2021 Texas Franchise Tax Report  

              FormInformation05-909 (9-20)     and Instructions

Topics covered in this booklet:                                                      General Information 
Amended Reports........................................................ 10           This booklet summarizes the Texas franchise tax law and 
Annual Reports ............................................................  4       rules and includes information that is most useful to the 
Annualized Total Revenue ...........................................  3              greatest number of taxpayers preparing Texas franchise 
                                                                                     tax reports. It is not possible to include all requirements of 
Change in Accounting Period ......................................  5
                                                                                     the Texas Tax Code Chapter 171. Taxpayers should not 
Combined Reporting....................................................  6            consider this tax booklet as authoritative law. Additional 
Credits .........................................................................  9 information about Texas franchise tax can be found online 
Disregarded Entities .................................................... 3          at www.comptroller.texas.gov/taxes/franchise.
Due Dates....................................................................  4
Electronic Funds Transfer (EFT) .................................  6                 File and Pay Franchise Tax Electronically
                                                                                     Electronically file and pay your franchise tax report using 
Entities Subject to Tax .................................................  1
                                                                                     Webfile. It helps with mathematical computations and has 
Entities Not Subject to Tax ...........................................  2
                                                                                     built-in edits to help you avoid mistakes that could lead to 
Estimated Tax ..............................................................  3      unnecessary billings and the forfeiture of an entity’s right to 
Exempt Entities............................................................  2       transact business in Texas. Electronic filing and paying is 
Extension of Time to File .............................................  5           available 24 hours a day.
EZ Computation........................................................... 4
File and Pay Franchise Tax Electronically ...................  1                     If you owe tax, electronic payment options include credit 
Final Reports ...............................................................  4     card, electronic check (Web EFT) or TEXNET (enrollment 
Forfeiture .....................................................................  6  required).
General Information .....................................................  1
                                                                                     To get started with Webfile for franchise tax, you will need 
Margin..........................................................................  3  your 11-digit Texas taxpayer number and your 6-digit XT 
Minimum Franchise Tax ...............................................  3             Webfile number listed on your Franchise Tax notice. Webfile is 
New Veteran-Owned Businesses ................................  2                     available online at www.comptroller.texas.gov/taxes/file-pay/.
Passive Entities ...........................................................  2
Penalties and Interest ..................................................  6         Webfile is not recommended for combined groups with more 
Tax Rates.....................................................................  3    than 10 members.
Tiered Partnership Election ......................................... 8
                                                                                     Franchise  reports  can  also  be  filed  using  approved  tax 
Where to File ............................................................... 10     preparation software. A list of approved providers is available 
                                                                                     at  www.comptroller.texas.gov/taxes/franchise/approved-
Index of forms:                                                                      providers.php.
Form #   Title
05-102   Public Information Report ........................ 12                       Electronic Filing of No Tax Due Reports Required
05-158-A Franchise Tax Report, page 1 .................. 12                          As of January 1, 2016, No Tax Due Reports must be filed 
05-158-B Franchise Tax Report, page 2 .................. 19                          electronically.
05-160   Credits Summary Schedule ..................... 21
                                                                                     Need a Webfile number?
05-163   No Tax Due Report ................................... 22                    Call  800-442-3453,  enter  the  taxpayer  number  when 
05-164   Extension Request ................................... 23                    prompted and choose option number 1. Our automated 
05-165   Extension Affiliate List .............................. 24                  system will require identifying information, such as total 
05-166   Affiliate Schedule ..................................... 25                 revenue from a prior report or last payment amount (if greater 
05-167   Ownership Information Report  ................ 26                           than zero), before releasing the Webfile number.
05-169   EZ Computation ....................................... 26
05-170   Franchise Tax Payment Form .................. 27                            Entities Subject to Tax
05-175   Tiered Partnership Report ........................ 27                       The franchise tax is imposed on the following entities that 
05-177   Common Owner Information Report ........ 28                                 are either organized in Texas or doing business in Texas: 
                                                                                     • corporations;
05-178   Research and Development Activities  
         Credit Schedule ................................... 28                      •  limited liability companies (LLCs), including single member 
                                                                                     and series LLCs;
05-180   Historic Structure Credit Supplement                                        • banks;
         for Credit Claimed on Report ............... 30
                                                                                     •  state limited banking associations;
                                                                                                                                     1

•  savings and loan associations;                                •  royalties from mineral properties, bonuses from mineral 
•  S corporations;                                               properties, delay rental income from mineral properties 
•  professional corporations;                                    and income from other non-operating mineral interests 
•  partnerships (general, limited and limited liability);        including non-operating working interests.
• trusts;
•  professional associations;                                    Passive income does not include rent or income received 
•  business associations;                                        by a non-operator from mineral properties under a joint 
•  joint ventures; and                                           operating agreement if the non-operator is a member of an 
•  other legal entities.                                         affiliated group and another member of that group is the 
                                                                 operator under the same joint operating agreement.
Entities Not Subject to Tax
The tax is not imposed on:                                       A passive entity that is registered, or is required to be 
•  sole proprietorships (except for single member LLCs);         registered with the Secretary of State (SOS) or the 
•  general partnerships where direct ownership is composed       Comptroller’s office must electronically file a No Tax Due 
 entirely of natural persons (except for limited liability       Report  (Form  05-163)  annually  to  affirm  that  the  entity 
 partnerships);                                                  qualifies as a passive entity. A passive entity is not required to 
•  entities exempt under Subchapter B of Chapter 171, Tax        file a Public Information Report (Form 05-102) or Ownership 
 Code;                                                           Information Report (Form 05-167).
•  certain unincorporated passive entities;
•  certain grantor trusts, estates of natural persons and        A  passive  entity  cannot  be  included  as  an  affiliate  of  a 
 escrows;                                                        combined group. LLCs cannot qualify as passive, even if 
•  real estate mortgage investment conduits and certain          filing as a partnership for federal income tax purposes.
 qualified real estate investment trusts;                        A partnership or trust that qualifies as a passive entity for the 
•  a nonprofit self-insurance trust created under Chapter        period upon which the franchise tax report is based, and is 
 2212, Insurance Code;                                           not registered and is not required to be registered with the 
•  a trust qualified under Section 401(a), Internal Revenue      SOS or Comptroller’s office, will not be required to register 
 Code;                                                           or file a franchise tax report with the Comptroller’s office.
•  a trust exempt under Section 501(c)(9), Internal Revenue 
 Code; or                                                        A passive entity not registered with the Comptroller’s office 
•  unincorporated political committees.                          that no longer qualifies as a passive entity must file a Nexus 
                                                                 Questionnaire (Form AP-114), a Business Questionnaire 
See Rule 3.581 for information on nontaxable entities.           (Form AP-224) or a Trust Questionnaire (Form AP-231) to 
                                                                 register with the Comptroller’s office and begin filing franchise 
Exempt Entities                                                  tax reports.
Some entities may be exempt from the franchise tax. The 
exemptions vary depending upon the type of organization. 
                                                                 New Veteran-Owned Businesses
Exemptions are not automatically granted to an entity. 
For more information on franchise tax exemptions, go to          ENTITIES MUST BE PRE-QUALIFIED
                                                                 New veteran-owned businesses are not subject to franchise 
www.comptroller.texas.gov/taxes/exempt/faq.php.
                                                                 tax for an initial five-year period. To be considered a new 
Note: New veteran-owned businesses and entities that qualify as  veteran-owned business, an entity must meet the following 
 passive are not considered exempt entities.                     qualifications as verified by the Comptroller’s office: 
                                                                 •  be an entity formed or organized in Texas on or after Jan. 
Passive Entities                                                 1, 2016, and before Jan. 1, 2020;
Partnerships (general, limited and limited liability) and trusts •  be 100% owned by a natural person (or persons), each 
(other than business trusts) may qualify as a passive entity     of whom was honorably discharged from a branch of the 
and not owe any franchise tax for a reporting period if at least United States armed services; and
90% of the entity’s federal gross income (as reported on the     •  provide a letter from the Texas Veterans Commission 
entity’s federal income tax return), for the period upon which   (TVC) verifying the honorable discharge of each owner.
the tax is based, is from the following sources: 
•  dividends, interest, foreign currency exchange gain,          A taxable entity that is verified as a new veteran-owned 
 periodic and non periodic payments with respect to notional     business must file a No Tax Due Report (Form 05-163) for 
 principal contracts, option premiums, cash settlements          each reporting period the franchise tax is not imposed on the 
 or termination payments with respect to a financial             taxable entity. However, the new veteran-owned business is 
 instrument, and income from a limited liability company;        not required to file a Public or Ownership Information Report.  
•  distributive shares of partnership income to the extent that 
 those distributive shares of income are greater than zero;      A new veteran-owned business cannot file as a member of 
•  net capital gains from the sale of real property, net gains   a combined group or as part of a tiered partnership.
 from the sale of commodities traded on a commodities 
 exchange and net gains from the sale of securities; and         The Comptroller’s office must be notified if the ownership 

