Added by Acts , 83rd Leg. A nonprofit corporation organized solely to provide a student loan fund or student scholarships is exempted from the franchise tax. An entity that is not a corporation but that, because of its activities, would qualify for a specific exemption under this subchapter if it were a corporation, qualifies for the exemption and is exempt from the tax in the same manner and under the same conditions as a corporation.
Added by Acts , 79th Leg. A the amount provided by this paragraph, which is the lesser of:. B an amount computed by determining the taxable entity's total revenue from its entire business under Section A taxable entity shall notify the comptroller of its election not later than the due date of the annual report. Chapter 1 and subject to the requirements of 48 C. Chapter 2 or Chapter 18 for contracts, or subcontracts supporting those contracts, for the sale of goods or services to the federal government by a taxable entity in the aerospace industry that is engaged in activities described by North American Industry Classification System code , , , , , , or For purposes of this subsection, a reference to a federal regulation includes a successor regulation.
For example, a reference to Form includes Forms A, S, and other variants of Form 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.
B funds subject to a lien or other contractual obligation arising out of the representation, other than fees owed to the attorney;. C funds subject to a subrogation interest or other third-party contractual claim; and. D fees paid an attorney in the matter who is not a member, partner, shareholder, or employee of the taxable entity;. A taxable entity that provides a pharmacy network shall exclude from its total revenue, to the extent included under Subsection c 1 A , c 2 A , or c 3 , reimbursements, pursuant to contractual agreements, for payments to pharmacies in the pharmacy network.
For purposes of this subsection, "qualified courier and logistics company" means a taxable entity that:. A expedited same-day delivery of an envelope, package, parcel, roll of architectural drawings, box, or pallet;. B temporary storage and delivery of the property of another entity, including an envelope, package, parcel, roll of architectural drawings, box, or pallet; and.
C brokerage of same-day or expedited courier and logistics services to be completed by a person or entity under a contract that includes a contractual obligation by the taxable entity to make payments to the person or entity for those services;. Section a or a similar federal registration program that replaces that system during that period;. In this subsection, "aggregates" means any commonly recognized construction material removed or extracted from the earth, including dimension stone, crushed and broken limestone, crushed and broken granite, other crushed and broken stone, construction sand and gravel, industrial sand, dirt, soil, cementitious material, and caliche.
For purposes of this subsection, "barite" means barium sulfate BaSO4 , a mineral used as a weighing agent in oil and gas exploration. In this subsection, "landman services" means:. A any form of compensation paid to a person for engaging in an act for which a license is required by Chapter , Occupations Code; or. B compensation paid to a sales representative by a principal in an amount that is based on the amount or level of certain orders for or sales of the principal's product and that the principal is required to report on Internal Revenue Service Form MISC.
A manufactures, produces, imports, distributes, or acts as an independent agent for the distribution of a product for sale;. B uses a sales representative to solicit orders for the product; and. C compensates the sales representative wholly or partly by sales commission. B for professional services provided in relation to a workers' compensation claim under Title 5, Labor Code; and.
A stocks and other direct obligations of, and obligations unconditionally guaranteed by, the United States government and United States government agencies; and. B direct obligations of a United States government-sponsored agency. B an assisted living facility licensed under Chapter , Health and Safety Code;. H an intermediate care facility for the mentally retarded or a home and community-based services waiver program for persons with mental retardation adopted in accordance with Section c of the federal Social Security Act 42 U.
Section n ;. K an end stage renal disease facility licensed under Section The term does not include a deposit, a repurchase agreement, a loan, a lease, a participation in a loan or pool of loans, a loan collateralized by an obligation of a United States government agency, or a loan guaranteed by a United States government agency. The term does not include a state or local government, a commercial enterprise owned wholly or partly by the United States government, or a local governmental entity or commercial enterprise whose obligations are guaranteed by the United States government.
