84R13303 BEF-F
By: Capriglione H.B. No. 2939
A BILL TO BE ENTITLED
AN ACT
relating to the deduction of certain officers' compensation as a
cost of goods sold for purposes of the franchise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.1012(e), Tax Code, is amended to
read as follows:
(e) The cost of goods sold does not include the following
costs in relation to the taxable entity's goods:
(1) the cost of renting or leasing equipment,
facilities, or real property that is not used for the production of
the goods;
(2) selling costs, including employee expenses
related to sales;
(3) distribution costs, including outbound
transportation costs;
(4) advertising costs;
(5) idle facility expense;
(6) rehandling costs;
(7) bidding costs, which are the costs incurred in the
solicitation of contracts ultimately awarded to the taxable entity;
(8) unsuccessful bidding costs, which are the costs
incurred in the solicitation of contracts not awarded to the
taxable entity;
(9) interest, including interest on debt incurred or
continued during the production period to finance the production of
the goods;
(10) income taxes, including local, state, federal,
and foreign income taxes, and franchise taxes that are assessed on
the taxable entity based on income;
(11) strike expenses, including costs associated with
hiring employees to replace striking personnel, but not including
the wages of the replacement personnel, costs of security, and
legal fees associated with settling strikes;
(12) officers' compensation that is not compensation
for direct labor;
(13) costs of operation of a facility that is:
(A) located on property owned or leased by the
federal government; and
(B) managed or operated primarily to house
members of the armed forces of the United States; and
(14) any compensation paid to an undocumented worker
used for the production of goods. As used in this subdivision:
(A) "undocumented worker" means a person who is
not lawfully entitled to be present and employed in the United
States; and
(B) "goods" includes the husbandry of animals,
the growing and harvesting of crops, and the severance of timber
from realty.
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, 2016.