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Texas Statutes (Last Updated: January 4, 2014) |
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TAX CODE |
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Title 2. STATE TAXATION |
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Subtitle F. FRANCHISE TAX |
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Chapter 171. FRANCHISE TAX |
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Subchapter C. DETERMINATION OF TAXABLE MARGIN; ALLOCATION AND APPORTIONMENT |
Sec. 171.101. DETERMINATION OF TAXABLE MARGIN
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(a) The taxable margin of a taxable entity is computed by:
(1) determining the taxable entity's margin, which is the lesser of:
(A) 70 percent of the taxable entity's total revenue from its entire business, as determined under Section 171.1011; or
(B) an amount computed by:
(i) determining the taxable entity's total revenue from its entire business, under Section 171.1011;
(ii) subtracting, at the election of the taxable entity, either:
(a) cost of goods sold, as determined under Section 171.1012; or
(b) compensation, as determined under Section 171.1013; and
(iii) subtracting, in addition to any subtractions made under Subparagraph (ii)(a) or (b), compensation, as determined under Section 171.1013, paid to an individual during the period the individual is serving on active duty as a member of the armed forces of the United States if the individual is a resident of this state at the time the individual is ordered to active duty and the cost of training a replacement for the individual;
(2) apportioning the taxable entity's margin to this state as provided by Section 171.106 to determine the taxable entity's apportioned margin; and
(3) subtracting from the amount computed under Subdivision (2) any other allowable deductions to determine the taxable entity's taxable margin.
(b) Notwithstanding Subsection (a)(1)(B)(ii), a staff leasing services company may subtract only compensation as determined under Section 171.1013.
(c) In making a computation under this section, an amount that is zero or less is computed as a zero.
(d) An election under Subsection (a)(1)(B)(ii) shall be made by the taxable entity on its annual report and is effective only for that annual report. A taxable entity shall notify the comptroller of its election not later than the due date of the annual report.