| (16) United States government agency--An instrumentality
of the United States government whose obligations are fully and explicitly
guaranteed as to the timely payment of principal and interest by the
full faith and credit of the United States government. The term includes
the Government National Mortgage Association, the Department of Veterans
Affairs, the Federal Housing Administration, the Farmers Home Administration,
the Export-Import Bank, the Overseas Private Investment Corporation,
the Commodity Credit Corporation, the Small Business Administration,
and any successor agency.
(17) United States government-sponsored agency--An
agency originally established or chartered by the United States government
to serve public purposes specified by the United States Congress but
whose obligations are not explicitly guaranteed by the full faith
and credit of the United States government. The term includes the
Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Farm Credit System, the Federal Home Loan Bank System,
the Student Loan Marketing Association, and any successor agency.
(c) General rules for reporting total revenue.
(1) Variant of form. Any reference to an Internal Revenue
Service form includes a variant of the form. For example, a reference
to Form 1120 includes Forms 1120-A, 1120-S, and other variants of
Form 1120. A reference to an Internal Revenue Service form also includes
any subsequent form with a different number or designation that substantially
provides the same information as the original form.
(2) Amount reportable. Any reference to an amount reportable
as income on a line number on an Internal Revenue Service form is
the amount entered to the extent the amount entered complies with
federal income tax law and includes the corresponding amount entered
on a variant of the form, or a subsequent form, with a different line
number to the extent the amount entered complies with federal income
tax law.
(3) Federal consolidated group. A taxable entity that
is part of a federal consolidated group or is a disregarded entity
shall compute its total revenue as if it had filed a separate return
for federal income tax purposes; provided, however, that a disregarded
entity may combine its revenue, cost of goods sold, compensation and
gross revenue with its parent as provided by §3.590(d)(6) of
this title (relating to Margin: Combined Reporting). Further information
on combined entities can be found in §3.590 of this title.
(4) Passive entity. A taxable entity will include its
share of net distributive income from a passive entity, but only to
the extent the net income of the passive entity was not generated
by any other taxable entity.
(5) Exclusions from total revenue.
(A) Any expense excluded from total revenue (e.g. flow-through
funds or the cost of uncompensated care allowed under subsection (e)
of this section) may not be included in the determination of cost
of goods sold (see §3.588 of this title) or the determination
of compensation (see §3.589 of this title).
(B) Net distributive income that is subtracted from
total revenue may not be included in the determination of compensation.
(6) Contract services. Except as provided by subsection
(e)(2) of this section, a payment received under an ordinary contract
for the provision of services in the ordinary course of business may
not be excluded from the calculation of total revenue.
(7) Payment to affiliated group members. If the taxable
entity belongs to an affiliated group, the taxable entity may not
exclude from the calculation of total revenue any payments described
by subsection (e)(1) - (6) of this section that are made to entities
that are members of the affiliated group.
(8) Tiered partnership provision. This provision is
not mandatory. Subject to the following subparagraphs, a lower tier
entity in a tiered partnership arrangement may exclude from total
revenue the amount of total revenue reported to an upper tier entity.
If a lower tier entity chooses to file under the tiered partnership
provision, the lower tier entity may report total revenue to any or
all of its upper tier entities. The total revenue reported to an upper
tier entity must equal the upper tier entity's ownership percentage
of the lower tier entity's entire total revenue.
(A) Reporting requirements. The lower tier entity must
submit a report to the comptroller showing the amount of total revenue
that each upper tier entity must include with the upper tier entity's
own total revenue. Each upper tier entity must submit a report to
the comptroller showing the amount of the lower tier entity's total
revenue that was passed to the upper tier entity and is included in
the total revenue of the upper tier entity.
(B) Nontaxable upper tier entity. This paragraph does
not apply to that percentage of the total revenue attributable to
an upper tier entity by a lower tier entity if the upper tier entity
is not subject to the tax under this chapter. In this case, the lower
tier entity cannot report total revenue to the nontaxable upper tier
entity and the lower tier entity cannot exclude this total revenue
from its franchise tax report.
(C) Eligibility for no tax due, discounts and the E-Z
Computation. The no tax due thresholds, discounts and the E-Z Computation
do not apply to an upper or lower tier entity if, before the attribution
of any total revenue by a lower tier entity to upper tier entities
under this section, the lower tier entity does not meet the criteria.
See §3.584(d)(8) of this title (relating to Margin: Reports and
Payments).
(D) Not a partnership distribution. Total revenue reported
from a lower tier entity to an upper tier entity under the provisions
of Tax Code, §171.1015(b) is not a distribution from a partnership.
(E) Combined reporting. The tiered partnership provision
is not an alternative to combined reporting. Combined reporting is
mandatory for taxable entities that meet the ownership and unitary
criteria. See §3.590 of this title. Therefore, the tiered partnership
provision is not allowed if the lower tier entity is included in a
combined group.
(F) Accounting period. If the lower tier entity and
an upper tier entity have different accounting periods, the upper
tier entity must allocate the revenue reported from the lower tier
entity to the accounting period that the upper tier entity's report
is based on.
(G) Lower tier entity no tax due. For reports originally
due on or after January 1, 2010, if the lower tier entity owes no
tax before the attribution of total revenue to the upper tier entities,
filing under the tiered partnership provision is not allowed.
(9) Allocated revenue. Revenue that Texas cannot tax
because the activities generating that item of revenue do not have
sufficient unitary connection with the entity's other activities conducted
in Texas under the United States Constitution is not included in total
revenue.
(d) Reporting total revenue. The line items in this
subsection refer to line items on the 2006 Internal Revenue Service
forms. In computing total revenue for a subsequent report year, total
revenue should be based on the equivalent line numbers from the corresponding
federal report and computed based on the Internal Revenue Code of
1986 in effect for the federal tax year beginning on January 1, 2007.
(1) Corporations. For the purpose of computing its
taxable margin, the total revenue of a taxable entity treated as a
corporation for federal income tax purposes is computed by:
(A) adding:
(i) the amount reportable as income on line 1c, Internal
Revenue Service Form 1120;
(ii) the amounts reportable as income on lines 4 through
10, Internal Revenue Service Form 1120; and
(iii) any total revenue reported by a lower tier entity
as includable in the taxable entity's total revenue under Tax Code, §171.1015(b);
and
(B) subtracting, to the extent included in the calculation
under subparagraph (A) of this paragraph:
(i) bad debt expensed for federal income tax purposes
that corresponds to items of gross receipts included for the current
reporting period or a past reporting period;
(ii) foreign royalties and foreign dividends, including
amounts determined under Internal Revenue Code, §78 or §§951
- 964;
(iii) net distributive income from a taxable entity
treated as a partnership or as an S corporation for federal income
tax purposes, except as provided by subsection (c)(4) of this section;
(iv) allowable deductions from Internal Revenue Service
Form 1120, Schedule C, to the extent the relating dividend income
is included in total revenue;
(v) items of income attributable to an entity that
is a disregarded entity for federal income tax purposes; and
Cont'd... |
