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A BILL TO BE ENTITLED
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AN ACT
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relating to the application of the franchise tax to certain S |
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corporations. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.0002(c), Tax Code, is amended to |
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read as follows: |
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(c) "Taxable entity" does not include an entity that is: |
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(1) a grantor trust as defined by Sections 671 and |
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7701(a)(30)(E), Internal Revenue Code, all of the grantors and |
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beneficiaries of which are natural persons or charitable entities |
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as described in Section 501(c)(3), Internal Revenue Code, excluding |
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a trust taxable as a business entity pursuant to Treasury |
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Regulation Section 301.7701-4(b); |
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(2) an estate of a natural person as defined by Section |
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7701(a)(30)(D), Internal Revenue Code, excluding an estate taxable |
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as a business entity pursuant to Treasury Regulation Section |
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301.7701-4(b); |
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(3) an escrow; |
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(4) a real estate investment trust (REIT) as defined |
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by Section 856, Internal Revenue Code, and its "qualified REIT |
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subsidiary" entities as defined by Section 856(i)(2), Internal |
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Revenue Code, provided that: |
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(A) a REIT with any amount of its assets in direct |
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holdings of real estate, other than real estate it occupies for |
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business purposes, as opposed to holding interests in limited |
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partnerships or other entities that directly hold the real estate, |
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is a taxable entity; and |
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(B) a limited partnership or other entity that |
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directly holds the real estate as described in Paragraph (A) is not |
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exempt under this subdivision, without regard to whether a REIT |
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holds an interest in it; |
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(5) a real estate mortgage investment conduit (REMIC), |
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as defined by Section 860D, Internal Revenue Code; |
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(6) a nonprofit self-insurance trust created under |
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Chapter 2212, Insurance Code, or a predecessor statute; |
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(7) a trust qualified under Section 401(a), Internal |
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Revenue Code; [or] |
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(8) a trust or other entity that is exempt under |
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Section 501(c)(9), Internal Revenue Code; or |
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(9) an S corporation, as that term is defined by |
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Section 1361, Internal Revenue Code, that is owned entirely by an |
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employee stock ownership plan, as that term is defined by Section |
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4975(e), Internal Revenue Code. |
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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, 2012. |