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Franchise Tax
Frequently Asked Questions

Note: TTC means Texas Tax Code and IRC means Internal Revenue Code

Apportionment

Rule 3.591

1. How is the apportionment factor calculated?
The apportionment factor is calculated by dividing Texas Gross Receipts by Everywhere Gross Receipts. Everywhere Gross Receipts will almost always equal Total Revenue except for health care providers, health care institutions, legal services and security broker/dealers.
2. Are there changes to how receipts are apportioned?
The apportionment factor is generally the same as under previous law; however, the throw-back provisions were repealed. Also see exceptions for Texas gross receipts for transactions between members of a combined group under TTC 171.1055.
3. May a taxpayer use the three-factor apportionment formula permitted by the Multistate Tax Compact to apportion its margin under the revised Texas franchise tax?
No. The revised Texas franchise tax specifically provides for a single-factor apportionment formula based on gross receipts in TTC 171.105. The apportionment provision in TTC Chapter 141, related to the Multistate Tax Compact (MTC), does not apply to the revised Texas franchise tax and entities may not elect to use the MTC's three-factor apportionment formula in lieu of the formula specified in Texas Tax Code Chapter 171. (added 01/26/11)
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