TO: | Honorable Rene Oliveira, Chair, House Committee on Ways & Means |
FROM: | John S. O'Brien, Director, Legislative Budget Board |
IN RE: | HB4269 by Howard, Charlie (Relating to the definition of passive entity for purposes of the franchise tax.), As Introduced |
The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $29,926,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2010 | $0 |
2011 | $0 |
2012 | $0 |
2013 | $0 |
2014 | $0 |
Fiscal Year | Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304 |
---|---|
2010 | ($14,778,000) |
2011 | ($15,148,000) |
2012 | ($15,678,000) |
2013 | ($16,305,000) |
2014 | ($16,958,000) |
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, relating to the requirements for an entity to be a passive entity.
Under current law to be considered a passive entity it must receive at least 90 percent of its federal gross income from specified passive sources and no more than 10 percent from conducting an active trade or business. This bill would change the calculation for one of the sources of passive income—gains from the sale of real property. Gains under current law are net gains. Under this bill's provisions only positive gains would count toward meeting the 90 percent income requirement. The bill would delete the requirement related to not more than 10 percent of income coming from conducting an active trade or business.
The bill would take effect on January 1, 2010, and apply to a report due on or after that date.
Source Agencies: | 304 Comptroller of Public Accounts
|
LBB Staff: | JOB, MN, SD
|