By Shapiro                                            S.B. No. 1200
         77R7931 DAK-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to a franchise tax credit for contributions to
 1-3     organizations assisting educationally disadvantaged children.
 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 CONTRIBUTIONS TO ORGANIZATIONS
 1-8               ASSISTING EDUCATIONALLY DISADVANTAGED CHILDREN
 1-9           Sec. 171.851.  DEFINITION. In this subchapter, "at-risk
1-10     child" means:
1-11                 (1)  a student at risk of dropping out of school as
1-12     defined by Section 29.081, Education Code; or
1-13                 (2)  a child who is eligible for the national school
1-14     lunch program of free or reduced-price lunches.
1-15           Sec. 171.852.  ELIGIBILITY.  A corporation is eligible for a
1-16     credit against the tax imposed under this chapter in the amount and
1-17     under the conditions and limitations provided by this subchapter.
1-18           Sec. 171.853.  CREDIT FOR CONTRIBUTIONS.  A corporation may
1-19     claim a credit under this subchapter only for a contribution to an
1-20     organization that:
1-21                 (1)  is a nonprofit corporation organized for
1-22     educational purposes to aid community colleges and other schools in
1-23     meeting the needs of at-risk children;
1-24                 (2)  is exempt from the tax imposed under this chapter;
 2-1     and
 2-2                 (3)  spends 80 percent or more of its funds for direct
 2-3     assistance for at-risk children.
 2-4           Sec. 171.854.  LIMITATION.  (a)  The total credit claimed
 2-5     under this subchapter for a period may not exceed 25 percent of the
 2-6     amount of franchise tax due for the report after any other
 2-7     applicable tax credits.
 2-8           (b)  A corporation may claim a credit under this subchapter
 2-9     for a contribution made during an accounting period only against
2-10     the tax owed for the corresponding reporting period.
2-11           Sec. 171.855.  APPLICATION FOR CREDIT.  (a)  A corporation
2-12     must apply for a credit under this subchapter on or with the tax
2-13     report for the period for which the credit is claimed.
2-14           (b)  The comptroller shall adopt a form for the application
2-15     for the credit.  A corporation must use this form in applying for
2-16     the credit.
2-17           Sec. 171.856.  ASSIGNMENT PROHIBITED.  A corporation may not
2-18     convey, assign, or transfer the credit allowed under this
2-19     subchapter to another entity unless all of the assets of the
2-20     corporation are conveyed, assigned, or transferred in the same
2-21     transaction.
2-22           SECTION 2.  (a)  This Act takes effect January 1, 2002, and
2-23     applies only to a report due on or after that date.
2-24           (b)  A corporation may claim a credit under Subchapter S,
2-25     Chapter 171, Tax Code, as added by this Act, only for a
2-26     contribution made on or after January 1, 2002.