| 1 | 1 | | 83R24452 TJB-F |
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| 2 | 2 | | By: Button, N. Gonzalez of El Paso H.B. No. 1860 |
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| 3 | 3 | | Substitute the following for H.B. No. 1860: |
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| 4 | 4 | | By: Hilderbran C.S.H.B. No. 1860 |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | A BILL TO BE ENTITLED |
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| 8 | 8 | | AN ACT |
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| 9 | 9 | | relating to a deduction under the franchise tax for certain |
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| 10 | 10 | | contracts with the federal government. |
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| 11 | 11 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 12 | 12 | | SECTION 1. Section 171.101(a), Tax Code, is amended to read |
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| 13 | 13 | | as follows: |
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| 14 | 14 | | (a) The taxable margin of a taxable entity is computed by: |
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| 15 | 15 | | (1) determining the taxable entity's margin, which is |
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| 16 | 16 | | the lesser of: |
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| 17 | 17 | | (A) 70 percent of the taxable entity's total |
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| 18 | 18 | | revenue from its entire business, as determined under Section |
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| 19 | 19 | | 171.1011; or |
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| 20 | 20 | | (B) an amount computed by: |
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| 21 | 21 | | (i) determining the taxable entity's total |
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| 22 | 22 | | revenue from its entire business, under Section 171.1011; |
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| 23 | 23 | | (ii) subtracting, at the election of the |
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| 24 | 24 | | taxable entity, either: |
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| 25 | 25 | | (a) cost of goods sold, as determined |
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| 26 | 26 | | under Section 171.1012; or |
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| 27 | 27 | | (b) compensation, as determined under |
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| 28 | 28 | | Section 171.1013; [and] |
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| 29 | 29 | | (iii) subtracting 50 percent of the costs |
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| 30 | 30 | | not already subtracted under Subparagraph (ii)(a) or (b) that are |
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| 31 | 31 | | properly allocable under the Federal Acquisition Regulation (48 |
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| 32 | 32 | | C.F.R. Chapter 1, or a successor regulation), to contracts, or |
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| 33 | 33 | | subcontracts supporting those contracts, for the sale of goods or |
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| 34 | 34 | | services to the federal government; and |
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| 35 | 35 | | (iv) subtracting, in addition to any |
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| 36 | 36 | | subtractions made under Subparagraph (ii)(a) or (b), compensation, |
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| 37 | 37 | | as determined under Section 171.1013, paid to an individual during |
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| 38 | 38 | | the period the individual is serving on active duty as a member of |
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| 39 | 39 | | the armed forces of the United States if the individual is a |
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| 40 | 40 | | resident of this state at the time the individual is ordered to |
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| 41 | 41 | | active duty and the cost of training a replacement for the |
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| 42 | 42 | | individual; |
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| 43 | 43 | | (2) apportioning the taxable entity's margin to this |
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| 44 | 44 | | state as provided by Section 171.106 to determine the taxable |
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| 45 | 45 | | entity's apportioned margin; and |
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| 46 | 46 | | (3) subtracting from the amount computed under |
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| 47 | 47 | | Subdivision (2) any other allowable deductions to determine the |
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| 48 | 48 | | taxable entity's taxable margin. |
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| 49 | 49 | | SECTION 2. This Act applies only to a report originally due |
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| 50 | 50 | | on or after January 1, 2014. |
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| 51 | 51 | | SECTION 3. This Act takes effect January 1, 2014. |
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