Texas Administrative Code › Title 34 - PUBLIC FINANCE › Part 1 - COMPTROLLER OF PUBLIC ACCOUNTS › Chapter 3 - TAX ADMINISTRATION › Subchapter V - FRANCHISE TAX › Section 3.591 - Margin: Apportionment

Current through Reg. 49, No. 28; July 12, 2024
(a) Effective date.
				  The provisions of this section apply to franchise tax reports originally due on
				  or after January 1, 2008, except as otherwise noted.
(b) Definitions. The following words and
				  terms, when used in this section, shall have the following meanings, unless the
				  context clearly indicates otherwise.
(1)
				  Capital asset--Any asset that is held for use in the production of income, and
				  that is subject to depreciation, depletion or amortization.
(2) Employee retirement plan--A plan or other
				  arrangement that qualifies under Internal Revenue Code (IRC), §401(a)
				  (Qualified pension, profit-sharing, and stock bonus plans), or that satisfies
				  the requirement of IRC, §403 (Taxation of employee annuities), or a
				  government plan described in IRC, §414(d) (Definitions and special
				  rules).
(3) Gross receipts--Revenue
				  as determined under §
											3.587 of this title (relating to
				  Margin: Total Revenue), except as provided in subsection (e)(2) (concerning
				  capital assets and investments) and subsection (e)(17) (concerning loans and
				  securities) of this section. Non-receipt items excluded from total revenue
				  under §
											3.587 of this title are not
				  included in the calculation of total revenue under that section and are not
				  deducted from gross receipts. These non-receipt items include the exclusion for
				  uncompensated care, the $500 exclusion per pro bono services case, the
				  exclusion for the direct cost of providing waterway transportation, the
				  exclusion for the direct cost of providing agricultural aircraft services, and
				  the exclusion for the cost of a vaccine. See subsection (d)(5) of this section
				  for gross receipts that are excluded from the apportionment
				  calculation.
(4) Internal Revenue
				  Code--The Internal Revenue Code of 1986 in effect for the federal tax year
				  beginning on January 1, 2007, not including any changes made by federal law
				  after that date, and any regulations adopted under that code applicable to that
				  period.
(5) Inventory--Property
				  held primarily for sale to customers in the ordinary course of a trade or
				  business. Securities and loans held for investment, hedging, or risk management
				  purposes are not inventory.
(6)
				  Investment--Any non-cash asset that is not a capital asset or
				  inventory.
(7) Legal domicile--The
				  legal domicile of a corporation or limited liability company is its state of
				  formation. The legal domicile of a partnership, trust, or joint venture is the
				  principal place of business of the partnership, trust, or joint
				  venture.
(8) Location of payor--The
				  legal domicile of the payor.
(9)
				  Principal place of business--The place where an entity's management directs,
				  controls, and coordinates the entity's activities.
(10) Regulated investment company--Any
				  domestic corporation defined under IRC, §851(a) (Definition of regulated
				  investment company), including a taxable entity that includes trustees or
				  sponsors of employee benefit plans that have accounts in a regulated investment
				  company.
(11) Security--An
				  instrument defined under IRC, §475(c)(2) (Mark to market accounting method
				  for dealers in securities). This term includes instruments described by
				  §475(e)(2)(B), (C), and (D) of that code.
(12) Tax reporting period--The period upon
				  which the tax is based under Tax Code, §
											171.1532 (Business on Which
				  Tax on Net Taxable Margin Is Based) or §171.0011 (Additional
				  Tax).
(13) Taxable entity--Any
				  entity upon which tax is imposed under Tax Code, §
											171.0002(a)
				  (Definition of Taxable Entity) and not specifically excluded under Tax Code,
				  §
											171.0002(b)
				  or §
											171.0002(c).
				  See also §
											3.581 of this title (relating to
				  Margin: Taxable and Nontaxable Entities).
(14) Texas gross receipts--The portion of a
				  taxable entity's gross receipts that is from business done in Texas.