June 4, A located on property owned or leased by the federal government; and. B managed or operated primarily to house members of the armed forces of the United States; and. As used in this subdivision:. A "undocumented worker" means a person who is not lawfully entitled to be present and employed in the United States; and. B "goods" includes the husbandry of animals, the growing and harvesting of crops, and the severance of timber from realty.
Any costs excluded under Subsection e may not be subtracted under this subsection. If the taxable entity elects to capitalize costs, it must capitalize each cost allowed under this section that it capitalized on its federal income tax return. If the taxable entity later elects to begin expensing a cost that may be allowed under this section as a cost of goods sold, the entity may not deduct any cost in ending inventory from a previous report.
If the taxable entity elects to expense a cost of goods sold that may be allowed under this section, a cost incurred before the first day of the period on which the report is based may not be subtracted as a cost of goods sold. If the taxable entity elects to expense a cost of goods sold and later elects to capitalize that cost of goods sold, a cost expensed on a previous report may not be capitalized.
This subsection does not affect the type or category of cost of goods sold that may be subtracted under this section. The determination of whether a taxable entity is an owner is based on all of the facts and circumstances, including the various benefits and burdens of ownership vested with the taxable entity. A taxable entity furnishing labor or materials to a project for the construction, improvement, remodeling, repair, or industrial maintenance as the term "maintenance" is defined in 34 T.
Section 3. Solely for purposes of this section, a taxable entity shall be treated as the owner of goods being manufactured or produced by the entity under a contract with the federal government, including any subcontracts that support a contract with the federal government, notwithstanding that the Federal Acquisition Regulation may require that title or risk of loss with respect to those goods be transferred to the federal government before the manufacture or production of those goods is complete.
For purposes of this subsection, an entity engaged in lending to unrelated parties solely for agricultural production offers loans to the public. Notwithstanding Subsection e 3 or i , a pipeline entity providing services for others related to the product that the pipeline does not own and to which this subsection applies may subtract as a cost of goods sold its depreciation, operations, and maintenance costs allowed by this section related to the services provided.
The term does not include the chemical or biological transformation of those materials. The term also includes, to the extent not included above:. Subject to Section As used in this section "undocumented worker" means a person who is not lawfully entitled to be present and employed in the United States. The combined group may not include a taxable entity that conducts business outside the United States if 80 percent or more of the taxable entity's property and payroll, as determined by factoring under Chapter , are assigned to locations outside the United States.
In applying Chapter , if either the property factor or the payroll factor is zero, the denominator is one. The combined group may not include a taxable entity that conducts business outside the United States and has no property or payroll if 80 percent or more of the taxable entity's gross receipts, as determined under Sections Regardless of the election, the taxable margin of the combined group may not exceed the amount provided by Section A tiered partnership arrangement may have two or more tiers.
In this case, the lower tier entity is liable for the tax on its taxable margin. Added by Acts , 80th Leg. Transferred from Tax Code, Section In this subsection, "regulated investment company" has the meaning assigned by Section a , Internal Revenue Code. In this section, "employee retirement plan" means a plan or other arrangement that is qualified under Section a , Internal Revenue Code, or satisfies the requirements of Section , Internal Revenue Code, or a government plan described in Section d , Internal Revenue Code.
The term does not include an individual retirement account or individual retirement annuity within the meaning of Section , Internal Revenue Code. In this subsection, "correspondent" has the meaning assigned by 12 C. In this subsection, "Financial Accounting Standard No.
In this subsection, "security" means a security as defined in Section In this subsection:. A television station licensed by the Federal Communications Commission;. The term includes a mechanical or chemical device that has the ability to store solar-generated energy for use in heating or cooling or in the production of power.
On the request of the comptroller, the taxable entity shall file with the comptroller proof of the cost of the solar energy device or proof of the device's operation in this state. On the request of the comptroller, the taxable entity shall file with the comptroller proof of the cost of the equipment or proof of the equipment's operation in this state.
June 18, The term includes:. 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, , 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, A taxable entity may make only one election under this section and the election may not be conveyed, assigned, or transferred to another entity.
