Bill Text: TX HB2611 | 2019-2020 | 86th Legislature | Engrossed
Bill Title: Relating to the treatment of certain limited liability companies as passive entities for purposes of the franchise tax.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Engrossed - Dead) 2019-05-17 - Left pending in committee [HB2611 Detail]
Download: Texas-2019-HB2611-Engrossed.html
86R23216 BEF-D | ||
By: Morrison | H.B. No. 2611 |
|
||
|
||
relating to the treatment of certain limited liability companies as | ||
passive entities for purposes of the franchise tax. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 171.0003(a), Tax Code, is amended to | ||
read as follows: | ||
(a) An entity is a passive entity only if: | ||
(1) the entity is a general or limited partnership, a | ||
limited liability company, or a trust, other than a business trust; | ||
(2) during the period on which margin is based, the | ||
entity's federal gross income consists of at least 90 percent of the | ||
following income: | ||
(A) dividends, interest, foreign currency | ||
exchange gain, periodic and nonperiodic payments with respect to | ||
notional principal contracts, option premiums, cash settlement or | ||
termination payments with respect to a financial instrument, and | ||
income from a limited liability company; | ||
(B) distributive shares of partnership income to | ||
the extent that those distributive shares of income are greater | ||
than zero; | ||
(C) capital gains from the sale of real property, | ||
gains from the sale of commodities traded on a commodities | ||
exchange, and gains from the sale of securities; and | ||
(D) royalties, bonuses, or delay rental income | ||
from mineral properties and income from other nonoperating mineral | ||
interests; and | ||
(3) the entity does not receive more than 10 percent of | ||
its federal gross income from conducting an active trade or | ||
business. | ||
SECTION 2. This Act applies only to a report originally due | ||
on or after the effective date of this Act. | ||
SECTION 3. This Act takes effect January 1, 2020. |