By: Howard of Fort Bend, Paxton H.B. No. 4265

(Senate Sponsor - Averitt)

(In the Senate - Received from the House May 7, 2009; May 8, 2009, read first time and referred to Committee on Finance; May 25, 2009, reported adversely, with favorable Committee Substitute by the following vote: Yeas 11, Nays 0; May 25, 2009, sent to printer.)

COMMITTEE SUBSTITUTE FOR H.B. No. 4265 By: Averitt

A BILL TO BE ENTITLED

AN ACT

relating to the definition of controlling interest for purposes of the franchise tax.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 171.0001(8), Tax Code, is amended to read as follows:

(8) "Controlling interest" means:

(A) for a corporation, either more than 50 percent, owned directly or indirectly, of the total combined voting power of all classes of stock of the corporation, or more than 50 percent, owned directly or indirectly, of the beneficial ownership interest in the voting stock of the corporation;

(B) for a partnership, [association, trust, or other entity other than a limited liability company,] more than 50 percent, owned directly or indirectly, of the capital or[,] profits[, or beneficial] interest in the partnership[, association, trust, or other entity]; [and]

(C) for an association [for a limited liability company], [either] more than 50 percent, owned directly or indirectly, of the capital or profits interest in the association;

(D) for a trust, more than 50 percent, owned directly or indirectly, of the current beneficial interest in the trust corpus or income;

(E) for a limited liability company, either:

(i) more than 50 percent, owned directly or indirectly, of the total membership interest of the limited liability company; or

(ii) more than 50 percent, owned directly or indirectly, of the beneficial ownership interest in the membership interest of the limited liability company; or

(F) for any other entity, more than 50 percent, owned directly or indirectly, of the capital or profits interest in the entity [total membership interest of the limited liability company or more than 50 percent, owned directly or indirectly, of the beneficial ownership interest in the membership interest of the limited liability company].

SECTION 2. This Act applies only to a report originally due on or after the effective date of this Act.

SECTION 3. This Act takes effect January 1, 2010.

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