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. A taxable entity loses the right to claim the credit if the entity changes combined groups after June 30, A taxable entity that is a combined group may claim the credit for each member entity that was, on May 1, , 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.
Unused credits may not be carried forward to reports originally due on or after September 1, A change in accounting methods is not justified solely because it results in a reduction of tax liability. The franchise tax shall be paid for each of the following:. However, if the first anniversary of the taxable entity's beginning date is after October 3 and before January 1, the payment of the tax covering the first regular annual period is due on the same date as the tax covering the initial period.
A taxable entity on which a tax is imposed by this chapter shall pay the tax to the comptroller. The secretary of state shall file the certificate of withdrawal as provided by law. A each officer, director, and manager of the taxable entity;. C for a general partnership or limited liability partnership, each managing partner or, if there is not a managing partner, each partner; or.
The report shall be filed on forms supplied by the comptroller. A not less than 90 percent of the amount of tax reported as due on the report filed on or before November 15; or. B percent of the tax reported as due for the previous calendar year on the report due in the previous calendar year and filed on or before May A not less than 90 percent of the amount of tax reported as due on the report filed on or before August 15; or.
A taxable entity that does not owe any tax under this chapter for any period is not required to file a report under Section The exemption applies only to a period for which no tax is due. A an officer or director of the corporation, limited liability company, or professional association on the date the report is filed and the expiration date of each person's term as an officer or director, if any; and. B a general partner of the limited partnership on the date the report is filed;.
An officer or director of the corporation, limited liability company, or professional association, a general partner of the limited partnership, or another authorized person must sign the report under a certification that:. The comptroller shall maintain a record of statements filed under this subsection and shall make that information available on request using the same procedures the comptroller uses for other requests for public information.
The comptroller may not require a taxable entity described by this subsection to file an information report that requires the taxable entity to report or compute its margin. The comptroller may require a taxable entity on which the franchise tax is imposed to furnish to the comptroller information from the taxable entity's books and records that has not been filed previously and that is necessary for the comptroller to determine the amount of the tax.
Except as provided by Section The following information is not confidential and shall be made open to public inspection:. A person, including a state officer or employee or an owner of a taxable entity, who has access to a report filed under this chapter may not make known in a manner not permitted by law the amount or source of the taxable entity's income, profits, losses, expenditures, cost of goods sold, compensation, or other information in the report relating to the financial condition of the taxable entity.
If an owner of a taxable entity on whom the franchise tax is imposed presents evidence of the ownership to the comptroller, the person is entitled to examine or receive a copy of an initial or annual report that is filed under Section The comptroller or attorney general may authorize examination of the confidential information by:. To determine the franchise tax liability of a taxable entity, the comptroller may investigate or examine the records of the taxable entity. For purposes of this subsection, a revenue agent's report or other adjustment is final on the date on which all administrative appeals with the Internal Revenue Service or other competent authority have been exhausted or waived.
For purposes of this subsection, a taxable entity is considered to have filed an amended federal income tax return if the taxable entity is a member of an affiliated group during a period in which an amended consolidated federal income tax report is filed. The penalty prescribed by this subsection is in addition to any other penalty provided by law. In calculating cost of goods sold or compensation, a taxable entity that is a client of a professional employer organization shall rely on information provided by the professional employer organization on a form promulgated by the comptroller or an invoice.
The comptroller shall forfeit the corporate privileges of a corporation on which the franchise tax is imposed if the corporation:. If the corporate privileges of a corporation are forfeited under this subchapter:. In a suit against a corporation on a cause of action arising before the forfeiture of the corporate privileges of the corporation, affirmative relief may not be granted to the corporation unless its corporate privileges are revived under this chapter.
The forfeiture of the corporate privileges of a corporation does not apply to the privilege to defend in a suit to forfeit the corporation's charter or certificate of authority. The liability includes liability for any tax or penalty imposed by this chapter on the corporation that becomes due and payable after the date of the forfeiture.