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of the new veteran-owned business changes at any point               activities classified as SIC Industry Group 753 (Automotive 
during the initial five-year period. If during the initial five-year Repair Shops); activities involving the rental or leasing of tools, 
period a new veteran-owned business no longer meets the              party and event supplies, and furniture under SIC Code 7359; 
above criteria, it will become subject to the franchise tax.         heavy construction equipment rental or leasing activities under 
                                                                     SIC Code 7353; and rental-purchase agreement activities 
For the verification process and additional information please       regulated by Chapter 92, Business & Commerce Code. 
visit the Comptroller’s website at www.comptroller.texas.gov/        Wholesale trade means the activities described in Division F 
taxes/franchise/veteran-business.php.                                of the 1987 SIC Manual. (The 1987 SIC Manual is available 
                                                                     online at www.osha.gov/pls/imis/ sicsearch.html.)
If you are a veteran and your entity was formed prior 
                                                                     An entity is primarily engaged in retail or wholesale trade if: 
to January 1, 2016, please contact the Texas Veterans 
                                                                     1) the total revenue from its activities in retail or wholesale 
Commission for other resources that may be available to 
                                                                     trade is greater than the total revenue from its activities 
you at 800-252-8387 or www.tvc.texas.gov/entrepreneurs/.
                                                                     in trades other than the retail and wholesale trades; 
                                                                     2) except for eating and drinking places as described in Major 
Disregarded Entities                                                 Group 58 of Division G, less than 50% of the total revenue 
An entity’s treatment for federal income tax purposes does           from activities in retail or wholesale trade comes from the 
not determine its responsibility for Texas franchise tax.            sale of products it produces or products produced by an 
Therefore, partnerships, LLCs and other entities that are            entity that is part of an affiliated group to which the taxable 
disregarded for federal income tax purposes are considered           entity also belongs; and 
separate legal entities for franchise tax reporting purposes.        3) the taxable entity does not provide retail or wholesale 
The separate entity is responsible for filing its own franchise      utilities, including telecommunications services, electricity 
tax report unless it is a member of a combined group. If the         or gas.
entity is a member of a combined group, the reporting entity 
for the group may elect to treat the entity as disregarded and       Note: See franchise tax Rule 3.584(b)(3) to determine if a taxable 
                                                                     entity produces a product that it sells.
will not unwind its operations from its “parent” entity. In this 
instance, it will be presumed that both the “parent” entity and 
the disregarded entity have nexus in Texas for apportionment         Annualized Total Revenue
purposes only. Whether or not the entity is disregarded for          To determine an entity’s eligibility for the $1,180,000 no tax due 
franchise tax, it must be listed separately on the affiliate         threshold and qualification for the EZ computation, an entity 
schedule. Additionally, if the disregarded entity is organized       must annualize its total revenue if the period upon which the 
in Texas or has nexus in Texas, it will be required to file the      report is based is not equal to 12 months.
appropriate information report (Form 05-102 or 05-167).
                                                                     Note:  The amount of total revenue used in the tax calculations will 
                                                                     NOT change as a result of annualizing revenue. Total revenue 
Margin                                                               will equal the prescribed amounts for the period upon which 
Unless a taxable entity qualifies and chooses to file using          the tax is based.
the EZ computation or No Tax Due Report, the tax base is 
the taxable entity’s margin and is computed in one of the            To annualize total revenue, divide total revenue by the number 
following ways:                                                      of days in the period upon which the report is based, and 
•  Total Revenue times 70%                                           multiply the result by 365.
•  Total Revenue minus Cost of Goods Sold (COGS)
•  Total Revenue minus Compensation                                  Example: A taxable entity’s 2021 franchise tax report is based 
•  Total Revenue minus $1 million.                                   on the period 09-15-2020 through 12-31-2020 (108 days), and 
                                                                     its total revenue for the period is $400,000. The taxable entity’s 
Note: Not all entities will qualify to use COGS to compute margin.   annualized total revenue is $1,351,852 ($400,000 divided by 
See instructions for Item 11. Cost of goods sold (COGS) on 
page 16 for more information.                                        108 days multiplied by 365 days). Based on its annualized 
                                                                     total revenue, the taxable entity would NOT qualify for the 
                                                                     $1,180,000 no tax due threshold, but is eligible to file using 
Tax Rates                                                            the EZ computation. The entity will report $400,000 as total 
The franchise tax rates for reports originally due on or after  
                                                                     revenue for the period.
January 1, 2016: 
•  0.75% (0.0075) for most entities
•  0.375% (0.00375) for qualifying wholesalers and retailers         Estimated Tax
•  0.331% (0.00331) for those entities with $20 million or less      Texas law does not require the filing of estimated tax reports 
in annualized total revenue using the EZ computation.                or payments.

Qualifying retailers and wholesalers are entities that are           Minimum Franchise Tax
primarily engaged in retail or wholesale trade. Retail trade         There is no minimum tax requirement under the franchise tax 
means the activities described in Division G of the 1987             provisions. An entity that calculates an amount of tax due that 
Standard Industrial Classification (SIC) Manual; apparel rental      is less than $1,000 or that has annualized total revenue less 
activities classified in Industry 5999 or 7299 of the SIC Manual;    than or equal to $1,180,000 is not required to pay any tax. (See 
                                                                                                                           3

note for tiered partnership exception.) The entity, however,          Accounting Year End Date: 
must submit all required reports to satisfy its filing requirements.  Enter the last accounting period end date for federal income tax 
                                                                      purposes in the year before the year the report is originally due.
If an entity meets the $1,180,000 no tax due threshold, it may 
file a No Tax Due Report (Form 05-163).                               Entities that became subject to the tax during the 2020 
                                                                      calendar year and have a federal accounting year end date 
Note:  A tiered partnership election is not allowed if the lower tier that is prior to the date the entity became subject to the tax, 
 entity, before passing total revenue to the upper tier entities,     will use the day they became subject to the franchise tax as 
 has $1,180,000 or less in annualized total revenue or owes           the accounting year end date on the first annual report. This 
 less than $1,000 in tax. If the election is allowed and revenue 
                                                                      results in a zero report.
 is passed, both the upper and lower tier entities will owe any 
 amount of tax that is calculated as due even if the amount is 
 less than $1,000 or annualized total revenue after the tiered        Example: An entity became subject to the tax on 10-05-2020. 
 partnership election is $1,180,000 or less.                          The entity’s federal accounting year end date is 08-31. Since 
                                                                      the federal accounting year end date of 08-31-2019 is prior 
                                                                      to the date the entity first became subject to the tax, both the 
EZ Computation
                                                                      accounting period begin and end date on the 2021 annual 
Entities with $20 million or less in annualized total revenue may 
                                                                      report will be 10-05-2020. This results in a zero report. On 
choose to file using the EZ Computation Report (Form 05-169).
                                                                      the 2022 annual report, the entity will file with an accounting 
                                                                      period 10-05-2020 through 08-31-2021.
Combined groups are eligible for the EZ computation method. 
Upper and lower tier entities, when the tiered partnership            Combined Groups
election has been made, will qualify for the EZ computation           For the period that a combined group exists, the combined 
method only if the lower tier entity would have qualified for         group will file only annual reports. A taxable entity will only 
the EZ computation method before passing total revenue to             be included in a combined group report for the accounting 
the upper tier entities.                                              period in which it belongs to the combined group. For any 
                                                                      accounting period that an entity is not part of a combined 
Entities  using  the  EZ  computation  method  forego  any            group, the entity must file a separate report. 
credits for that report year, including the temporary credit 
for business loss carryforwards.                                      Final Reports
                                                                      An entity, other than a member of a combined  group, 
                                                                      that ceases doing business in Texas for any reason (i.e., 
The franchise tax rate for entities choosing to file using the 
                                                                      termination, withdrawal, merger, etc.) is required to file a final 
EZ computation method is 0.331% (0.00331). No margin 
                                                                      franchise tax report (Forms 05-158-A and 05-158-B, 05-163 
deduction (COGS, compensation, 70% of revenue or $1                   or 05-169) and pay any additional tax, if due.
million) is allowed when choosing the EZ computation method.
                                                                      Due Date
Due Dates                                                             A final report is due 60 days after the entity ceases doing 
If the due date (original or extended) of a report falls on           business in Texas.
a Saturday, Sunday or legal holiday included on the list 
published before Jan. 1 of each year in the Texas Register,           Note: A Public Information Report or an Ownership Information 
the due date will be the next business day.                           Report is not required to be filed with the final report. 

                                                                      Accounting Period
Annual Reports                                                        Accounting Year Begin Date: 
Due Date
                                                                      The day after the end date on the previous franchise tax report.
An annual report is due May 15 of each report year.
                                                                      Accounting Year End Date: 
Report Year
                                                                      The date the taxable entity ceases doing business in Texas. 
The year in which the franchise tax report is due. The 2021 
                                                                      For a Texas entity, the end date is the effective date of 
annual report is due May 17, 2021.
                                                                      termination, merger or conversion into a nontaxable entity. 
                                                                      For a non-Texas entity, the end date is the date the entity 
Accounting Period
                                                                      ceases doing business in Texas.
Accounting Year Begin Date: 
Enter the day after the end date on the previous franchise tax 
                                                                      Example: A Texas entity filed a 2021 annual franchise tax 
report. For example, if the 2020 annual franchise tax report 
                                                                      report using a 12-31-2020 accounting year end date. The 
had an end date of 12-31-2019, then the begin date on the 
                                                                      entity wants to end its existence on 08-03-2021. To obtain 
2021 annual report should be 01-01-2020.
                                                                      a certificate  of account  status for termination,  the entity 
                                                                      must file a final report and pay tax for the accounting period 
For entities that became subject to the tax in 2020, enter the 
                                                                      from 01-01-2021 through 08-03-2021. If the entity is not 
date the entity became subject to the tax.
                                                                      terminated until 08-16-2021, the entity must file an amended 
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final report. The amended final report is due the 60th day          A change in a federal accounting period or the loss of a 
after 08-16-2021, the date the entity terminated.                   federal filing election does not change the begin and end 
                                                                    dates of an accounting period for franchise tax reporting 
Taxable entities must satisfy all tax requirements or state in      purposes. The keys to the period upon which the tax is 
the appropriate articles which entity will be responsible for       based are the begin and end dates. The begin date will be 
satisfying all franchise tax requirements before they may           the day after the end date on the prior franchise tax report, 
terminate legal existence in Texas. All documents required          and the end date will be the last federal tax accounting period 
by the Texas Secretary of State (SOS) to terminate legal            end date in the year prior to the year in which the report is 
existence in Texas must be received in that office before 5:00      originally due. Therefore, a change in a federal accounting 
p.m. on Dec. 31 to avoid liability for the next annual franchise    period may result in an accounting period on the franchise 
tax report. If Dec. 31 falls on a weekend, the documents            tax report of more or less than 12 months.
must be received by 5:00 p.m. on the last working day of the 
year. Postmark dates will not be accepted. You may refer to         Example 1: A fiscal year entity changes its accounting year 
www.comptroller.texas.gov/taxes/franchise/reinstate-                end from 09-30-2020 to a calendar year end of 12-31-2020. 
terminate.php for more information on filing requirements.          Because of the change in the federal accounting period, the 
This section does not apply to financial institutions.              entity is required to file a short period federal return covering 
                                                                    the period 10-01-2020 through 12-31-2020. For franchise tax 
Non-Texas entities that have not registered with the SOS office,    reporting purposes, the entity would file its 2021 report based 
but have been doing business in Texas, must satisfy all franchise   on the period 10-01-2018 through 12-31-2020, combining the 
tax requirements to end their responsibility for franchise tax. The relevant information from the two federal income tax reports.
entity must notify the Comptroller’s office in writing and include  Example 2: A calendar year entity lost its S-Corp election 
the date the entity ceased doing business in Texas.                 under the Internal Revenue Code on June 27, 2020. As a 
                                                                    result, the entity was required to file a short period federal 
Combined Groups                                                     S return for the period 01-01-2020 through 06-27-2020. The 
If every member of a combined group ceases doing business           entity did not change its accounting year end and filed a 
in Texas, a final combined report must be filed and paid.           second short period federal return for the period 06-28-2020 
To receive clearance from the Comptroller for termination,          through 12-31-2020. For franchise tax reporting purposes, 
cancellation, withdrawal or merger, Form 05-359 must also           the entity would include the period 01-01-2020 through 12-
be filed. In all other cases, for the period a combined group       31-2020 on its 2021 annual report and would combine the 
exists, the combined group will file only annual reports.           relevant information from the two federal reports.

