84R13306 BEF-F
By: Capriglione H.B. No. 2942
A BILL TO BE ENTITLED
AN ACT
relating to passive entities for purposes of the franchise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.0003(a), Tax Code, is amended to
read as follows:
(a) An entity is a passive entity only if:
(1) the entity is a general or limited partnership or a
trust, other than a business trust; and
(2) during the period on which margin is based, the
entity's federal gross income consists of at least 90 percent of the
following income:
(A) dividends, interest, foreign currency
exchange gain, periodic and nonperiodic payments with respect to
notional principal contracts, option premiums, cash settlement or
termination payments with respect to a financial instrument, and
income from a limited liability company;
(B) distributive shares of partnership income to
the extent that those distributive shares of income are greater
than zero;
(C) net capital gain [capital gains] from the
sale of real property, gains from the sale of commodities traded on
a commodities exchange, and gains from the sale of securities; and
(D) royalties, bonuses, or delay rental income
from mineral properties and income from other nonoperating mineral
interests[; and
[(3) the entity does not receive more than 10 percent
of its federal gross income from conducting an active trade or
business].
SECTION 2. Sections 171.0003(a-1) and 171.0004, Tax Code,
are repealed.
SECTION 3. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 4. This Act takes effect January 1, 2016.