200806199L



AWM 07214606

June 2, 2008

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

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

Thank you for your August 2, 2007 email regarding the Texas franchise tax. I 
apologize for the lengthy delay in responding to your inquiry.

You stated in your message that you were trying to file a Texas Franchise Tax 
report for the survivor of a merger effective 12/31/05. The survivor is a 
calendar year taxpayer. The entity that was merged into the survivor had nexus 
in Texas and filed a report with an ending date of 12/31/05. The surviving 
entity did not have nexus in Texas until the merger was complete. You believe 
the correct beginning date for the next report is 1/1/06. You asked if the 
correct ending date is 12/31/06 or if the initial report include the first 12 
months after the corporation's beginning date of 1/1/06 plus a second period 
from the corporations first anniversary date to the next December 31 [Tex. Tax 
Code Ann. Sec. 171.151]. You also asked how this is impacted under the revised 
franchise tax effective January 1, 2008.

As you are aware, Texas Tax Code (TTC) Section 171.151 defines the privilege 
periods covered by the franchise tax. TTC Section 171.152 provides guidance as 
to when the tax covering each of these privilege periods is due. Finally, TTC 
Sections 171.153 and 171.1532 provide information related to the business upon 
which the tax is based for franchise tax reports due prior to January 1, 2008. 
For reports due on or after January 1, 2008, TTC Section 171.1532 provides 
guidance for the business upon which the tax is based.

Based on these statutory provisions and the facts you presented, the following 
reports will be required of the survivor:

Initial Report
Privilege period: 12/31/2005 - 12/31/2007*
Due Date: 03/30/2007
Accounting period for taxable capital: 12/31/2006
Accounting period for earned surplus: 12/31/2005 - 12/31/2006

Annual Report
Privilege period: 01/01/2008 – 12/31/2008
Due Date: 05/15/2008**
Accounting period for taxable capital:12/31/2006
Accounting period for margin: 01/01/2007 – 12/31/2007

*  Includes the initial, second and first annual periods described in TTC Sec. 
171.151

**  The Comptroller’s office has provided for a 30 day grace period to file 
that report without penalty. This means the report should be filed on or before 
June 16, 2008.

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

If you have any additional questions, please email us at 
tax.help@cpa.state.tx.us.

Sincerely,


Janet Spies
Franchise Tax Policy
Texas Comptroller of Public Accounts




ACCESSION NUMBER: 200806199L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 06/02/2008
TAX TYPE: FRANCHISE