HBA-LJP C.S.H.B. 2234 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2234 By: Delisi Ways & Means 4/30/2001 Committee Report (Substituted) 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. C.S.H.B. 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 C.S.H.B. 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 in equal monthly payments for a period of at least 60 months, 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 tax period applies to the second tax period and to the first regular annual period. EFFECTIVE DATE January 1, 2002. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 2234 amends the original to remove from the definition of "wind energy device" the inclusion of a mechanical or chemical device that has the ability to store wind-generated energy for use in heating or cooling in the production of power. The substitute also conforms the original to Texas Legislative Council style and format.