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A BILL TO BE ENTITLED
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AN ACT
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relating to the 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. Section 171.651, Tax Code, is amended by adding |
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Subdivision (1-a) and amending Subdivision (4) to read as follows: |
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(1-a) "Production costs" include the cost of: |
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(A) materials; |
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(B) labor; |
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(C) supplies; |
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(D) pilot models; and |
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(E) products manufactured or produced. |
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(4) "Qualified research expense" has the meaning |
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assigned by Section 41, Internal Revenue Code, except that the |
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expense must be for research conducted in this state. The term |
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includes an expense described by Section 171.6515. |
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SECTION 2. Subchapter M, Chapter 171, Tax Code, is amended |
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by adding Section 171.6515 to read as follows: |
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Sec. 171.6515. QUALIFIED RESEARCH EXPENSES RELATING TO |
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RESEARCH INVOLVING PRODUCTION PROCESS. A taxable entity that |
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conducts qualified research for which the business component is a |
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production process may treat as a qualified research expense |
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production costs incurred while conducting that research, |
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regardless of whether the costs: |
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(1) include a taxable item exempted from sales and use |
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taxes under Section 151.318; or |
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(2) would have been incurred in the process if the |
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qualified research were not conducted. |
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SECTION 3. 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 4. This Act takes effect January 1, 2022. |