83R2240 KLA-D
By: Button H.B. No. 414
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for certain research and
development activities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter M to read as follows:
SUBCHAPTER M. TAX CREDIT FOR CERTAIN RESEARCH AND DEVELOPMENT
ACTIVITIES
Sec. 171.651. DEFINITIONS. In this subchapter:
(1) "Qualified research" has the meaning assigned by
Section 41, Internal Revenue Code, except that the research must be
conducted in this state.
(2) "Qualified research expense" has the meaning
assigned by Section 41, Internal Revenue Code, except that the
payments and expenses must be for research conducted in this state.
Sec. 171.652. ENTITLEMENT TO CREDIT. A taxable entity is
eligible for a credit against the tax imposed under this chapter in
the amount and under the conditions and limitations provided by
this subchapter.
Sec. 171.653. AMOUNT OF CREDIT. (a) The credit for any
report equals:
(1) 10 percent of the difference between:
(A) the qualified research expenses incurred in
this state during the period on which the report is based; and
(B) 50 percent of the average amount of qualified
research expenses incurred in this state during the three tax years
preceding the period on which the report is based; or
(2) the amount of taxes imposed by Chapter 151 and paid
during the period on which the report is based on the sale, lease,
or rental to or use by the taxable entity of a taxable item that is
used in performing qualified research.
(b) For each report, a taxable entity may elect to compute
the amount of the credit in accordance with Subsection (a)(1) or
(2), regardless of whether the taxable entity has made a different
election on a previous report.
(c) The burden of establishing entitlement to and the value
of the credit is on the taxable entity.
Sec. 171.654. LIMITATIONS. The total credit claimed under
this subchapter for a report, including the amount of any
carryforward credit under Section 171.655, may not exceed 50
percent of the amount of franchise tax due for the report before any
other applicable tax credits.
Sec. 171.655. CARRYFORWARD. If a taxable entity is
eligible for a credit that exceeds the limitation under Section
171.654, the taxable entity may carry the unused credit forward for
not more than 20 consecutive reports. A credit carryforward from a
previous report is considered to be used before the current year
credit.
Sec. 171.656. ASSIGNMENT PROHIBITED. A taxable entity may
not convey, assign, or transfer the credit allowed under this
subchapter to another entity unless all of the assets of the taxable
entity are conveyed, assigned, or transferred in the same
transaction.
Sec. 171.657. APPLICATION FOR CREDIT. A taxable entity
must apply for a credit under this subchapter on or with the tax
report for the period for which the credit is claimed.
Sec. 171.658. RULES. The comptroller shall adopt rules
necessary to implement this subchapter, including rules regarding
the documentation necessary to establish the amount of the credit
computed under Section 171.653(a)(2).
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, 2014.