A member of a combined group that ceases doing business             Extension of Time to File (Non-EFT)
in Texas  will  not  file  a  final  report. The  data  that  would Please see extension requirements for combined reports 
have been reported on the final report will be included in          and electronic funds transfer (EFT) payors in the respective 
the combined group’s annual report for the corresponding            sections of these instructions.
accounting period. Form 05-359 must be filed to end that 
member’s filing responsibility and to identify the reporting        If an entity cannot file its annual report, including the first 
entity of the combined group.                                       annual report, by the original due date, it may request an 
                                                                    extension of time to file the report. If granted, the extension 
An entity that joins a combined group, and then ceases              for a non-EFT payor will be through Nov. 15, 2021. The 
doing business in Texas in the accounting year that would           extension payment must be at least 90% of the tax that will 
be covered by a final report, is required to file a final report    be due with the report or 100% of the tax reported as due 
for the data from the accounting year begin date through            on the prior franchise tax report (provided the prior report 
the date before it joined the combined group. The period            was filed on or before May 14, 2021). The extension request 
beginning with the date the entity joined the combined group        must be made using Webfile or Form 05-164 and must be 
through the date the entity ceased doing business in Texas          postmarked on or before May 17, 2021. If a timely filed 
will be reported on the combined group’s annual report for          extension request does not meet the payment requirements, 
the corresponding period.                                           the due date reverts back to May 17, 2021, and penalty and 
                                                                    interest will apply to any part of the 90% not paid by May 17, 
A member of a combined group that leaves the combined               2021, and to any part of the 10% not paid by Nov. 15, 2021.
group, and then ceases doing business in Texas during the 
accounting year that would be covered by a final report, is         A taxable entity that became subject to the franchise tax 
required to file a final report for the data from the date the      during 2020 may not use the 100% extension option.
entity left the combined group through the date that the entity 
ceased doing business in Texas.                                     An entity that was included as an affiliate on a 2020 combined 
                                                                    group report may not use the 100% extension option if filing 
Change in Accounting Period                                         as a separate entity in 2021.
Texas law does not typically provide for the filing of short 
period franchise tax reports.                                       Note: A combined group must file the Extension Request (Form 
                                                                    05-164) and an Extension Affiliate List (Form 05-165) to have 
                                                                                                                      5

 a valid extension for all members of the group.                  Taxpayers will be assessed a $50 penalty when a report is 
                                                                  filed late. The penalty will be assessed regardless of whether 
Electronic Funds Transfer (EFT)                                   the taxpayer subsequently files the report or any tax is due for 
Taxable entities that remitted $10,000 or more in franchise       the period covered by the late-filed report. This $50 penalty 
tax payments during the preceding state fiscal year (Sept.        is due in addition to any other penalties assessed for the 
1 through Aug. 31) are required to electronically transmit        reporting period.
franchise tax payments to the Comptroller’s office for the 
subsequent calendar year. Additional information about EFT        Additionally, a penalty of 5% of the tax due will be imposed 
requirements are outlined in Rule 3.9 concerning electronic       on an entity that fails to pay the tax when due. If the entity 
filing and electronic fund transfers.                             fails to pay the tax within 30 days after the due date, an 
                                                                  additional 5% penalty will be imposed.
The Schedule of  Electronic Funds Transfer Due Dates 
(Form 00-843) is available at www.comptroller.texas.gov/          Delinquent taxes accrue interest beginning 60 days after the 
forms/00-843.pdf                                                  date the tax is due. The interest rate to be charged is the 
                                                                  prime rate plus 1%, as published in The Wall Street Journal 
The extended due date for mandatory EFT payors is different       on the first day of each calendar year that is not a Saturday, 
from that of other franchise taxpayers. An EFT payor may          Sunday or legal holiday.
extend the filing date from May 17, 2021, to Aug. 16, 2021 
by timely making an extension payment electronically using        Late EFT payments are subject to the same penalties noted 
TEXNET (tax type code 13080 Franchise Tax Extension) or           above. Also, failure to follow the EFT requirements could 
Webfile. Mandatory EFT payors must remit at least 90% of          result in an additional 5% penalty being assessed.
the tax that will be due with the report, or 100% of the tax 
reported as due on the prior franchise tax report provided        Forfeiture
the prior year’s report was filed on or before May 14, 2021.      If an entity does not file its franchise tax report and required 
An EFT payor may request a second extension to Nov. 15,           information report and/or does not pay tax, penalty or interest 
2021, to file the report by paying electronically before Aug. 16, due within 45 days of the due date, its powers, rights and right to 
2021, the balance of the amount of tax that will be reported as   transact business in Texas may be forfeited. Entities that fail to 
due on Nov. 15, 2021, using TEXNET (tax type code 13080           file or pay within 120 days of the forfeiture of the right to transact 
Franchise Tax Extension), Webfile or by submitting a paper        business are subject to having their registration forfeited.
Extension Request (Form 05-164) if the entity has paid all 
of the tax due with its first extension.                          Upon the forfeiture of the right to transact business, the 
                                                                  officers and directors of the entity become personally liable 
For payments of $25,000 or less, a payor has until 10:00          for each debt of the entity that is created or incurred in this 
a.m. (CT) on the due date to initiate the transaction in          state after the due date of the report and/or tax and before 
the TEXNET System. Payments above $25,000 must be                 the privileges are restored. Texas Tax Code Section 171.255.
initiated in the TEXNET System by 8:00 p.m. (CT) on the 
business day before the due date. For more information, go 
                                                                  Combined Reporting
to www.comptroller.texas.gov, and click on the TEXNET link.
                                                                  Taxable entities that are part of an affiliated group engaged 
                                                                  in a unitary business must file a combined group report in 
If an online extension payment is made, the taxable entity 
                                                                  lieu of individual reports. The combined group is a single 
should NOT submit a paper Extension Request (Form 05-164).
                                                                  taxable entity for purposes of calculating franchise tax due 
                                                                  and completing the required tax reports.
Combined Groups
If any one member of a combined group receives notice that 
                                                                  An affiliated group is a group of entities (with or without 
it is required to electronically transfer franchise tax payments, 
                                                                  nexus in Texas) in which a controlling interest (more than 
then the combined group is required to electronically transfer 
                                                                  50%) is owned by a common owner(s), either corporate or 
payments and comply with the EFT rules. The payment must 
                                                                  noncorporate, or by one or more of the member entities.
be remitted as discussed previously; however, the combined 
group must also submit an Extension Affiliate List (Form 05-
                                                                  An affiliated group can include: 
165) to the Comptroller’s office for the first extension request. 
                                                                  •  pass-through entities, including partnerships; 
Do not resubmit an Extension Affiliate List when filing for 
                                                                  •  limited liability companies taxed as partnerships under 
the second extension request. It is the responsibility of the 
                                                                  federal law; 
taxpayer to monitor their electronically submitted reports 
                                                                  •  S corporations; and 
and payments through their software providers to ensure 
                                                                  •  disregarded entities under federal law.
successful transmission. Questions about the software 
provider’s products should be directed to the provider of 
                                                                  A combined group cannot include:
the software.
                                                                  •  taxable entities that conduct business outside the United 
                                                                  States if 80% or more of the taxable entity’s property 
Penalties and Interest                                            and payroll are assigned to locations outside the United 
Late Filing Penalties
6

States (See Texas Tax Code Section 171.1014(a) for more             A combined group must look at the total revenue of the group 
details);                                                           to determine the applicable tax rate. If the combined group’s 
•  new veteran-owned businesses (See the section on New             revenue from retail or wholesale activities is greater than the 
Veteran-Owned Businesses);                                          revenue from all other activities, then the group may qualify 
•  entities exempt under Chapter 171, Subchapter B; or              as a retailer or wholesaler and may use the 0.375% (0.00375) 
•  passive entities.                                                tax rate as long as it meets all the criteria specified, except 
                                                                    as provided below. See Tax Rates, page 3.
A unitary business is defined as a single economic enterprise 
that is made up of separate parts of a single entity or of a        A combined group may not include taxable entities that 
commonly controlled group of entities that are sufficiently         provide retail or wholesale electric utilities, if: 
interdependent, integrated and interrelated through their           •  the taxable entity’s activity disallows the combined group 
activities so as to provide a synergy and mutual benefit that       from qualifying for the retailer or wholesaler tax rate; and
produces a sharing or exchange of value among them and              •  the taxable entity’s or entities’ total revenue is less than 
a significant flow of value to the separate parts. All affiliated   five percent of the total revenue for the combined group. 
entities are presumed to be engaged in a unitary business.
                                                                    Accounting Period of the Combined Group
See franchise tax Rule 3.590 for more detailed information          The combined group’s accounting period is generally 
on combined reporting.                                              determined as follows:
                                                                    •  if two or more  members  of  a  group  file  a  federal 
Reporting Entity                                                    consolidated return, the group’s accounting period is the 
The combined group’s choice of an entity that is:                   federal tax period of the federal consolidated group; 
1. the parent entity, if it is a part of the combined group, or     •  in all other cases, the accounting period is the federal tax 
2. an entity that is included within the combined group, is         period of the reporting entity.
subject to Texas’ taxing jurisdiction, and has the greatest 
Texas business activity during the first period upon which          See the accounting period begin and end date requirements 
the first combined group report is based, as measured by            in the annual and final report sections.
the Texas receipts after eliminations for that period.
                                                                    The accounting year begin and end dates entered on page 
The reporting entity must file a combined report on behalf          1 of the franchise tax report must reflect the full accounting 
of the group together with all schedules required by the            period on which the combined group report is based.
Comptroller. The reporting entity should change only when 
the entity (other than the parent) is no longer subject to          If  the  federal  tax  period  of  a  member  differs  from  the 
Texas’ jurisdiction to tax or the reporting entity is no longer a   federal tax period of the group, the reporting entity will 
member of the combined group. The same entity cannot be the         determine the portion of that member’s revenue, cost of 
reporting entity for more than one report for a reporting period.   goods sold, compensation, etc. to be included by preparing 
                                                                    a separate income statement based on federal income tax 
Combined Report                                                     reporting methods for the months included in the group’s 
A combined group must include all taxable entities in the           accounting period.
combined report even if, on a separate entity basis, the 
member has $1,180,000 or less in total revenue. The                 Note: The affiliates’ accounting year begin and end dates on the 
combined group may; however, qualify for the No Tax Due             affiliate schedule must be within the accounting year begin 
Report if the annualized total revenue of the combined group        and end dates entered on page 1 of the franchise tax report. 
                                                                    For example, a combined group selects a newly formed entity 
is $1,180,000 or less.
                                                                    (formed 07-01-2020) as the reporting entity. The combined 
                                                                    group’s franchise tax report is based on the accounting period 
A combined group may qualify to use the EZ computation if           01-01-2020 through 12-31-2020. On page 1 of the franchise 
its combined annualized total revenue is $20 million or less.       tax report, the accounting year begin date is 01-01-2020, 
                                                                    and the accounting period end date is 12-31-2020. On the 
Unless a combined group qualifies and chooses to file the No        affiliate schedule, the newly formed entity will be listed with an 
Tax Due Report or the EZ Computation Report, the combined           accounting year begin date of 07-01-2020 and an accounting 
group’s margin is computed in one of the following ways:            year end date of 12-31-2020.
•  Total Revenue times 70%
•  Total Revenue minus Cost of Goods Sold (COGS)**                  Newly Formed or Acquired Entities
•  Total Revenue minus Compensation                                 When a combined group acquires or forms another taxable 
•  Total Revenue minus $1 million                                   entity during the period upon which the combined group’s 
                                                                    report is based, it will be presumed that the newly acquired or 
**If the entity has qualifying costs. See instructions for Item 11. formed entity is unitary and will be included in the combined 
Cost of goods sold (COGS) on page 16 for more information.          filing. The presumption is rebuttable.