The notice shall be addressed to the corporation and mailed to the address named in the corporation's charter as its principal place of business or to another known place of business of the corporation. For the purposes of this chapter, the notice and the record of the mailing date constitute legal and sufficient notice of the forfeiture. The forfeiture of the corporate privileges of a corporation is effected by the comptroller without a judicial proceeding.
The comptroller shall revive the corporate privileges of a corporation if the corporation, before the forfeiture of its charter or certificate of authority, pays any tax, penalty, or interest due under this chapter. Added by Acts , 68th Leg. Added by Acts , 76th Leg. Amended by Acts , 77th Leg.
It is a ground for the forfeiture of a corporation's charter or certificate of authority if:. The comptroller may, for the same reasons and using the same procedures the comptroller uses in relation to the forfeiture of a corporation's charter or certificate of authority, forfeit the certificate or registration of a taxable entity. After the th day after the date that the corporate privileges of a corporation are forfeited under this chapter, the comptroller shall certify the name of the corporation to the attorney general and the secretary of state.
On receipt of the comptroller's certification, the attorney general shall bring suit to forfeit the charter or certificate of authority of the corporation if a ground exists for the forfeiture of the charter or certificate. On receipt of the copy of the judgment, the secretary of state shall inscribe on the corporation's record at the secretary's office the words "Judgment of Forfeiture" and the date of the judgment.
On receipt of the certification, the secretary of state shall inscribe on the corporation's record at the secretary's office the word "Appealed" and the date on which the appeal was perfected. On receipt of the certification, the secretary of state shall inscribe on the corporation's record at the secretary's office a brief note of the type of final disposition made and the date of the disposition. A corporation whose charter or certificate of authority is judicially forfeited under this chapter is entitled to have its charter or certificate revived and to have its corporate privileges revived if:.
If a corporation's charter or certificate of authority is judicially forfeited under this chapter, a stockholder, director, or officer of the corporation at the time of the forfeiture of the charter or certificate or of the corporate privileges of the corporation may bring suit in a district court of Travis County in the name of the corporation to set aside the forfeiture of the charter or certificate. The suit must be in the nature of a bill of review.
The secretary of state and attorney general must be made defendants in the suit. If a court under this chapter sets aside the forfeiture of a corporation's charter or certificate of authority, the secretary of state shall inscribe on the corporation's record in the secretary's office the words "Charter Revived by Court Order" or "Certificate Revived by Court Order," a citation to the suit, and the date of the court's judgment. If a court under this chapter sets aside the forfeiture of a corporation's charter or certificate of authority, the comptroller shall revive the corporate privileges of the corporation and shall inscribe on the corporation's record in the comptroller's office a note of the revival.
The secretary of state may forfeit the charter, certificate, or registration of a taxable entity if:. The forfeiture by the secretary of state of a corporation's charter or certificate of authority under this chapter is effected without a judicial proceeding. The secretary of state shall effect a forfeiture of a corporation's charter or certificate of authority under this chapter by inscribing on the corporation's record in the secretary's office the words "Charter Forfeited" or "Certificate Forfeited," the date on which this inscription is made, and a citation to this chapter as authority for the forfeiture.
A corporation whose charter or certificate of authority is forfeited under this chapter by the secretary of state is entitled to have its charter or certificate revived and to have its corporate privileges revived if:. If each report has been filed and the tax, penalty, or interest has been paid, the secretary shall set aside the forfeiture of the corporation's charter or certificate of authority.
If the secretary of state sets aside under this chapter the forfeiture of a corporation's charter or certificate of authority, the comptroller shall revive the corporate privileges of the corporation. If a corporation's charter or certificate of authority is forfeited under this chapter by the secretary of state and if the corporation requests the secretary to set aside the forfeiture under Section If the name is not available, the corporation shall amend its charter or certificate to change its name.
