2023 Texas Statutes › Tax Code › Title 2 - State Taxation › Subtitle F - Franchise Tax; Credits › Chapter 171 - Franchise Tax › Subchapter C. Determination of Taxable Margin; Allocation and Apportionment › Section 171.111. Temporary Credit on Taxable Margin

Sec. 171.111.  TEMPORARY CREDIT ON TAXABLE MARGIN.  (a)  On the first report originally due under this chapter on or after January 1, 2008, a taxable entity must notify the comptroller in writing of its intent to take a credit in an amount allowed by this section on the tax due on taxable margin.  The taxable entity may thereafter elect to claim the credit for the current year and future year at or before the original due date of any report due after January 1, 2008, until the taxable entity revokes the election or this section expires, whichever is earlier.  A taxable entity may claim the credit for not more than 20 consecutive privilege periods beginning with the first report originally due under this chapter on or after January 1, 2008.  A taxable entity may make only one election under this section and the election may not be conveyed, assigned, or transferred to another entity.
(b)  The credit allowed under this section for any privilege period is computed by:
(1)  determining the amount of the business loss carryforwards of the taxable entity under Section 171.110(e), as that section applied to annual reports originally due before January 1, 2008, that were not exhausted on a report originally due under this chapter before January 1, 2008;
(2)   multiplying the amount determined under Subdivision (1)  by:
(A)  2.25 percent for reports originally due on or after January 1, 2008, and before January 1, 2018; and
(B)  7.75 percent for reports originally due on or after January 1, 2018, and before September 1, 2027; and
(3)  multiplying the amount determined under Subdivision (2) by 4.5 percent.
(c)   The comptroller may request that the taxable entity submit, with each annual report in which the taxable entity is eligible to take a credit, information relating to the amount determined under Subsection (b)(1).  The taxable entity shall submit in the form and content the comptroller requires any information relating to the amount determined under Subsection (b)(1) or any other matter relevant to the computation of the credit for which the taxable entity is eligible.
(d)  A credit that a taxable entity is entitled to under this section may not be conveyed, assigned, or transferred.  A taxable entity loses the right to claim the credit if the entity changes combined groups after June 30, 2007.
(d-1)  A taxable entity, other than a combined group, may not claim the credit under this section unless the taxable entity was, on May 1, 2006, subject to the tax imposed by this chapter as this chapter existed on that date.  A taxable entity that is a combined group may claim the credit for each member entity that was, on May 1, 2006, subject to the tax imposed by this chapter as this chapter existed on that date and shall compute the amount of the credit for that member as provided by this section.
(d-2)  The amount of credit claimed, including any unused credit carried forward, may not exceed the amount of franchise tax due for the report.  Unused credits may not be carried forward to reports originally due on or after September 1, 2027.
(e)  This section expires September 1, 2027.
Added by Acts 1991, 72nd Leg., 1st C.S., ch. 5, Sec. 8.09, eff. Jan. 1, 1992.
Amended by:
Acts 2006, 79th Leg., 3rd C.S., Ch. 1 (H.B. 3), Sec. 5, eff. January 1, 2008.
Acts 2007, 80th Leg., R.S., Ch. 1282 (H.B. 3928), Sec. 23, eff. January 1, 2008.