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.