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A BILL TO BE ENTITLED
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AN ACT
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relating to the temporary credit for business losses under the |
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franchise tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.111, Tax Code, as effective January |
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1, 2008, is amended to read as follows: |
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Sec. 171.111. TEMPORARY CREDIT ON TAXABLE MARGIN. (a) On |
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the first report originally due under this chapter on or after |
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January 1, 2008, [Not later than March 1, 2007,] a taxable entity |
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[may notify the comptroller in writing of its intent to preserve its
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right to take a credit in an amount allowed by this section on the
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tax due on taxable margin. The taxable entity] may [thereafter] |
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elect to claim the credit allowed by this section for the current |
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year and future year. The credit remains in effect [at or before
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the original due date of any report due after January 1, 2007,] |
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until the taxable entity revokes the election or this section |
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expires, whichever is earlier. A taxable entity may claim the |
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credit for not more than 10 [20] consecutive privilege periods |
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beginning with the first report originally due under this chapter |
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on or after January 1, 2008 [2007]. A taxable entity may make only |
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one election under this section and the election may not be |
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conveyed, assigned, or transferred to another entity. |
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(b) The credit allowed under this section for any privilege |
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period is computed by: |
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(1) determining the amount of the business loss |
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carryforwards of the taxable entity under Section 171.110(e), as |
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that section applied to annual reports originally due before |
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January 1, 2008, that were not exhausted on a report originally due |
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under this chapter before January 1, 2008[, as of the end of the
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taxable entity's accounting year ending in 2006, of the difference
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between (i) the taxable entity's deductible temporary differences
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and net operating loss carryforwards, net of related valuation
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allowance amounts, shown on the taxable entity's books and records
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on the last day of its taxable year ending in 2006, and (ii) the
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taxable entity's taxable temporary differences as shown on those
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books and records on that date. The amount of other net deferred
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tax items may be less than zero. For the purpose of computing the
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amount of the taxable entity's other net deferred tax items, any
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credit carryforward allowed under this chapter shall be excluded
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from the amount of deductible temporary differences to the extent
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such credit carryforward amount, net of any related valuation
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allowance amount, is otherwise included in the taxable entity's
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deductible temporary differences, net of related valuation
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allowance amounts, shown on the taxable entity's books and records
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on the last day of the taxable entity's taxable year ending in
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2006]; |
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(2) [apportioning the amount determined under
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Subdivision (1) to this state in the same manner taxable margin is
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apportioned under Section 171.106 on the first report due on or
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after January 1, 2007;
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[(3)] multiplying the amount determined under |
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Subdivision (1) [(2)] by 10 percent; and |
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(3) [(4)] multiplying the amount determined under |
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Subdivision (2) [(3)] by the 4.5 percent tax rate prescribed by |
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Section 171.002(a)(2), as that section existed on December 31, |
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2007. |
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(c) [A taxable entity that notifies the comptroller of its
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intent to preserve its right to take a credit allowed by this
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section shall submit with its notice of intent a statement of the
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amount determined under Subsection (b)(1).] The comptroller may |
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request that the taxable entity that intends to take a credit |
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allowed by this section submit, with each [in the] annual report |
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[for each succeeding privilege period] in which the taxable entity |
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is eligible to take a credit, information relating to the amount |
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determined under Subsection (b)(1). The taxable entity shall |
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submit in the form and content the comptroller requires any |
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information relating to the assets and liabilities that determine |
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the amount of the credit, the amount determined under Subsection |
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(b)(1), or any other matter relevant to the computation of the |
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credit for which the taxable entity is eligible. |
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(d) A credit that a taxable entity is entitled to under this |
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section does not convey, and may not be assigned or transferred, in |
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relation to a transaction in which the taxable entity is purchased |
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by another entity. |
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(d-1) A taxable entity, other than a combined group, may not |
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claim the credit under this section unless the taxable entity was, |
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on May 1, 2006, subject to the tax imposed by this chapter as this |
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chapter existed on that date. A taxable entity that is a combined |
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group may claim the credit for each member entity that was, on May |
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1, 2006, subject to the tax imposed by this chapter as this chapter |
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existed on that date and shall compute the amount of the credit for |
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that member as provided by this section. |
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(e) This section expires September 1, 2017 [2026]. |
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SECTION 2. This Act applies only to a report originally due |
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on or after the effective date of this Act. |
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SECTION 3. This Act takes effect January 1, 2008. |