200608757L




August 24, 2006

To:  **************  
**************

Dear **************:  

Thank you for your email regarding the revised franchise tax recently passed by 
the Texas Legislature.  

The publication and calculator I mention below, as well as other related 
information, can be found at http://www.window.state.tx.us/m23taxes.html.

You have asked if margin is equal to total revenue minus compensation or total 
revenue minus compensation and benefits.  

In the compensation calculation for the franchise tax calculated on margin, 
your margin equals total revenue minus compensation (limited to $300,000 per 
person) and benefits to the extent the benefits are deductible for federal 
income tax purposes.  This provision can be found in Tax Code Section 171.1013 
of House Bill 3.  

This agency’s publication, The Revised Franchise Tax Overview (98-806), 
provides a concise summary of the revised franchise tax.  The publication 
briefly addresses the entities subject to the tax, the calculation of the tax 
and other general information.  There is also a franchise tax calculator 
available on our website for you to estimate a tax liability under the new 
provisions if you operate a taxable entity. 

A copy of HB3 is available through the legislature's website, "Texas 
Legislature Online" at www.capitol.state.tx.us.  

This response is based on the facts presented and current law.  If there are 
different or additional facts, the response may change.  

Our goal is to provide you with prompt, professional service.  Please take a 
moment to complete our on-line survey at:  
http://aixtcp.cpa.state.tx.us/surveys/tpsurv2/index.html.

If you need any additional information, please feel free to contact me at 
1.800.531.5441, extension 34629.  

Sincerely,


Lowell Olsen Dunn
Tax Policy Division




ACCESSION NUMBER: 200608757L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 08/24/2006
TAX TYPE: FRANCHISE