A combined group may choose only one method for computing           See the annual and final report sections of these instructions 
margin that applies to all members of the combined group.           for additional information.

                                                                                                                          7

Combined Total Revenue                                        between members that are excluded from revenue may 
A combined group must determine its total revenue by:         not be included in Texas gross receipts. However, Texas 
1. calculating the total revenue of each of its members as if gross receipts will include certain sales of tangible personal 
the member were an individual taxable entity without regard   property made to third party purchasers if the tangible 
to the $1,180,000 no tax due threshold (See instructions for  personal property is ultimately delivered to a purchaser in 
Items 1-9 on Form 05-158-A to compute total revenue on        Texas without substantial modification. For example, drop 
an individual entity basis.);                                 shipments made by a member of a combined group from a 
2. adding together the total revenues of the members          Texas location to a Texas purchaser would be included in 
determined under (1); and                                     Texas receipts based on the amount billed to the third party 
3. subtracting, to the extent included in (2), items of total purchaser if the seller is also a member of the combined 
revenue received from a member of the combined group.         group and the seller does not have nexus.

Combined Cost of Goods Sold (COGS)                            Gross receipts everywhere for a combined group should 
A combined group that elects to subtract COGS must            include receipts for all entities within the group, regardless 
determine that amount by:                                     of whether the entities have nexus in Texas. Receipts from 
1. calculating the COGS for each of its members as if the     transactions between members that are excluded from 
 member were an individual taxable entity (See instructions   revenue may not be included in gross receipts everywhere.
 for Items 11-13 on Form 05-158-A to compute COGS on 
 an individual entity basis.);                                Additional Reporting Requirement for Combined Groups 
2. adding together the amounts of COGS determined under       with Temporary Credit
 (1); and                                                     The reporting entity of a combined group with a temporary 
3. subtracting from the amount determined under (2) any       credit for business loss carryforward preserved for itself and/
 COGS amounts paid from one member of the combined 
                                                              or its affiliates must submit a Common Owner Information 
 group to another member of the combined group, but 
                                                              Report (Form 05-177) by the due date of the report. This 
 only to the extent the corresponding item of total revenue 
                                                              information must be submitted to satisfy franchise tax filing 
 was subtracted.
                                                              requirements, even if the combined group is not claiming 
Note: COGS amounts may be computed ONLY for those affiliates  the credit on the current year’s report. Submit the Common 
 that have eligible COGS deductions. See instructions on      Owner Information Report before or with your franchise 
 page 16 for more information.                                tax report to prevent processing delays. If you submit the 
                                                              Common Owner Information Report after you file your report, 
Combined Compensation                                         it will NOT immediately process to your account.
A combined group that elects to subtract compensation must 
determine that amount by:                                     Combined Extensions
1. calculating the compensation for each of its members as    A combined group must timely submit Forms 05-164 and 05-
 if each member were an individual taxable entity (See        165 along with the required payment to request an extension 
 instructions for Items 15-17 on Form 05-158-A to compute     of time to file its report. See the Extensions and EFT sections 
 compensation on an individual entity basis.);                of this booklet for additional information.
2. adding together the amounts of compensation determined 
 under (1); and                                               Liability for the Tax
3. subtracting from the amount determined under (2) any       Each taxable entity identified on the Affiliate Schedule (Form 
 compensation amounts paid from one member of the             05-166) is jointly and severally liable for the franchise tax of 
 combined group to another member of the combined             the combined group. See Texas Tax Code, Sec. 171.1014(i). 
 group, but only to the extent the corresponding item of      Notice of any such tax liability must be sent to the reporting 
 total revenue was subtracted.                                entity at the address listed on the report and must be 
                                                              deemed sufficient and adequate notice of such liability to 
If any employee, officer, director, etc. is paid by more      each member of the combined group. Separate notice to 
than one member of the combined group, that individual’s      each member is not required.
compensation is capped at $390,000 per 12-month period 
upon which the report  is based when computing the            Tiered Partnership Election
compensation deduction for the group.                         A “tiered partnership arrangement” means an ownership 
                                                              structure in which any of the interests in one taxable entity 
Combined $1 Million Deduction                                 treated as a partnership or an S corporation for federal 
A combined group that elects to subtract $1 million to        income tax purposes (a “lower tier entity”) are owned by one 
determine margin is allowed $1 million for the combined       or more other taxable entities (an “upper tier entity”). A tiered 
group as a whole, not for each member of the group.           partnership arrangement may have two or more tiers. The 
                                                              tiered partnership election, under Texas Tax Code Section 
Combined Apportionment                                        171.1015, is not mandatory; it is a filing option for entities in 
Texas gross receipts of a combined group include only         a tiered partnership arrangement.
receipts for entities within the group that are organized in 
Texas or that have nexus in Texas. Receipts from transactions The  tiered  partnership  election  is  not  an  alternative  to 
8

combined reporting. Combined reporting is mandatory for             member’s entire amount of credit and the member’s entire 
taxable entities that meet the ownership and unitary criteria.      available credit carryover for that report year. For subsequent 
Therefore, the tiered partnership election is not allowed if the    reports, the departed member’s credit will no longer be 
lower tier entity is included in a combined group.                  available to the combined group, and the combined group’s 
                                                                    credit carryover must be adjusted to remove the portion of 
Additionally, the tiered partnership election is not allowed if     carryover related to the departed member. 
the lower tier entity, before passing total revenue to the upper 
tier entities owes no tax.                                          See Rule 3.594 for additional information regarding this credit.

The tiered partnership election allows the lower tier entity        Economic Development Credits
to pass its total revenue to its upper tier entities. The upper     A taxable entity that established a research and development 
tier entities then report this passed revenue with their own        credit on a franchise tax report originally due prior to Jan. 1, 
total revenue. It is important to note that this election does      2008, may claim any unused credit carried forward to offset 
not allow the lower tier entity to pass its margin deduction        the tax on margin.
(COGS, compensation, 70% of revenue or $1 million) to the 
upper tier entities.                                                Credit for Certified Rehabilitation of Certified Historic 
                                                                    Structures
The  requirements  for  filing  under  the  tiered  partnership     Effective for reports due on or after Jan. 1, 2015, a tax credit 
election are:                                                       of up to 25 percent of eligible costs and expenses incurred 
•  All taxable entities involved in the tiered partnership election in the certified rehabilitation of a certified historic structure 
must file a franchise tax report, a Public Information Report       placed in service on or after Sept. 1, 2013, is allowed.
(Form 05-102) or Ownership Information Report (Form 05- 
167), and the Tiered Partnership Report (Form 05-175).              To qualify for the historic structure credit, the owner must 
•  Both the upper and the lower tier entities must blacken the      have an ownership interest in the structure during the 
tiered partnership election circle on their tax reports.            calendar year the structure was placed in service and the 
•  Total revenue may be passed only to upper tier entities          total amount of eligible costs and expenses incurred must 
that are subject to the Texas franchise tax.                        exceed $5,000.
•  Total revenue must be passed to upper tier taxable entities 
based on ownership percentage.                                      The entity must first establish the credit with the Comptroller’s 
•  Margin deductions (COGS, compensation, 70% of revenue            office  by  submitting  the Texas  Historic  Structure  Credit 
or $1 million) may not be passed to upper tier entities.            Registration  (Form AP-235),  the  Certificate  of  Eligibility 
•  The upper and lower tier entities may use the EZ                 issued by the Texas Historical Commission and an audited 
Computation (Form 05-169) only if the lower tier entity has         cost report. The Comptroller’s office will issue the owner of 
$20 million or less in annualized total revenue before total        the credit a Texas Historic Structure Credit Certificate (Form 
revenue is passed to the upper tier entities.                       05-901) to be included with any transactions involving the 
•  The upper tier entities are not eligible to file a No Tax Due    amount or ownership of the credit.
Report (Form 05-163). 
                                                                    If an entity is eligible for a historic structure credit carryforward, 
Both the upper and lower tier entities will owe any amount          the unused credit may be carried forward for not more than 
of tax that is calculated as due even if the amount is less         five consecutive years.
than $1,000 or annualized total revenue after the tiered 
partnership election is $1,180,000 or less.                         The historic structure credit may be taken on a franchise tax 
                                                                    report only after all other credits available for that filing period 
If the upper and lower tier entities have different accounting      have been applied, including carryforwards.
periods, the upper tier entity must allocate the total revenue 
reported from the lower tier entity to the accounting period        The historic structure credit may be sold, assigned, or 
on which the upper tier entity’s report is based.                   allocated an unlimited number of times. The credit may only 
                                                                    be allocated to partners, members or shareholders of a pass-
Credits                                                             through entity. If the credit is sold, assigned or allocated, Form 
2008 Temporary Credit for Business Loss Carryforwards               05-179 must be submitted to the Comptroller’s office with the 
Each eligible taxable entity must have preserved its right to       credit owner’s Historic Structure Credit Certificate within 30 
take the credit with the Comptroller’s office on or before the      days of the transaction. Once the credit is processed as sold, 
due date of its 2008 report.                                        assigned or allocated, the credit will be recalculated and all 
                                                                    parties involved will receive a new Historic Structure Credit 
A taxable entity that is a combined group is allowed to take        Certificate to reflect a credit balance or letter of explanation 
a credit for eligible members of the combined group (i.e., the      for credit accounts with zero balance. 
member was subject to the franchise tax on May 1, 2006, 
and preserved the right to take the credit). If a combined          Research and Development Activities Credits
group member leaves the combined group during the a tax             A  taxable  entity  is  eligible  for  a  franchise  tax  credit  for 
period, the original combined group may claim the departing         performing  qualified  research  and  incurring  qualified 
                                                                                                                            9

