SRC-TJG S.B. 696 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 696
78R6549 SMJ-DBy: Estes
Finance
3/18/2003
As Filed


DIGEST AND PURPOSE 

Currently, there exists no working partnership between the government and
the private sector to encourage the production, use, and advancement of
desalination in Texas.  As proposed, S.B. 696 provides a franchise tax
exemption for a corporation engaged solely in the business of
manufacturing, selling, and installing desalination devices capable of
producing at least 3,000 gallons of desalted water per day.  This bill
also allows a corporation that has purchased a desalination device to
deduct from its apportioned taxable capital the amortized cost of the
desalination device or from its apportioned taxable earned surplus 10
percent of the amortized cost of a desalination device. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 171B, Tax Code, by adding Section 171.088, as
follows: 

Sec. 171.088.  EXEMPTION--CORPORATION ENGAGED IN BUSINESS DESALINATION
DEVICES.  (a) Defines "desalination device." 

(b) Provides that a corporation engaged solely in the business of
manufacturing, selling, and installing desalination devices capable of
producing at least 3,000 gallons of desalted water per day is exempted
from the franchise tax. 

(c) Provides that this section expires September 1, 2016.

SECTION 2.  Amends Chapter 171C, Tax Code, by adding Section 171.108, as
follows: 

Sec. 171.108.  DEDUCTION OF COST OF DESALINATION DEVICE.  (a) Defines
"desalination devises." 

(b) Authorizes a corporation to deduct from its apportioned taxable
capital the amortized cost of a desalination device or from its
apportioned taxable earned surplus 10 percent of the amortized cost of a
desalination devices if certain conditions apply. 

(c) Requires a corporation that makes a deduction under this section to
file with the comptroller of public accounts of the State of Texas
(comptroller) an amortization schedule showing the period in which a
deduction will be made.  Requires the corporation, on the request of the
comptroller, to file with the comptroller proof of the cost of the
desalination device or of the device's operation in this state. 

(d) Authorizes a corporation to elect to make the deduction under this
section from either apportioned taxable capital or apportioned taxable
earned surplus for each  regular annual period.  Provides that an election
for an initial tax period applies to the second tax period and to the
first regular annual period. 

(e) Provides that this section expires September 1, 2016.

SECTION 3.  (a) Effective date: January 1, 2006.
                            Makes application of this Act prospective.

(b) Authorizes a corporation to claim a deduction under Section 171.108,
Tax Code, as added by this Act, only for an expenditure made on or after
the effective date of this Act.