HBA-LJP H.B. 2234 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2234
By: Delisi
Ways & Means
4/12/2001
Introduced



BACKGROUND AND PURPOSE 

Under current law, a corporation engaged solely in the business of
manufacturing, selling, or installing, solar energy devices is exempt from
the franchise tax, but a corporation that is engaged solely in business
related to wind energy devices is not exempt from that same tax.  If such
corporations were exempt from the franchise tax, it may promote the
manufacturing, selling, or installing of a renewable resource.  House Bill
2234 provides for the exemption of a corporation engaged solely in the
business of manufacturing, selling, or installing wind energy devices from
the franchise tax. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2234 amends the Tax Code to provide that a corporation engaged
solely in the business of manufacturing, selling, or installing wind energy
devices is exempted from the franchise tax. 

The bill provides that the amortization of the cost of the wind energy
device must be for a period of at least 60 months, provide for equal
monthly payments, begin on the month in which the device is placed in
service in this state, and cover only a period in which the device is in
use in this state.  The bill authorizes a corporation to deduct from its
apportioned taxable capital the amortized cost of a wind energy device or
from its apportioned taxable earned surplus 10 percent of the amortized
cost of a wind energy device if the device is acquired and used in this
state by a corporation for heating or cooling or for the production of
power and the cost of the device is amortized as described above. 

The bill requires that a corporation that makes the deduction file with the
comptroller of public accounts (comptroller) an amortization schedule
showing the period of the deduction and to file, on the request of the
comptroller, proof of the cost of the wind energy device or proof of the
operation of the device in this state.  The bill authorizes the corporation
to elect to make the deduction either from apportioned taxable capital or
apportioned earned surplus for each separate regular annual period.  The
bill provides that an election for an initial period applies to the second
tax period and to the first regular annual period. 

EFFECTIVE DATE

January 1, 2002.