200809213L



September 30, 2008

**************
**************
**************

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

Thank you for your letter concerning COMPANY and the calculation of total 
revenue for franchise tax reporting purposes.  I apologize for the delay in 
responding to you.

You state that ************** (“COMPANY”) is a limited partnership that was 
organized in Texas and engages in the portfolio asset acquisition and 
resolution business.  COMPANY has acquired and is resolving portfolios of 
performing and nonperforming commercial and consumer loans and other assets 
that were generally acquired at a discount to face value.  Purchases were 
generally in the form of pools of assets.  COMPANY has historically treated its 
loans as inventory for federal tax purposes, and has consistently reported the 
sales and payoffs of such loans on page one, line 1c of its Form 1065.  You ask 
whether or not the proceeds from the payoff of the loans held by COMPANY are 
eligible for an exclusion from total revenue of the tax basis under the 
Internal Revenue Code of securities and loans sold under Texas Tax Code Section 
171.1011(g-2).

Texas Tax Code Section 171.1011(g-2) allows an exclusion from total revenue, to 
the extent included in total revenue, the tax basis as determined under the 
Internal Revenue Code of securities and loans sold.  The payoff of a loan will 
be considered a “sale” for purposes of Tax Code Section 171.1011(g-2).  
Therefore, to the extent the gross proceeds from the payoff are reported on 
line 1c, Form 1065, the tax basis of such loan may be excluded from total 
revenue.

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

If you have questions about this, please call me at (800) 531-5441, ext. 59952. 
 You may write me at Tax Policy Division, Comptroller of Public Accounts, P.O. 
Box 13528, Austin, Texas 78711-3528. 

Sincerely,


Teresa Bostick
Tax Policy Division



ACCESSION NUMBER: 200809213L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 09/30/2008
TAX TYPE: FRANCHISE