research expenses from activities conducted in Texas.               Where to file
“Qualified research” and “qualified research expense” are           Reports and payments should be mailed to:
defined by Section 41 of the Internal Revenue Code.
                                                                    Texas Comptroller of Public Accounts 
An increased amount of credit is allowed for taxable entities       P.O. Box 149348 
that  contract  with  public  or  private  institutions  of  higher Austin, TX  78714-9348 
education for the performance of qualified research and 
have qualified research expenses incurred in Texas under            If tax is due, and the taxable entity is not required to use 
the contract during the period on which the report is based.        EFT or does not submit payment online, make the check 
                                                                    or money order payable to the Texas Comptroller. Write the 
A taxable entity is not eligible for the franchise tax credit if    Texas taxpayer number and the report year on the check or 
the taxable entity, or any member of its combined group,            money order. Complete the Texas Franchise Tax Payment 
received  a  sales  tax  exemption  under Texas Tax  Code           Form (Form 05-170).
Section 151.3182 during the period on which the franchise 
tax is based.                                                       Private Delivery Services
                                                                    Texas law conforms to federal law regarding the use of 
Amended Reports                                                     certain designated private delivery services to meet the 
If an entity needs to amend a report, it must file all pages        “timely mailing as timely filing/paying” rule for tax reports 
of the amended report along with a cover letter explaining          and payments. If a private delivery service is used, address 
the reason for the amendment.  The entity must write                the return to:
“AMENDED” on the top of the report and submit the 
supporting documentation. If the amended report will result         Texas Comptroller of Public Accounts 
in a refund of taxes previously paid, the claim must comply         111 E. 17th St.
with Texas Tax  Code Section 111.104; the cover letter must         Austin, TX 78701-1334
state and detail each reason on which the claim is founded.

10

          Instructions for Completing Taxpayer Information 

                      Included on Texas Franchise Tax Forms

Taxpayer number:                                       Report year:                                                                                                Secretary of State 
                                                                                               Due date: 
Enter the Texas taxpayer number that                   The year the                                                                                                (SOS) file number 
                                                                                               For annual filers, enter May 17, 2021. 
has been assigned to your entity by the                report is due.                                                                                              or Comptroller file 
Comptroller’s office. If you do not have                                                       If you are filing a final report, enter                             number: 
an assigned number, enter your federal                                                         the due date that was provided on the                               The number assigned 
employer identification number (FEIN).                                                         letter you received.                                                to the entity by the 
                                                                                                                                                                   SOS or Comptroller.

Taxpayer name:
The legal name 
of the entity filing                      05-158-A 
                                          (Rev.9-15/8) 
the report.                                                                       Texas Franchise Tax Report - Page 1 
                                          Tcode        13250   Annual 
                            Taxpayer number                                                    Report year          Due date 
Mailing address:
The mailing 
                        Taxpayer name 
address of the 
entity filing the       Mailing address 
report. If there is a   City                                             State                              Country                           ZIP code plus 4      Blacken circle if the  
change of address                                                                                                                                                  address has changed 
                        Blacken circle if this is a combined report      Blacken circle if Total Revenue is adjusted for 
for this entity,                                                         Tiered Partnership Election, see instructions 
please blacken the       Is this entity a corporation, limited liability company, professional association, limited partnership or  nancialfi institution?    Yes  No
circle as indicated.    ** If not twelve months, see instructions for annualized revenue  
                                           m m d d y y                                                       m m d d y                  y                 SIC code   NAICS  code 
                        Accounting year                                           Accounting  year  
                        begin date**                                              end date 
Combined Report: 
If this report is being 
filed on behalf of an 
affiliated group of entities 
engaged in a unitary                      Accounting year end date:
business, please blacken                  See the accounting year 
the circle accordingly.                   end date requirements in                                                                                                 NAICS code: 
                                          the annual and final report                                                                                              Enter the code that 
                                          sections. Also see the                                                                                                   is appropriate for the 
                                          accounting period inform-                                                                                                taxable entity or the 
Accounting year begin date:               ation in the combined                                                                                                    code that reflects 
                                                                                               SIC code: 
See the accounting year begin             reporting section.                                                                                                       the overall business 
date requirements in the                                                                       This field determines the tax rate. 
annual and final report                                                                        Completion of the field is optional;                                activity of a combined 
sections. Also see the                                                                         however, if left blank, the tax rate will                           group. The North 
accounting period                                                                              default to 0.75%. See “Tax Rates”                                   American Industry 
information in the                                                                             on page 3 to determine if you qualify                               Classification System 
combined                                                                                       for the tax rate and, if qualified, enter                           (NAICS) codes are 
                                                                                               the appropriate retail or wholesale                                 online at www.census.
reporting         Tiered Partnership:                                                                                                                              gov/eos/www/naics/.
                                                                                               Standard Industrial Classification 
section.          If you are making a tiered partnership 
                                                                                               (SIC) code. Otherwise, enter a code 
                  election and are the upper tier entity 
                                                                                               that is appropriate for the taxable 
                  including revenue passed to you by the 
                                                                                               entity or the code that reflects 
                  lower tier entity, or if you are the lower 
                                                                                               the overall business activity of a 
                  tier entity excluding revenue passed to an 
                                                                                               combined group.  The SIC codes 
                  upper tier entity, blacken this circle and 
                                                                                               are online at www.osha.gov/pls/imis/
                  complete Form 05-175. Do not blacken 
                                                                                               sicsearch.html.
                  this circle just because you own an 
                  interest in another entity.

                                                                                                                                                                                          11

                         Specific Line Instructions for 

                     Each Report Included in this Booklet

Form 05-102                                                         list all officers and directors that are required by the laws of 
                                                                    the state or country of incorporation or organization. Limited 
Texas Franchise Tax Public Information Report
Filing Requirements:   Each  corporation,  LLC,  limited            Partnerships must include all general partners.
partnership, professional association and financial institution 
that has a franchise tax responsibility must file a Public          Professional associations should report the members of their 
Information Report (PIR) to satisfy their filing obligation.        executive committee.
The PIR is due on the date the franchise tax report is due. 
The report must be completed and signed by an officer,              Sections B and C: Complete both sections as applicable 
director or other authorized person. A separate PIR is to           for the entity for which this report is filed.
be  filed  for  each  corporation,  LLC,  limited  partnership, 
professional association and financial institution that files a     Processing, Accessing and Correcting Information Reported 
separate franchise tax report or that is part of a combined         on the PIR: 
group  (unless  the  corporation,  LLC,  limited  partnership,      Reports filed by Texas and Non-Texas corporations, LLCs, 
professional  association  or  financial  institution  is  not      limited partnerships and professional associations registered 
organized in Texas and does not have nexus in Texas).               with the Secretary of State (SOS) are sent to the SOS, as 
                                                                    required by law.
Even if the franchise tax report is filed and all taxes paid, the 
right to transact business may be forfeited for failure to file the After processing, officer and director information from the 
completed and signed PIR. The effects of forfeiture include         report is made available on the Comptroller’s Franchise 
the denial of the entity’s right to sue or defend in a Texas        Account Status website, www.comptroller.texas.gov/taxes/
court, and each officer and director becomes personally             franchise/coas-instructions.php. If the information is not 
liable for certain debts of the entity (Texas Tax Code Sections     available online, you may request a copy of the most recent 
171.251, 171.252 and 171.255). Forfeiture provisions do             PIR by contacting us at open.records@cpa.texas.gov, or 
not apply to financial institutions (Texas Tax Code Sections        write to: 
171.259 and 171.260).
                                                                                Comptroller of Public Accounts 
Address changes can be indicated by blackening the circle                       Open Records Section
after the Taxpayer name.                                                        P. O. Box 13528
                                                                                Austin, TX  78711-3528
Changes to the registered agent or registered office must 
be filed directly with the Secretary of State, and cannot be        Changes to officer and director information that occur after 
made on this form. The changes can be made online or on             the report is filed should be reported to the Comptroller 
forms downloaded from their website at www.sos.texas.gov/.          on the next PIR the corporation, LLC, limited partnership, 
                                                                    professional association, or financial institution is required 
If there are no changes to the information in Section A of this     to file. The Comptroller will not accept changes during the 
report, then blacken the circle as indicated and complete           year, except as noted below.
Sections B and C. If no information is displayed or preprinted 
on this form, complete all applicable items.                        An individual whose name was included on the report, but 
                                                                    who was not an officer or director on the date the report 
Section A: Report the name, title and mailing address of            was filed, may file a sworn statement to that effect with 
each officer and director of the corporation, LLC, limited          the Comptroller. A corporation,  LLC, limited  partnership, 
partnership, professional association, or financial institution     professional association, or financial institution that made 
as of the date the report is filed.                                 an error on its PIR may file an amended PIR with a cover 
                                                                    letter explaining the error.
Domestic  profit  corporations  and  domestic  professional 
corporations must list all officers, which must include the         Signature Block:  Report  must  be  signed  by  an  officer, 
president and secretary and all directors. One person may           director or other authorized person. This includes a paid 
hold all offices. Domestic non-profit corporations must list all    preparer authorized to sign the report.
officers. Different persons must hold the offices of president 
and secretary. There  is a minimum of three directors.              Form 05-158-A 
Domestic limited liability companies must list all managers         Texas Franchise Tax Report – Page 1
and, if the company is member-managed, list all members.            Filing Requirements: Any entity (including a combined 
All officers, if any, must be listed. Non-Texas entities must       group) that does not qualify to file using the EZ computation 