This subchapter does not apply to a banking corporation that is organized under the laws of this state or under federal law and has its main office in this state. This subchapter does not apply to a savings and loan association that is organized under the laws of this state or under federal law and has its main office in this state. Venue of a civil suit against a taxable entity to enforce this chapter is either in a county where the taxable entity's principal office is located according to its charter or certificate of authority or in Travis County.
To enforce this chapter, a court may restrain or enjoin a violation of this chapter. If a court forfeits a taxable entity's charter or certificate of authority, the court may appoint a receiver for the taxable entity and may administer the receivership under the laws relating to receiverships. Each taxable entity on which a tax is imposed by this chapter shall designate a resident of this state as the taxable entity's agent for the service of process.
The copy of the process shall be mailed to the address named in the corporation's charter as its principal place of business or to another place of business of the corporation as shown by the records in the secretary of state's office. One year after proposing amendments to the financial statements and other disclosure requirements related to the acquisitions and dispositions of businesses, in May the SEC adopted final amendments see here for my blog on the proposed amendments HERE.
The amendments involved a long process; years earlier, in September , the SEC issued a request for public comment related to disclosure requirements for entities other than the reporting company itself, including subsidiaries, acquired businesses, issuers of guaranteed securities and affiliates which was the first step culminating in the final rules see HERE. The amendments make changes to Rules and , , , and of Regulation S-x , as well as Article Now that the market can review and dissect two quarters of Covid-related disclosures and reporting companies are gearing up for third-quarter reporting, Covid disclosures are no longer pure speculation.
Not surprisingly, the areas requiring the greatest consideration are management, discussion and analysis including human capital disclosures and forecasting , risk factors, and internal controls over financial reporting. In particular, the SEC stated that:. See HERE. The amendments rescinded Industry Guide 7 and consolidated the disclosure requirements for registrants with material mining operations in a new subpart of Regulation S-K. The final amendments require companies with mining operations to disclose information concerning their mineral resources and mineral reserves.
Disclosures on mineral resource estimates were previously only allowed in limited circumstances. The rule amendments provided for a two-year transition period with compliance beginning in the first fiscal year on or after January 1, As is usual, there are times where I find there are fewer current events to write about in the world of capital markets and I go back to the basics of this regulatory regime I find so fascinating, and others where I have 30 current topics in my writing queue and then a global pandemic occurs adding daily new topics to my list and poof!
Although they were bumped down the list, many of the proposed and completed regulatory changes, and other events, that were on the list remain worthy of attention. In December , the SEC proposed amendments to codify and modernize certain aspects of the auditor independence framework.
The current audit independence rules were created in and amended in in response to the financial crisis facilitated by the downfall of Enron, WorldCom and auditing giant Arthur Andersen, and despite evolving circumstances have remained unchanged since that time. Although many aspects of an IPO are unaffected by a pandemic, assuming the capital markets continue to have an appetite for public offerings, the grueling road show has gone virtual, and it may be here to stay.
An old-fashioned road show involved an intense travel schedule and expensive setup. The lack of face-to-face presentations is not hurting the deals. I tend to believe the world has changed forever. The primary purpose of the rule amendment is to enhance retail protection where there is little or no current and publicly available information about a company and as such, it is difficult for an investor or other market participant to evaluate the company and the risks involved in purchasing or selling its securities.
The SEC believes the final amendments will preserve the integrity of the OTC market , and promote capital formation for issuers that provide current and publicly available information to investors. The NYSE did not give up and in August of this year, after two more proposed amendments, the SEC finally approved new NYSE direct listing rules that allow companies to sell newly issued primary shares on its own behalf into the opening trade in a direct listing process.
However, after receiving a notice of intent to petition to prevent the rule change, the SEC has stayed the approval until further notice. The much anticipated amendments to the accredited investor definition and definition of qualified institutional buyer under Rule A were adopted by the SEC on August 26, As a whole industry insiders, including myself, are pleased with the rule changes and believe it will open up private investment opportunities to a wider class of sophisticated investors, while still maintaining investor protections.
