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A BILL TO BE ENTITLED
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AN ACT
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relating to the deduction of certain officers' compensation as a |
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cost of goods sold for purposes of the franchise tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.1012(e), Tax Code, is amended to |
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read as follows: |
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(e) The cost of goods sold does not include the following |
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costs in relation to the taxable entity's goods: |
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(1) the cost of renting or leasing equipment, |
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facilities, or real property that is not used for the production of |
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the goods; |
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(2) selling costs, including employee expenses |
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related to sales; |
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(3) distribution costs, including outbound |
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transportation costs; |
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(4) advertising costs; |
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(5) idle facility expense; |
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(6) rehandling costs; |
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(7) bidding costs, which are the costs incurred in the |
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solicitation of contracts ultimately awarded to the taxable entity; |
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(8) unsuccessful bidding costs, which are the costs |
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incurred in the solicitation of contracts not awarded to the |
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taxable entity; |
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(9) interest, including interest on debt incurred or |
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continued during the production period to finance the production of |
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the goods; |
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(10) income taxes, including local, state, federal, |
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and foreign income taxes, and franchise taxes that are assessed on |
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the taxable entity based on income; |
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(11) strike expenses, including costs associated with |
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hiring employees to replace striking personnel, but not including |
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the wages of the replacement personnel, costs of security, and |
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legal fees associated with settling strikes; |
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(12) officers' compensation that is not compensation |
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for direct labor; |
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(13) costs of operation of a facility that is: |
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(A) located on property owned or leased by the |
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federal government; and |
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(B) managed or operated primarily to house |
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members of the armed forces of the United States; and |
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(14) any compensation paid to an undocumented worker |
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used for the production of goods. As used in this subdivision: |
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(A) "undocumented worker" means a person who is |
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not lawfully entitled to be present and employed in the United |
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States; and |
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(B) "goods" includes the husbandry of animals, |
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the growing and harvesting of crops, and the severance of timber |
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from realty. |
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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, 2016. |