Tag Archives: cost of goods sold deduction

Appeals Court: No COGS for Heavy Equipment Delivery/Pick-up Fees

The Texas Third Court of Appeals recently held in Hegar v. Sunstate Equipment Co., LLC, that a company that leased heavy equipment to contractors could not include its delivery and pick-up fees for the equipment in its cost of goods sold deduction for Texas franchise tax COGS deduction purposes.  In doing so, the Third Court […]


Movie Theaters Still Qualify for COGS, Appeals Court Says

The Third Court of Appeals issued a new opinion today in American Multi-Cinema, Inc. v. Hegar, over a year and a half after the Texas Comptroller filed a motion for rehearing.  The new opinion leaves in places the Third Court of Appeals’ prior ruling that a movie theater company may include costs of exhibiting films […]


Texas Legislative Recap for State and Local Taxes 2015

While the 2015 Texas Legislature gave taxpayers a significant franchise tax (margin tax) rate cut and repealed some smaller taxes (some of which had not been collected in years), it otherwise left much of the Texas tax code otherwise unchanged.  In this Texas legislative recap, we’ll tell you about the changes the Texas Legislature made […]


Texas Judge Rules Auto Repair Labor Costs Includible in Franchise Tax Cost of Goods Sold

A Travis County District Court judge ruled on July 22, 2014 in Autohaus LP, LLP v. Combs that an auto dealer could include labor costs to install new and replacement auto parts in its cost of goods sold for Texas franchise tax purposes.  In doing so, the judge held that the Comptroller rule defining the […]


Major Texas Franchise Tax Policy Change: Comptroller Gives Up on the “Physical Change” Rule for Subcontractor Exclusion and COGS Deduction

The Texas Comptroller recently published a very significant policy letter to the Comptroller’s online database. The letter announces a significant change in Texas franchise tax policy that could affect entities even only somewhat involved with the design, construction, remodeling, repair, or industrial maintenance of real property. The Comptroller’s previous policy was that only entities that […]


Taxpayers’ first appellate margin tax win becomes final

The Third Court of Appeals’ decision in Combs v. Newpark Resources, Inc. became final today, marking Texas taxpayers’ first appellate margin tax win.  The Texas Comptroller did not file a timely appeal with the Texas Supreme Court, so the Third Court of Appeals issued its mandate today.  The opinion, originally handed down this past December, […]


Third Court of Appeals First Texas Margin Tax Opinion is a Big Win for Taxpayers

The Third Court of Appeals issued its opinion today in Combs v. Newpark Resources, Inc., its first case under the revised Texas franchise tax law (also known as the Texas margin tax).   The opinion rejects the Texas Comptroller’s narrow interpretation of the Texas franchise tax’s cost of goods sold deduction in favor of the taxpayer’s […]


Major Change to Texas Franchise Tax Cost of Goods Sold Rule Finalized

The Texas Comptroller just adopted a major revision to the Texas franchise tax cost of goods sold rule.  The final rule the Texas Comptroller adopted is basically the same as the proposed cost of goods sold rule Michael described in his earlier post.  I’ll describe the ways the Texas Comptroller’s final cost of goods sold […]


The 2013 Changes to the Texas Franchise Tax

The 83rd Regular Legislative session is at an end, and the Legislature passed many changes to the Texas franchise tax in the session’s final hours. The bill that included most of these changes was HB 500. I previously covered the House version of this bill, as well as the very different Senate version. The Legislature worked out […]


Major Change in the Works for Texas Franchise Tax Cost of Goods Sold Rules

Last Friday, the Texas Comptroller posted to the Texas Register a proposed revision to her Rule 3.588, which explains how to calculate COGS (cost of goods sold) for Texas franchise tax purposes. The Comptroller appears ready to significantly expand which costs are included in the cost of goods sold deduction.


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