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Floor Packet Page No. 66                                                    



	

Amend proposed CSHB 3, on page 38, between lines 21 and 22, by 

inserting a new Section 171.1015, Tax Code, to read as follows:

	Sec. 171.1015.  REPORTING FOR CERTAIN PARTNERSHIPS IN TIERED 

PARTNERSHIP ARRANGEMENT.  (a)  In this section, "tiered partnership 

arrangement" means an ownership structure in which all of the 

interests in one partnership, trust, limited liability company that 

is treated for federal income taxes as a partnership or a limited 

liability company treated as an S corporation for federal income 

tax purposes (an "upper tier partnership") are owned by one or more 

other taxable entities (a "lower tier entity").  A tiered 

partnership arrangement may have two or more tiers.

	(b)  In addition to the tax it is required to pay under this 

chapter on its own taxable margin, a taxable entity that is a lower 

tier entity may pay the tax on the taxable margin of a higher tier 

partnership if the higher tier partnership submits a report to the 

comptroller showing the amount of taxable margin that each lower 

tier entity that owns it should include within the lower tier 

entity's own taxable margin, according to the profits interest of 

the lower tier entity.  An upper tier partnership is not required to 

pay tax under this chapter on any taxable margin reported under this 

section.

	(c)  This section does not apply to that percentage of the 

taxable margin attributable to a lower tier entity by a upper tier 

partnership if the lower tier entity is not subject to the tax under 

this chapter. In this case, the higher tier partnership is liable 

for the tax on its taxable margin.

	(d)  The comptroller shall adopt rules to administer this 

section.