Tag Archives: Texas franchise tax

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 […]


U.S. Supreme Court Denies Three-Factor Apportionment Review

The United States Supreme Court denied review of Gillette Co. v. California Franchise Tax Board, the California Supreme Court case holding that taxpayers may not use the Multistate Tax Compact’s three-factor apportionment method to apportion their income under the California Business Income Tax.  As is customary, the Court didn’t explain its reasons for denying review.  […]


Texas Supreme Court: Margin Tax Apportionment Rule Invalid

The Texas Supreme Court issued an opinion today in Hallmark Marketing Co., LLC v. Hegar. The opinion invalidated a Texas Comptroller rule regarding apportionment under the Texas franchise tax (also known as the Texas margin tax).  The rule required taxpayers to reduce net gains from sales of capital assets and investments by the amount of […]


Court of Appeals Rules No Three-Factor Apportionment, Texas Franchise Tax Is Not an Income Tax

The Texas Third Court of Appeals issued its opinion yesterday in Graphic Packaging Corp. v. Hegar, No. 03-14-00197-CV.   It ruled that taxpayers may not choose to use the Multistate Tax Compact’s three-factor apportionment method to apportion their taxable margin under the Texas franchise tax.  In doing so, the Third Court of Appeals held that the […]


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While the 2015 Texas Legislature gave taxpayers a significant franchise tax (margin tax) rate cut and repealed some smaller taxes (some of which had not been collected in years), it otherwise left much of the Texas tax code otherwise unchanged.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 […]


Michigan Supreme Court OKs Three-Factor Apportionment, Possible Texas Franchise Tax Implications

In its recent decision in IBM Corp. v. Department of Treasury, the Michigan Supreme Court ruled that taxpayers may apportion their tax base for the Michigan Business Tax using the three-factor apportionment method provided by the Multistate Tax Compact instead of the single-factor apportionment method the Michigan Business Tax statute provided.  The decision means that […]


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 […]


Supreme Court to review three state tax cases

The United States Supreme Court has already announced that it will review three state tax cases in its upcoming term — Comptroller v. Wynne, Direct Marketing Association v. Brohl, and Alabama Department of Revenue v. CSX Transportation, Inc.  This is unusual as the Supreme Court rarely reviews state tax cases.  While none of these cases involve […]


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