82R8100 KLA-F
By: Thompson H.B. No. 1954
A BILL TO BE ENTITLED
AN ACT
relating to the application of the franchise tax to certain S
corporations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.0002(c), Tax Code, is amended to
read as follows:
(c) "Taxable entity" does not include an entity that is:
(1) a grantor trust as defined by Sections 671 and
7701(a)(30)(E), Internal Revenue Code, all of the grantors and
beneficiaries of which are natural persons or charitable entities
as described in Section 501(c)(3), Internal Revenue Code, excluding
a trust taxable as a business entity pursuant to Treasury
Regulation Section 301.7701-4(b);
(2) an estate of a natural person as defined by Section
7701(a)(30)(D), Internal Revenue Code, excluding an estate taxable
as a business entity pursuant to Treasury Regulation Section
301.7701-4(b);
(3) an escrow;
(4) a real estate investment trust (REIT) as defined
by Section 856, Internal Revenue Code, and its "qualified REIT
subsidiary" entities as defined by Section 856(i)(2), Internal
Revenue Code, provided that:
(A) a REIT with any amount of its assets in direct
holdings of real estate, other than real estate it occupies for
business purposes, as opposed to holding interests in limited
partnerships or other entities that directly hold the real estate,
is a taxable entity; and
(B) a limited partnership or other entity that
directly holds the real estate as described in Paragraph (A) is not
exempt under this subdivision, without regard to whether a REIT
holds an interest in it;
(5) a real estate mortgage investment conduit (REMIC),
as defined by Section 860D, Internal Revenue Code;
(6) a nonprofit self-insurance trust created under
Chapter 2212, Insurance Code, or a predecessor statute;
(7) a trust qualified under Section 401(a), Internal
Revenue Code; [or]
(8) a trust or other entity that is exempt under
Section 501(c)(9), Internal Revenue Code; or
(9) an S corporation, as that term is defined by
Section 1361, Internal Revenue Code, that is owned entirely by an
employee stock ownership plan, as that term is defined by Section
4975(e), Internal Revenue Code.
SECTION 2. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 3. This Act takes effect January 1, 2012.