12

or that does not have $1,180,000 or less in annualized total            Item 1. Gross receipts or sales
revenue (qualifying to file the No Tax Due Report) should              •  For a taxable entity filing as a corporation for federal tax 
file this report. If you are a passive entity or a new veteran-        purposes, enter the amount from Form 1120 line 1c.
owned business, see the Passive Entities section on page               •  For a taxable entity filing as an S corporation for federal 
2 or New Veteran-Owned Businesses on page 3 for specific               tax purposes, enter the amount from Form 1120S line 1c.
filing instructions.                                                   •  For a taxable entity filing as a partnership for federal tax 
                                                                       purposes, enter the amount from Form 1065 line 1c.
Note: If  a  tiered  partnership  election  is  made  and  revenue  is •  For a taxable entity filing as a trust for federal tax purposes, 
passed, both the upper and lower tier entities will owe any            enter the amount from Form 1040 Schedule C line 3.
amount of tax that is calculated as due, even if the amount is         •  For a taxable entity that is a single member LLC filing as 
less than $1,000 or annualized total revenue after the tiered 
                                                                       a sole proprietorship for federal tax purposes, enter the 
partnership election is $1,180,000 or less.
                                                                       amount from Form 1040 Schedule C line 3.
                                                                       •  For a taxable entity filing a federal tax form other than those 
The instructions for Items 1-7 and 9 below are for taxable 
                                                                       mentioned above, enter an amount that is substantially 
entities that are filing as a separate entity and not as part of 
                                                                       equivalent to the amounts discussed in this section.
a combined group. A combined group should follow these 
specific instructions for each member of the group, creating 
                                                                       Item 2. Dividends
a combinations and eliminations schedule, and then add 
                                                                       •  For a taxable entity filing as a corporation for federal tax 
across each item to determine the amounts that will be 
                                                                       purposes, enter the amount from Form 1120 line 4.
reported for the group. Intercompany eliminations should be 
                                                                       •  For a taxable entity filing as an S corporation for federal tax 
reported on Item 9 as an exclusion from revenue.
                                                                       purposes, enter the amount from Form 1120S Schedule 
                                                                       K line 5a.
The amounts referenced in the instructions presume that 
                                                                       •  For a taxable entity filing as a partnership for federal tax 
a  separate federal income  tax  return was  filed  by  each 
                                                                       purposes, enter the amount from Form 1065 Schedule K 
separate taxable entity. If a taxable entity was part of a 
                                                                       line 6a.
federal consolidated return or was disregarded for federal 
                                                                       •  For a taxable entity filing as a trust for federal tax purposes, 
tax purposes and is not being treated as disregarded in a 
                                                                       enter the amount from Form 1041 line 2a.
combined group report for franchise tax purposes, report 
                                                                       •  To the extent dividends earned by the LLC are included 
the amounts on Items 1-7 and 9 as if the entity had filed a 
                                                                       for a taxable entity registered as a single member LLC 
separate return for federal income tax purposes.
                                                                       and filing as a sole proprietorship for federal tax purposes, 
                                                                       enter the amount associated with dividends from Form 
The instructions for Items 11-13 and 15-17 below are also for 
                                                                       1040 Schedule C line 6.
taxable entities that are filing as a separate entity and not as 
                                                                       •  For a taxable entity filing a federal tax form other than those 
part of a combined group. A combined group should follow 
                                                                       mentioned above, enter an amount that is substantially 
these specific instructions for each member of the group, 
                                                                       equivalent to the amounts discussed in this section.
add across each item, and then subtract any intercompany 
eliminations to determine the amounts that will be reported. 
                                                                       Item 3. Interest
Eliminations may be made only to the extent that the related 
                                                                       •  For a taxable entity filing as a corporation for federal tax 
items of revenue were eliminated.
                                                                       purposes, enter the amount from Form 1120 line 5.
                                                                       •  For a taxable entity filing as an S corporation for federal tax 
                                                                       purposes, enter the amount from Form 1120S Schedule 
Before you begin
                                                                       K line 4.
The line items indicated in this section refer to specific 
                                                                       •  For a taxable entity filing as a partnership for federal tax 
lines from the 2020 Internal Revenue Service (IRS) forms. 
                                                                       purposes, enter the amount from Form 1065 Schedule K 
The statute and administrative rules base total revenue 
                                                                       line 5.
on specific line items from the 2006 IRS forms and state 
                                                                       •  For a taxable entity filing as a trust for federal tax purposes, 
that in computing total revenue for a subsequent report 
                                                                       enter the amount from Form 1041 line 1.
year, total revenue:
                                                                       •  To the extent interest earned by the LLC is included for a 
                                                                       taxable entity registered as a single member LLC and filing 
•  is based on the 2006 equivalent line numbers on any 
                                                                       as a sole proprietorship for federal tax purposes, enter the 
subsequent version of that form and
                                                                       amount associated with interest from Form 1040 Schedule 
•  is computed based on the Internal Revenue Code in 
                                                                       C line 6.
effect for the federal tax year beginning on Jan. 1, 2007.
                                                                       •  For a taxable entity filing a federal tax form other than those 
                                                                       mentioned above, enter an amount that is substantially 
The actual line numbers in the statute and rules are 
                                                                       equivalent to the amounts discussed in this section.
not updated to reflect subsequent changes in the 
                                                                       •  The amount reported must be zero or greater. We do not 
federal form line numbering. Although the instructions 
                                                                       allow a negative amount on Item 3 of this report.  The 
are updated annually to reflect federal line numbering 
                                                                       federal return lines that Texas franchise tax pulls from 
changes that affect total revenue, be aware that federal 
                                                                       should only report interest income.
line numbers are subject to change throughout the year.

                                                                                                                           13

Item 4. Rents                                                       amount from Form 1040 Schedule D, to the extent that it 
•  For a taxable entity filing as a corporation for federal tax     relates to the LLC; and the amount from Form 4797 line 
purposes, enter the amount from Form 1120 line 6.                   17, to the extent that it relates to the LLC.
•  For a taxable entity filing as an S corporation for federal tax  •  For a taxable entity filing a federal tax form other than those 
purposes, enter the amount from Form 1120S Schedule K               mentioned above, enter an amount that is substantially 
line 3a and the amount from Form 8825 lines 18a and 19.             equivalent to the amounts discussed in this section.
•  For a taxable entity filing as a partnership for federal tax 
purposes, enter the amount from Form 1065 Schedule K                Item 7. Other income
line 3a and the amount from Form 8825 line 18a.                     •  For a taxable entity filing as a corporation for federal tax 
•  For a taxable entity filing as a trust for federal tax purposes, purposes, enter the amount from Form 1120 Line 10 to the 
enter the amount from Form 1040 Schedule E line 23a.                extent not already included; and any total revenue passed 
•  For a taxable entity that is a single member LLC filing as       from a lower tier entity under the tiered partnership election.
a sole proprietorship for federal tax purposes, enter the           •  For a taxable entity filing as an S corporation for federal 
amount from Form 1040 Schedule E line 23a, to the extent            tax purposes, enter the amount from Form 1120S line 5 
that it relates to the LLC.                                         and the amount from Form 1120S Schedule K to the extent 
•  For a taxable entity filing a federal tax form other than those  not already included; and any total revenue passed from 
mentioned above, enter an amount that is substantially              a lower tier entity under the tiered partnership election.
equivalent to the amounts discussed in this section.                •  For a taxable entity filing as a partnership for federal tax 
                                                                    purposes, enter the amount from Form 1065 line 4 and line 
Note: Do not include in Item 4 net rental income (loss) passed      7; the amount from Form 1065 Schedule K line 11, to the 
  through from a partnership or S corporation on IRS Form           extent not already included; the amount from Form 1040 
  K-1; report this amount in Item 7. This amount must also be       Schedule F line 9 plus line 1b, or Form 1040 Schedule F 
  included in Item 9 when subtracting “net distributive income 
                                                                    line 44; and any total revenue passed from a lower tier 
  from a taxable entity treated as a partnership or as an S 
  corporation for federal tax purposes.”                            entity under the tiered partnership election.
                                                                    •  For a taxable entity filing as a trust for federal tax purposes, 
                                                                    enter the amount from Form 1041 line 8 to the extent not 
Item 5. Royalties
•  For a taxable entity filing as a corporation for federal tax     already included; the amount from Form 1040 Schedule C 
purposes, enter the amount from Form 1120 line 7.                   line 6, that has not already been included; the amount from 
•  For a taxable entity filing as an S corporation for federal tax  Form 1040 Schedule E line 32 and line 37; the amount from 
purposes, enter the amount from Form 1120S Schedule                 Form 1040 Schedule F line 9 plus line 1b, or Form 1040 
K line 6.                                                           Schedule F line 44; and any other and total revenue passed 
•  For a taxable entity filing as a partnership for federal tax     from a lower tier entity under the tiered partnership election.
purposes, enter the amount from Form 1065 Schedule K                •  For a taxable entity that is a single member LLC filing as 
line 7.                                                             a sole proprietorship for federal tax purposes, enter the 
•  For a taxable entity filing as a trust for federal tax purposes, ordinary income or loss from partnerships, S corporations, 
enter the amount from Form 1040 Schedule E line 23b.                estates and trusts from Form 1040 Schedule E, to the 
•  For a taxable entity that is a single member LLC filing as       extent that it relates to the LLC; enter the amount from 
a sole proprietorship for federal tax purposes, enter the           line 9 plus line 1b, or Form 1040 Schedule F line 44, to 
amount from Form 1040 Schedule E line 23b, to the extent            the extent that it relates to the LLC; enter the amount from 
that it relates to the LLC.                                         Form 1040 Schedule C line 6, that has not already been 
•  For a taxable entity filing a federal tax form other than those  included; and any total revenue passed from a lower tier 
mentioned above, enter an amount that is substantially              entity under the tiered partnership election.
equivalent to the amounts discussed in this section.                •  For a taxable entity filing a federal tax form other than those 
                                                                    mentioned above, enter an amount that is substantially 
                                                                    equivalent to the amounts discussed in this section.
Item 6. Gains/losses
•  For a taxable entity filing as a corporation for federal tax 
purposes, enter the amounts from Form 1120 line 8 and               Item 8. Total gross revenue
line 9.                                                             Total the amounts entered on Items 1 through 7.
•  For a taxable entity filing as an S corporation for federal 
tax purposes, enter the amount from Form 1120S line 4               Item 9. Exclusions from gross revenue
and Form 1120S Schedule K lines 7, 8a and 9.                        Only the following items may be excluded from gross 
•  For a taxable entity filing as a partnership for federal tax     revenue. See Rule 3.587 for additional information.
purposes, enter the amount from Form 1065 line 6 and 
Form 1065 Schedule K lines 8, 9a and 10.                            Bad Debt Expense
•  For a taxable entity filing as a trust for federal tax purposes, •  For a taxable entity filing as a corporation for federal tax 
enter the amount associated with gains/losses from Form             purposes, enter the amount from Form 1120 line 15.
1041 lines 4 and 7.                                                 •  For a taxable entity filing as an S corporation for federal 
•  For a taxable entity that is a single member LLC filing as       tax purposes, enter the amount from Form 1120S line 10.
a sole proprietorship for federal tax purposes, enter the           •  For a taxable entity filing as a partnership for federal tax 
                                                                    purposes, enter the amount from Form 1065 line 12.
14

