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A BILL TO BE ENTITLED
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AN ACT
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relating to a franchise tax credit for certain research and |
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development activities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 171, Tax Code, is amended by adding |
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Subchapter M to read as follows: |
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SUBCHAPTER M. TAX CREDIT FOR CERTAIN RESEARCH AND DEVELOPMENT |
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ACTIVITIES |
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Sec. 171.651. DEFINITIONS. In this subchapter: |
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(1) "Qualified research" has the meaning assigned by |
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Section 41, Internal Revenue Code, except that the research must be |
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conducted in this state. |
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(2) "Qualified research expense" has the meaning |
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assigned by Section 41, Internal Revenue Code, except that the |
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payments and expenses must be for research conducted in this state. |
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Sec. 171.652. ENTITLEMENT TO CREDIT. A taxable entity is |
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eligible for a credit against the tax imposed under this chapter in |
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the amount and under the conditions and limitations provided by |
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this subchapter. |
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Sec. 171.653. AMOUNT OF CREDIT. (a) The credit for any |
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report equals: |
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(1) 10 percent of the difference between: |
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(A) the qualified research expenses incurred in |
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this state during the period on which the report is based; and |
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(B) 50 percent of the average amount of qualified |
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research expenses incurred in this state during the three tax years |
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preceding the period on which the report is based; or |
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(2) the amount of taxes imposed by Chapter 151 and paid |
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during the period on which the report is based on the sale, lease, |
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or rental to or use by the taxable entity of a taxable item that is |
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used in performing qualified research. |
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(b) For each report, a taxable entity may elect to compute |
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the amount of the credit in accordance with Subsection (a)(1) or |
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(2), regardless of whether the taxable entity has made a different |
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election on a previous report. |
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(c) The burden of establishing entitlement to and the value |
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of the credit is on the taxable entity. |
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Sec. 171.654. LIMITATIONS. The total credit claimed under |
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this subchapter for a report, including the amount of any |
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carryforward credit under Section 171.655, may not exceed 50 |
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percent of the amount of franchise tax due for the report before any |
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other applicable tax credits. |
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Sec. 171.655. CARRYFORWARD. If a taxable entity is |
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eligible for a credit that exceeds the limitation under Section |
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171.654, the taxable entity may carry the unused credit forward for |
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not more than 20 consecutive reports. A credit carryforward from a |
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previous report is considered to be used before the current year |
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credit. |
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Sec. 171.656. ASSIGNMENT PROHIBITED. A taxable entity may |
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not convey, assign, or transfer the credit allowed under this |
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subchapter to another entity unless all of the assets of the taxable |
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entity are conveyed, assigned, or transferred in the same |
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transaction. |
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Sec. 171.657. APPLICATION FOR CREDIT. A taxable entity |
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must apply for a credit under this subchapter on or with the tax |
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report for the period for which the credit is claimed. |
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Sec. 171.658. RULES. The comptroller shall adopt rules |
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necessary to implement this subchapter, including rules regarding |
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the documentation necessary to establish the amount of the credit |
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computed under Section 171.653(a)(2). |
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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, 2014. |