| 1 | 1 | | 85R8922 GRM-D |
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| 2 | 2 | | By: White H.B. No. 1365 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to the computation of cost of goods sold for purposes of |
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| 8 | 8 | | the franchise tax by taxable entities primarily engaged in the |
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| 9 | 9 | | business of harvesting trees for wood. |
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| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 11 | | SECTION 1. Section 171.1012, Tax Code, is amended by adding |
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| 12 | 12 | | Subsection (p) to read as follows: |
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| 13 | 13 | | (p) Notwithstanding Subsection (i) or any other provision |
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| 14 | 14 | | of this section, a taxable entity that is primarily engaged in the |
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| 15 | 15 | | business of harvesting trees for wood may subtract as cost of goods |
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| 16 | 16 | | sold the direct costs of acquiring or producing the timber for the |
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| 17 | 17 | | wood that are specified by this subsection or otherwise described |
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| 18 | 18 | | by this section, regardless of whether the taxable entity owns the |
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| 19 | 19 | | land from which the trees are harvested, the harvested timber, or |
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| 20 | 20 | | the wood resulting from the harvested timber. For purposes of this |
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| 21 | 21 | | subsection, direct costs include costs of: |
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| 22 | 22 | | (1) moving harvesting equipment; |
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| 23 | 23 | | (2) severing timber; |
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| 24 | 24 | | (3) transporting timber to and from a mill or |
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| 25 | 25 | | designated delivery point; |
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| 26 | 26 | | (4) obtaining, using, storing, or maintaining |
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| 27 | 27 | | equipment necessary for an activity described by Subdivision (1), |
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| 28 | 28 | | (2), or (3); and |
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| 29 | 29 | | (5) other supplies, labor, freight, and fuel necessary |
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| 30 | 30 | | for an activity described by Subdivision (1), (2), or (3). |
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| 31 | 31 | | SECTION 2. This Act applies only to a report originally due |
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| 32 | 32 | | on or after the effective date of this Act. |
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| 33 | 33 | | SECTION 3. This Act takes effect January 1, 2018. |
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