•  For a taxable entity registered as a single member LLC             employees, the tax basis of securities underwritten, and a 
and filing as a sole proprietorship for federal tax purposes,         taxable entity’s flow-through payments to subcontractors 
enter the amount associated with bad debt expense from                to provide services, labor or materials in connection with 
Form 1040 Schedule C line 27.                                         the  design,  construction,  remodeling,  remediation  or 
•  For a taxable entity filing as a trust for federal tax purposes,   repair of improvements on real property or the location of 
enter the amount associated with bad debt expense from                boundaries to real property); 
Form 1041 line 15a.                                                   •  A taxable entity that provides legal services may exclude 
•  For a taxable entity filing a federal tax form other than those    an amount equal to the: 
mentioned above, enter an amount that is substantially                  -  damages due the claimant; 
equivalent to the amounts discussed in this section.                    -  funds subject to a lien or other contractual obligation 
                                                                      arising out of the representation, other than fees owed  
Foreign Dividends and Foreign Royalties                               to the attorney; 
Enter the amount of foreign royalties and foreign dividends,            -  funds subject to a subrogation interest or other third-party 
including amounts reported under Section 78 or Sections               contractual claim; 
951-964, Internal Revenue Code, to the extent included in               -  fees paid to another attorney not within the same taxable 
gross revenue.                                                        entity; 
                                                                        -  reimbursement of case expenses; and
Net Distributive Income                                                 -  $500 per case for providing pro bono legal services. 
A taxable entity’s pro rata share of net distributive income          •  A taxable entity may exclude the tax basis of securities and 
from another  taxable  entity treated as a partnership or             loans sold as determined under the Internal Revenue Code.
as an S corporation for federal income tax purposes. Net              •  A taxable entity that is a pharmacy cooperative may 
distributive income for the calculation of total revenue is the       exclude flow-through funds from rebates from pharmacy 
net amount of income, gain, deduction or loss of the pass-            wholesalers  that  are  distributed  to  the  pharmacy 
through entity that is included in the federal taxable income         cooperative’s shareholders.
of the taxable entity. (If this amount is negative, it will be 
added in computing total revenue.)                                    Dividends and Interest from Federal Obligations
                                                                      Enter the amount of dividends and interest from federal 
A taxable entity that owns an interest in a passive entity            obligations to the extent included in gross revenue. See 
must not enter an amount on this item to deduct the taxable           Rule 3.587(b).
entity’s share of the net income of the passive entity unless 
the income was included in the computation of the total               Other Exclusions
revenue of another taxable entity. See Rule 3.587.                    •  A taxable entity that qualifies as a lending institution may 
                                                                      enter an amount equal to the principal repayment of loans.
Note: For an upper tier entity using the tiered partnership election, •  A taxable entity that is a professional employer organization 
the total revenue passed by the lower tier entity to the upper        may enter an amount equal to payments received from 
tier entity cannot be deducted as net distributive income.            a client for wages, payroll taxes, employee benefits 
                                                                      and workers’ compensation benefits for the covered 
Schedule C Dividends Received                                         employees. A professional employer organization cannot 
For a taxable entity reporting a Schedule C dividends                 exclude payments received from a client for payments 
received deduction, enter the amount reported on Form                 made to independent contractors assigned to the client 
1120 line 29b to the extent the relating dividend income is           and reportable on Internal Revenue Service Form 1099.
included in gross revenue.                                            •  A taxable entity that is a health care provider may enter 
                                                                      100% of revenues (including copayments, deductibles and 
Revenue from Disregarded Entities                                     coinsurance) from Medicaid, Medicare, CHIP, workers’ 
A taxable entity may exclude, to the extent included in gross         compensation claims and TRICARE, and actual costs for 
revenue  (Items  1-7  above),  its  share  of  income  directly       uncompensated care. Healthcare institutions may enter 
attributable to another entity that is treated as disregarded         only 50% of these exclusions. See Texas Tax Code Section 
for federal income tax purposes but that is not treated as            171.1011(p)(2) for the definition of a healthcare institution. 
disregarded in a combined group report for franchise tax              To calculate the cost of uncompensated care, see Rule 
purposes. A taxable entity cannot exclude its share of                3.587(b)(1).
income directly attributable to another entity that is treated as     •  A taxable entity that is a management company may enter 
disregarded for federal income tax purposes and is treated            an amount equal to reimbursements of specified costs 
as disregarded in a combined group report for franchise tax           incurred in its conduct of the active trade or business of a 
reporting purposes.                                                   managed entity.
                                                                      •  A taxable entity may enter amounts received that are 
Flow-through Funds                                                    directly  derived  from  the  operation  of  a  facility  that  is 
To the extent included in gross revenue:                              located on property owned or leased by the federal 
•  A taxable entity may exclude an amount for flow-through            government and managed or operated primarily to house 
funds mandated by: (1) law, (2) fiduciary duty or (3) contract        members of the armed forces of the United States.
or subcontract (limited to sales commissions to non-                  •  A taxable entity that is a qualified live event promotion 
                                                                                                                       15

company may exclude from revenue a payment made                     enter the total revenue passed to the upper tier entities.
to  an  artist  in  connection  with  the  provision  of  a  live 
entertainment event or live event promotion services.               Item 10. Total revenue
•  A taxable entity that is a qualified courier and logistics       Item 8 minus Item 9. If less than zero, enter zero. If the 
company may exclude from revenue subcontracting                     annualized total revenue is less than or equal to $1,180,000, 
payments made by the taxable entity to nonemployee                  and the entity is not an upper or lower tier entity making the 
agents for the performance of delivery services on behalf           tiered partnership election, stop here and file Form 05-163, 
of the taxable entity.                                              No Tax Due Report. If the annualized total revenue is $20 
•  A taxable entity that is a pharmacy network may exclude          million or less, the entity may choose to file using the EZ 
reimbursements, pursuant to contractual agreements, for             Computation (Form 05-169).
payments to pharmacies in the pharmacy network.
•  A taxable entity that is primarily engaged in the business       Note: The tiered partnership election is not allowed if the lower 
of transporting aggregates may exclude subcontracting               tier entity, before passing total revenue to the upper tier 
payments  made  by  the  taxable  entity  to  independent           entities, owes no tax. An upper or lower tier entity making 
                                                                    a  tiered  partnership  election  qualifies  to  use  the  EZ 
contractors for delivery services performed on behalf of 
                                                                    computation only if the lower tier entity would have qualified 
the taxable entity.                                                 for the EZ computation before passing total revenue to the 
•  A taxable entity primarily engaged in the business of            upper tier entities.
transporting barite may exclude subcontracting payments 
made by the taxable entity to nonemployee agents                    Item 11. Cost of goods sold (COGS)
for transportation services performed on behalf of the 
taxable entity.                                                     Note: A taxable entity will have eligible COGS ONLY if the taxable 
•  A taxable entity primarily engaged in the business of            entity sells real or tangible personal property in the ordinary 
performing landman services may exclude subcontracting              course of business OR if the taxable entity has qualifying 
payments made by the taxable entity to nonemployees                 COGS under any one of the exceptions noted in Texas Tax 
for the performance of landman services on behalf of the            Code Section 171.1012 or Rule 3.588. Enter ONLY qualifying 
taxable entity.                                                     COGS to compute margin.
•  A taxable entity may exclude the actual cost paid by the 
taxable entity for a vaccine.                                       “Goods” are defined as real or tangible personal property sold 
•  A taxable entity primarily engaged in the business of            in the ordinary course of business. Tangible personal property 
transporting goods by waterways that does not subtract              includes computer programs as well as films, sound recordings, 
the cost of goods sold in computing its taxable margin may          videotapes, live and prerecorded television and radio programs, 
exclude direct costs of providing transportation services by        books and other similar property. Tangible personal property 
intrastate or interstate waterways to the same extent that a        does not include intangible property or services.
taxable entity that sells in the ordinary course of business 
real or tangible personal property would be authorized by           Generally, a taxable entity in the service industry will not 
Texas Tax Code Section 171.1012 to subtract those costs             have qualifying COGS as they do not sell tangible personal 
as COGS in computing its taxable margin, notwithstanding            property or real property in the ordinary course of business. 
Texas Tax Code Section 171.1012(e)(3).                              However, if a transaction contains elements of both a sale 
•  A taxable entity that is registered as a motor carrier under     of tangible personal property and a service, a taxable entity 
Transportation  Code,  Chapter  643  may  exclude  flow-            may subtract as COGS the cost otherwise allowed by Texas 
through revenue derived from taxes and fees.                        Tax Code Sec. 171.1012 in relation to the tangible personal 
•  A taxable entity primarily engaged in the business of            property sold.  The labor costs related to the services 
providing services as an agricultural aircraft operation may        performed are not eligible COGS.
exclude the cost of labor, equipment, fuel and materials 
used in providing those services.                                   A taxable entity may make a subtraction in relation to the 
•  A taxable entity may exclude from total revenue, to the          COGS only if that entity owns the goods. A taxable entity that 
extent included, revenue received from a qualified low              is a member of a combined group may subtract allowable 
producing oil or gas well.                                          costs as COGS if the goods for which the costs are incurred 
•  A  taxable  entity  that  is  a  Performing  Rights  Society     are owned by another member of the combined group. A 
may exclude from total revenue, to the extent included,             payment made to an affiliated entity that is not a member of 
payments made to the public performance rights holder               the combined group may only be included in COGS if the 
and the copyright owner for whom the taxable entity                 transaction is made at arm’s length.
licenses the public performances.
                                                                    A taxable entity that is subject to Internal Revenue Code, 
Intercompany eliminations – combined reports                        263A, 460 or 471 may choose to expense or capitalize 
To the extent included in total revenue, subtract items of total    allowable costs associated with the goods purchased or 
revenue received from members of the combined group.                produced. All other taxable entities will expense allowable 
                                                                    costs associated with the goods purchased or produced.
Tiered partnership election
For a lower tier entity that makes the tiered partnership election, Expensing COGS - An entity that elects to expense allowable 

