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78R2056 SMJ-D

By:  Jones of Bexar                                               H.B. No. 2956



A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for oil and gas producers that 
make financial contributions to institutions of higher education.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 171, Tax Code, is amended by adding 
Subchapter V to read as follows:

SUBCHAPTER V.  TAX CREDIT FOR CONTRIBUTIONS BY GAS AND OIL PRODUCERS 
TO INSTITUTIONS OF HIGHER EDUCATION
	Sec. 171.901.  DEFINITIONS.  In this subchapter:                        
		(1)  "Gas" has the meaning assigned by Section 
201.001(4).           
		(2)  "Institution of higher education" means a public 
or private institution of higher education in this state that is 
accredited by a recognized accrediting agency.
		(3)  "Oil" has the meaning assigned by Section 
202.001(3).           
	Sec. 171.902.  APPLICATION OF SUBCHAPTER.  This subchapter 
applies only to a corporation that:
		(1)  takes gas or oil from the earth or water;                         
		(2)  owns, controls, manages, or leases a gas well or an 
oil well; or
		(3)  owns an interest, including a royalty interest, in 
gas or its value or in oil or its value, regardless of whether the 
gas or oil is produced by the corporation owning the interest or by 
another person on the corporation's behalf by lease, contract, or 
other arrangement.
	Sec. 171.903.  CREDIT.  A corporation that meets the 
eligibility requirements under this subchapter is entitled to a 
credit in the amount allowed by this subchapter against the tax 
imposed under this chapter.
	Sec. 171.904.  EXPENDITURES ELIGIBLE FOR CREDIT.  A 
corporation may claim a credit under this subchapter only for a 
qualifying expenditure.  A qualifying expenditure is an expenditure 
that is:
		(1)  used for teaching or research, or services that 
support teaching or research, at an institution of higher 
education;
		(2)  used for an acquisition by a library or museum that 
is owned by an institution of higher education; or
		(3)  a contribution to the endowment of an institution 
of higher education.
	Sec. 171.905.  AMOUNT; LIMITATIONS.  (a)  The amount of the 
credit allowed under this subchapter is equal to 50 percent of the 
portion of a corporation's qualifying expenditure that is less than 
or equal to $100,000 and 100 percent of the portion of a 
corporation's qualifying expenditure that exceeds $100,000.
	(b)  A corporation may not claim a credit under this 
subchapter in an amount that, when added to all other credits 
claimed for the reporting period, results in a sum that exceeds 
$150,000.
	(c)  A corporation may claim a credit under this subchapter 
for a qualifying expenditure during an accounting period only 
against the tax owed for the corresponding reporting period.
	Sec. 171.906.  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. 171.907.  RULES.  The comptroller shall adopt rules for 
implementing this subchapter, including rules requiring an 
institution of higher education to report a qualifying expenditure 
received under this subchapter in the institution's biennial budget 
request.
	Sec. 171.908.  ASSIGNMENT PROHIBITED.  A corporation may not 
convey, assign, or transfer a 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 2.  A corporation may claim the credit under 
Subchapter V, Chapter 171, Tax Code, as added by this Act, only:
		(1)  for a qualifying expenditure made on or after the 
effective date of this Act; and
		(2)  on a franchise tax report due under Chapter 171, 
Tax Code, on or after January 1, 2004.
	SECTION 3.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2003.