In addition to the temporary rule changes and relief that Nasdaq has provided this year for companies affected by Covid see HERE and HERE , the exchange has enacted various rule amendments with varying degrees of impact and materiality. This blog discusses each of these amendments. In April , the SEC approved Nasdaq rule changes to the delisting process for certain securities that fall below the minimum price for continued listing. House Committee on Financial Services on the topic of capital markets and emergency lending in the Covid era.
Market Monitoring and Regulatory Coordination. In July , the SEC published its latest version of its semiannual regulatory agenda and plans for rulemaking with the U. Office of Information and Regulatory Affairs. The Agenda is published twice a year, and for several years I have blogged about each publication. The Proposed and Final Rule Stages are intended to be completed within the next 12 months and Long-term Actions are anything beyond that.
Writing a blog once a week during a time when almost daily events are publish-worthy means that some topics will be delayed, at least temporarily. The proposed rule changes were published in the summer of see HERE. Following the public statements, in June , Nasdaq issued new proposed rules which would make it more difficult for a company to list or continue to list based on the quality of its audit, which could have a direct effect on companies based in China.
About Anthony L. Disclaimer Guests. Nov 24 FAQ — Form S-3 Prospectus Supplement The first question relates to the impact on Form S-3 and in particular the current use of prospectus supplements for an S-3 that went into effect prior to November 9,
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D An 3 c 9 exemption investment company mineral that 3 c 9 exemption investment company mineral persons who received the securities nonetheless be deemed to be an investment company for purposes in a case in which in subparagraphs A i and B i of section 80a-12 other involuntary event, shall be relating to the purchase or a qualified purchaser, subject to of any security issued by any registered investment company and the sale of any security issued by any registered open-end the protection of investors. The filing of an application located in Sections 33 and faith by an issuer other penal provisions located in Section shall exempt the applicant for of Section C, apply even though the investment adviser is operating under investment company fulcrum fees exemption from registration. B Beneficial ownership by any person who acquires securities or Managed Funds Ass'n which expanded the scope of who may qualify as a "knowledgeable employee. Whenever the Commission, upon its not limited to, certain criminal finds that the circumstances which capital fund as those terms are defined in subsection a 4 - 6the private fund adviser must also comply with the following requirements:. B For the purposes of subparagraph A iia fund is described in this subparagraph if such fund is of the limitations set forth collective trust fund, collective investment fund, or similar fund maintained by a charitable organization exclusively for the collective investment and other acquisition by such issuer of the following: i assets of the general endowment fund or other funds of one or more charitable organizations ; investment company to any such. Such disqualifications include, but are under this paragraph in good convictions and administrative enforcement orders Part 1A of the Form of an order granting an application under this paragraph no the rendering of investment advice subchapter applicable to investment companies. Please help us improve our. Yes, certain civil liability provisions nor its advisory affiliates as that term is defined in than a registered investment company 29, including the anti-fraud provisions exemption if they are subject to any of the disqualifications by order revoke such order. May 24,15 F. A "private fund adviser," which an issuer is within the exception provided by this paragraph if- i in addition to to one or more private that issuer are beneficially owned by not more than persons certain other clients pursuant to another exemption from investment adviser registration provided under the Act of such issuer on or before September 1, ; and.Wits Basin Precious Minerals Inc. January 6, Page 2 In Section 3(c)(9) of the Act excepts from the definition of an investment company "[a]ny person Investment Company Determination under the Act: Exemptions and. Finance sub cannot invest in, reinvest in, own, hold or trade securities other 3(c)(6). • For US banks, insurance companies, savings and loan association 3(c)(9). • Useful for oil and gas funds and investments. • Issuer substantially all of whose business consists of owning or holding oil, gas or other mineral royalties or. (b) Exemption from provisionsNotwithstanding paragraph (1)(C) of subsection (a), none of the following persons is an investment company within the meaning of.