78S10334 CBH-D

By:  Homer                                                        H.B. No. 95 



A BILL TO BE ENTITLED

AN ACT

relating to franchise tax incentives for recycling.                           
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter C, Chapter 171, Tax Code, is amended 
by adding Section 171.1045 to read as follows:
	Sec. 171.1045.  GROSS RECEIPTS:  DEDUCTION FOR RECYCLED 
PRODUCTS. (a)  In this section, "recycled product" has the meaning 
assigned by Section 361.421, Health and Safety Code.
	(b)  A corporation may exclude from its receipts includable 
under Sections 171.103(1), 171.1032(a)(1), 171.105(a)(1), and 
171.1051(a)(1) the amount of the corporation's receipts from sales 
of recycled products manufactured by the corporation.  A 
corporation that chooses to exclude receipts as provided by this 
section shall exclude those receipts from each computation of gross 
receipts required by this chapter.
	SECTION 2.  Section 171.110(a), Tax Code, as amended by 
Section 39, H.B. No. 2424, Acts of the 78th Legislature, Regular 
Session, 2003, is amended to read as follows:
	(a)  The net taxable earned surplus of a corporation is 
computed by:         
		(1)  determining the corporation's reportable federal 
taxable income, subtracting from that amount any amount excludable 
under Subsection (k), any amount included in reportable federal 
taxable income under Section 78 or Sections 951-964, Internal 
Revenue Code, any amount derived from the sale of recycled products 
manufactured by the corporation, and dividends received from a 
subsidiary, associate, or affiliated corporation that does not 
transact a substantial portion of its business or regularly 
maintain a substantial portion of its assets in the United States, 
and adding to that amount any compensation of officers or 
directors, or if a bank, any compensation of directors and 
executive officers, to the extent excluded in determining federal 
taxable income to determine the corporation's taxable earned 
surplus;
		(2)  apportioning the corporation's taxable earned 
surplus to this state as provided by Section 171.106(b) or (c), as 
applicable, to determine the corporation's apportioned taxable 
earned surplus;
		(3)  adding the corporation's taxable earned surplus 
allocated to this state as provided by Section 171.1061;  and
		(4)  subtracting from that amount any allowable 
deductions and any business loss that is carried forward to the tax 
reporting period and deductible under Subsection (e).
	SECTION 3.  Section 171.110(l), Tax Code, as added by 
Section 39, H.B. No. 2424, Acts of the 78th Legislature, Regular 
Session, 2003, is amended by adding Subdivision (6) to read as 
follows:
		(6)  "Recycled product" has the meaning assigned by 
Section 361.421, Health and Safety Code.
	SECTION 4.  Chapter 171, Tax Code, is amended by adding 
Subchapter W to read as follows:

SUBCHAPTER W.  TAX CREDIT FOR CAPITAL EXPENDITURES FOR CERTAIN
RECYCLING EQUIPMENT
	Sec. 171.951.  DEFINITION. In this subchapter, "recycling 
equipment" means equipment necessary to assist a corporation in 
recycling waste and used predominantly for that purpose.
	Sec. 171.952.  ELIGIBILITY. A corporation is eligible for a 
credit against the tax imposed under this chapter in the amount and 
under the conditions and limitations provided by this subchapter.
	Sec. 171.953.  CREDIT FOR CAPITAL EXPENDITURE FOR RECYCLING 
EQUIPMENT. A corporation may claim a credit under this subchapter 
only for a capital expenditure made toward  purchasing recycling 
equipment.
	Sec. 171.954.  AMOUNTS; LIMITATIONS. (a)  The amount of the 
credit is equal to the lesser of:
		(1)  the total amount of the capital expenditure made 
during the reporting period; or
		(2)  $50,000.                                                          
	(b)  The corporation may claim the credit only in five equal 
installments of one-fifth the credit amount over five consecutive 
reports beginning with the report based on the period during which 
the capital expenditure was made.
	Sec. 171.955.  APPLICATION FOR CREDIT. (a)  A corporation 
must apply for a credit under this subchapter on or with the tax 
report for the period for which the credit is claimed.
	(b)  The comptroller shall adopt a form for the application 
for the credit.  A corporation must use this form in applying for 
the credit.
	Sec. 171.956.  ASSIGNMENT PROHIBITED.  A corporation may not 
convey, assign, or transfer the credit allowed under this 
subchapter to another entity unless all of the assets of the 
corporation are conveyed, assigned, or transferred in the same 
transaction.
	SECTION 5.  (a)  This Act takes effect January 1, 2004, and 
applies only to a report due on or after that date.
	(b)  A corporation may claim a credit under Subchapter W, 
Chapter 171, Tax Code, as added by this Act, only for an expenditure 
made on or after January 1, 2004.