sec. 171.108. DEDUCTION OF COST OF WIND ENERGY DEVICE FROM 1-20 TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS APPORTIONED TO THIS 1-21 STATE. (a) In this section, "wind energy device" has the meaning 1-22 assigned to it in section 171.088 of this code. 2-1 (b) A corporation may deduct from its apportioned taxable 2-2 capital the amortized cost of a wind energy device or from its 2-3 apportioned taxable earned surplus 10 percent of the amortized cost 2-4 of a wind energy device if: 2-5 (1) the device is acquired by the corporation for 2-6 heating or cooling or for the production of power; 2-7 (2) the device is used in this state by the 2-8 corporation; and 2-9 (3) the cost of the device is amortized in accordance 2-10 with Subsection (c) of this section. 2-11 (c) The amortization of the cost of a wind energy device 2-12 must: 2-13 (1) be for a period of at least 60 months; 2-14 (2) provide for equal monthly amounts; 2-15 (3) begin on the month in which the device is placed 2-16 in service in this state; and 2-17 (4) cover only a period in which the device is in use 2-18 in this state. 2-19 (d) A corporation that makes a deduction under this section 2-20 shall file with the comptroller an amortization schedule showing 2-21 the period in which a deduction is to be made. On the request of 2-22 the comptroller, the corporation shall file with the comptroller 2-23 proof of the cost of the wind energy device or proof of the 2-24 device's operation in this state. 2-25 (e) A corporation may elect to make the deduction authorized 2-26 by this section either from apportioned taxable capital or 3-1 apportioned taxable earned surplus for each separate regular annual 3-2 period. An election for an initial period applies to the second 3-3 tax period and to the first regular annual period. 3-4 SECTION 3. EFFECTIVE DATE. (a) This Act takes effect January 3-5 1, 2002, and applies only to a report due on or after that date. 3-6 (b) A corporation may claim an exemption or deduction under 3-7 Sections 171.088 and 171.108, Tax Code, as added by this Act, only 3-8 for an expenditure made on or after January 1, 2002.