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A BILL TO BE ENTITLED
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AN ACT
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relating to a deduction under the franchise tax for certain |
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contracts with the federal government. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.101(a), Tax Code, is amended to read |
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as follows: |
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(a) The taxable margin of a taxable entity is computed by: |
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(1) determining the taxable entity's margin, which is |
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the lesser of: |
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(A) the amount provided by this paragraph, which |
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is the lesser of: |
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(i) 70 percent of the taxable entity's total |
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revenue from its entire business, as determined under Section |
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171.1011; or |
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(ii) an amount equal to the taxable entity's |
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total revenue from its entire business as determined under Section |
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171.1011 minus $1 million; or |
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(B) an amount computed by determining the taxable |
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entity's total revenue from its entire business under Section |
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171.1011 and subtracting the greater of: |
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(i) $1 million; or |
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(ii) an amount equal to the sum of: |
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(a) at the election of the taxable |
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entity, either: |
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(1) cost of goods sold, as |
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determined under Section 171.1012; or |
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(2) compensation, as determined |
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under Section 171.1013; [and] |
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(b) any compensation, as determined |
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under Section 171.1013, paid to an individual during the period the |
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individual is serving on active duty as a member of the armed forces |
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of the United States if the individual is a resident of this state |
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at the time the individual is ordered to active duty and the cost of |
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training a replacement for the individual; and |
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(c) any costs not already subtracted |
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under Sub-subparagraph (a) that are properly allowable under the |
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Federal Acquisition Regulation (48 C.F.R. Chapter 1), or a |
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successor regulation, for contracts, or subcontracts supporting |
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those contracts, for the sale of goods or services to the federal |
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government by a taxable entity that is a party to a contract subject |
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to the requirements of 48 C.F.R. Chapter 2; |
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(2) apportioning the taxable entity's margin to this |
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state as provided by Section 171.106 to determine the taxable |
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entity's apportioned margin; and |
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(3) subtracting from the amount computed under |
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Subdivision (2) any other allowable deductions to determine the |
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taxable entity's taxable margin. |
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SECTION 2. This Act applies only to a report originally due |
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on or after January 1, 2016. |
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SECTION 3. This Act takes effect January 1, 2016. |