16

costs will have no beginning or ending inventory. The entity        owns an interest that is used to fund activities, the costs 
should include all allowable costs as described below for the       of which would otherwise be treated as COGS of the 
accounting period on which the report is based.                     partnership, but only to the extent that those costs are 
                                                                    related to goods distributed to the contributing taxable 
Capitalized COGS - If the entity elects to capitalize COGS,         entity as goods-in-kind in the ordinary course of production 
the calculation will include those allowable costs that were in     activities rather than being sold by the partnership. 
inventory at the beginning of the period upon which the tax is 
based plus allowable costs capitalized during the period minus      In addition to the items previously listed, COGS includes 
allowable costs in ending inventory at the end of the period.       the following costs in relation to the taxable entity’s goods: 
                                                                    •  deterioration of the goods;
The election to expense or capitalize allowable costs is            •  obsolescence of the goods;
made by filing the franchise tax report using one method or         •  spoilage and abandonment, including the costs of rework, 
the other. The election is for the entire period on which the       reclamation and scrap (does NOT include impairment 
report is based and may not be changed after the due date           costs/expenses);
or the date the report is filed, whichever is later.                •  if the property is held for future production, preproduction 
                                                                    direct costs allocable to the property, including storage 
Note: Generally COGS for Texas franchise tax reporting purposes     and handling costs, unless specifically excluded below;
will not equal the amount used for federal income tax               •  postproduction direct costs allocable to the property, 
reporting purposes or for financial accounting purposes.            including storage and handling costs, unless specifically 
Typically, this amount cannot be found on a federal income 
                                                                    excluded below;
tax report or on an income statement. It is a calculated 
amount specific to Texas franchise tax.                             •  the cost of insurance on a plant or a facility, machinery, 
                                                                    equipment or materials directly used in the production of 
Cost of goods sold includes all direct costs of acquiring or        the goods;
producing the goods, including:                                     •  the cost of insurance on the produced goods;
•  labor costs including W-2 wages, IRS Form 1099 wages,            •  the cost of utilities, including electricity, gas and water, 
temporary labor, payroll taxes and benefits;                        directly used in the production of the goods;
•  cost  of  materials  that  are  an  integral  part  of  specific •  the  costs  of  quality  control,  including  replacement  of 
property produced;                                                  defective components pursuant to standard warranty 
•  cost of materials that are consumed in the course of             policies, inspection directly allocable to the production of 
performing production activities;                                   the goods and repairs and maintenance of goods; and
•  handling costs, including costs attributable to processing,      •  licensing or franchise costs, including fees incurred in 
assembling, repackaging and inbound transportation;                 securing the contractual right to use a trademark, corporate 
•  storage costs (except for the rental of a storage facility),     plan, manufacturing procedure, special recipe or other 
including the costs of carrying, storing or warehousing property;   similar right directly associated with the goods produced.
•  depreciation, depletion and amortization reported on 
the federal income tax return on which the report under             Cost of goods sold does not include:
this chapter is based, to the extent associated with and            •  any amounts excluded from revenue;
necessary for the production of goods, including recovery           •  officers’ compensation;
described by, Sec. 197, Internal Revenue Code, and                  •  the cost of renting or leasing equipment, facilities or real 
property described in Sec. 179, Internal Revenue Code;              property that is not used for the production of the goods;
•  the cost of renting or leasing equipment, facilities or real     •  selling costs, including employee expenses related to sales 
property used for the production of the goods, including            and credit card fees;
pollution control equipment and intangible drilling and dry         •  distribution costs, including outbound transportation costs;
hole costs (does NOT include impairment costs/ expenses);           •  advertising costs;
•  the cost of repairing and maintaining equipment, facilities or   •  idle facility expense;
real property directly used for the production of the goods,        •  rehandling costs;
including pollution control devices;                                •  bidding costs, which are the costs incurred in the solicitation 
•  costs attributable to research, experimental, engineering        of contracts ultimately awarded to the taxable entity;
and design activities directly related to the production of the     •  unsuccessful bidding costs, which are the costs incurred in 
goods, including all research or experimental expenditures          the solicitation of contracts not awarded to the taxable entity;
described by Sec. 174, Internal Revenue Code;                       •  interest, including interest on debt incurred or continued 
•  geological and geophysical costs incurred to identify and        during the production period to finance the production of 
locate property that has the potential to produce minerals;         the goods;
•  taxes  paid  in  relation  to  acquiring  or  producing  any     •  income taxes, including local, state, federal and foreign 
material, including property taxes paid on building and             income taxes, and franchise taxes that are assessed on 
equipment, and taxes paid in relation to services that are          the taxable entity based on income;
a direct cost of production;                                        •  strike expenses, including costs associated with hiring 
•  the cost of producing or acquiring electricity sold; and         employees to replace striking personnel; however, COGS 
•  a contribution to a partnership in which the taxable entity      does include the wages of the replacement personnel, 
                                                                    costs of security and legal fees associated with settling 
                                                                                                                          17

strikes; and                                                     federal income tax purposes, regardless of whether it is a 
•  costs of operating a facility that is located on property     positive or negative amount;
owned or leased by the federal government and managed            •  net distributive income reported to natural persons 
or operated primarily to house members of the armed              from partnerships, trusts and limited liability companies 
forces of the United States.                                     treated as partnerships for federal income tax purposes, 
                                                                 regardless of whether it is a positive or negative amount;
Item 12. Indirect or administrative overhead costs               •  net distributive income reported to natural persons from 
A taxable entity may subtract, as part of COGS, indirect/        limited liability companies and corporations treated as S 
administrative overhead costs, including all mixed service       corporations for federal income tax purposes, regardless 
costs, such as security services, legal services, data           of whether it is a positive or negative amount; and
processing services, accounting services, personnel              •  stock  awards  and  stock  options  deducted  for  federal 
operations  and  general  financial  planning  and  financial    income tax purposes. 
management costs, that it can demonstrate are allocable 
to the acquisition or production of goods. This amount is        If an employee, officer, director, etc. is paid by more than 
limited to 4% of total indirect/administrative overhead costs.   one  member  of  the  combined  group,  that  individual’s 
Any costs specifically  excluded  from the computation  of       compensation is capped at $390,000, per 12-month period 
COGS may not be included in indirect or administrative           upon which the tax is based.
overhead costs. 
                                                                 Net distributive income for the calculation of compensation 
Item 13. Other                                                   is the amount of income, gain, deduction and loss relating 
The only allowable amounts to be entered on this line            to a pass-through entity or disregarded entity reportable to 
are  related  to  undocumented  worker  compensation,            the owner for the tax year of the entity regardless of whether 
compensation  of  active  duty  personnel,  and  aerospace       an actual distribution was made.
costs. These amounts will offset one another. The result can 
be either a negative (undocumented worker compensation)          If net distributive income is a negative number, it must 
or a positive number (active duty personnel compensation         be included in the computation of compensation as a 
and aerospace costs).                                            negative number. There is no cap or limitation on “negative” 
                                                                 compensation.
Undocumented Worker Compensation
A taxable entity must exclude from COGS any compensation         To compute Net Distributive Income from a partnership:
for undocumented workers for the period upon which the tax       From IRS Form 1065 K-1, add boxes 1, 2, 3, 4, 5, 6a, 7, 8, 
is based. “Undocumented worker” means a person who is            9a, 10 and 11. Subtract from that result Box 12, the Box 13 
present and employed in the United States but is not lawfully    amounts that represent deductions and Code L from Box 
entitled to be present and employed in the United States.        16 (Foreign taxes).

Compensation of Active Duty Personnel                            To compute Net Distributive Income from an S corporation:
A taxable entity may include, as an additional cost, the         From IRS Form 1120S K-1, add boxes 1, 2, 3, 4, 5a, 6, 7, 
wages and cash compensation paid during the period upon          8a, 9 and 10. Subtract from that result Box 11, the Box 12 
which the report is based to an individual for the period the    amounts that represent deductions, and Code L Box 14 
individual is serving on active duty as a member of the armed    (Foreign taxes).
forces of the United States if the individual is a resident of 
this state at the time the individual is ordered to active duty, Note:  A single member LLC treated as a sole proprietorship for federal 
plus the cost of training a replacement for the individual.      tax purposes may include in compensation the net distributive 
                                                                 income to the single member that is a natural person.
Aerospace Costs
A qualified entity in the aerospace industry may subtract        Wages and cash compensation DOES NOT include:
20 percent of costs properly allocated and incurred under        •  payments on IRS Forms 1099; 
                                                                 •  amounts excluded from gross revenue; 
the Federal Acquisition Regulation for the sale of goods or 
                                                                 •  an employer’s share of employment taxes; 
services to the federal government that the taxable entity has 
                                                                 •  amounts paid to an employee whose primary employment 
not already subtracted as cost of goods sold. See Texas Tax 
                                                                 is directly associated with the operation of a facility that 
Code Section 171.101(e) and (f).                                 is located on property owned or leased by the federal 
                                                                 government and managed or operated primarily to house 
Item 15. Wages and cash compensation                             members of the armed forces of the United States.
“Wages and cash compensation” means the following 
amounts paid to officers, directors, owners, partners and        Note: A professional employer organization may only include wages 
employees for the accounting period, limited to $390,000 per     and cash compensation paid to the entity’s own employees, 
person, prorated for the period upon which the tax is based:     and may not include wages, benefits, workers’ compensation 
•  Medicare wages and tips on Form W-2;                          benefits or payroll taxes of covered employees. A taxable 
•  net distributive income reported to a natural person from     entity  that  is  a  client  that  contracts  with  a  professional 
a limited liability company treated as a sole proprietor for     employer organization (or a temporary employment 

18

service as that term is defined by Sec. 93.001 Labor Code)       Form 05-158-B 
may include amounts paid to the professional employer 
organization relating to the covered employees for wages         Texas Franchise Tax Report – Page 2
as defined by Item 15 (Wages & Cash Compensation) and            Item 19. 70% of revenue
Item 17 (Other – Compensation of Active Duty Personnel),         Multiply Item 10 times 70%. If less than zero, enter zero.
and may include amounts paid for employee benefits 
including workers’ compensation benefits, as defined by          Item 20. Revenue less COGS
Item 16 (Employee Benefits). The client may not include any      Item 10 minus Item 14 – COGS. If less than zero, enter zero.
administrative fee, payroll taxes or other amounts related to 
the covered employees. In addition, the client may not include   Item 21. Revenue less compensation
as compensation any amounts reported on IRS Forms 1099.          Item 10 minus Item 18 – Compensation. If less than zero, 
                                                                 enter zero.
Note: A management company may not include as wages or cash 
compensation any amounts reimbursed by a managed entity. 
A managed entity includes as compensation reimbursements         Item 22. Revenue less $1 million 
made  to  the  management  company  for  wages  and              Item 10 minus $1 million. If less than zero, enter zero. 
compensation as if the reimbursed amounts had been paid 
to employees of the managed entity.                              Item 23. Margin
                                                                 Enter the lowest amount from Items 19, 20, 21, or 22. If the 
Item 16. Employee benefits                                       amount is less than zero, enter zero.
Enter the cost of benefits provided to officers, directors, 
owners, partners and employees, including workers’               Item 24. Gross receipts in Texas
compensation,  health  care  and  retirement  benefits. The      Texas gross receipts and gross receipts everywhere 
deduction for employee benefits is not limited to $390,000       should be reported for the same accounting period used 
per person but is only deductible to the extent deductible for   in the calculation of total revenue. Gross receipts means 
federal income tax purposes.                                     all revenues reportable by a taxable entity on its federal 
                                                                 tax return, without deduction for the COGS or other costs 
Item 17. Other                                                   incurred unless otherwise provided for by law.
The only allowable amounts to be entered on this line 
are  related  to  undocumented  worker  compensation,            “Gross receipts in Texas” means:
compensation  of  active  duty  personnel,  and  aerospace       •  sales of tangible personal property when the property is 
costs. These amounts will offset one another. The result can     delivered or shipped to a purchaser within Texas;
be either a negative (undocumented worker compensation)          •  sales of real property located in Texas, including royalties 
or a positive number (active duty personnel compensation         from oil, gas or other mineral interests;
and aerospace costs).                                            •  receipts from services performed within Texas;
                                                                 •  rentals of property situated in Texas;
Undocumented Worker Compensation                                 •  royalties from use of patents or copyrights within Texas;
A taxable entity must exclude from compensation any wages        •  receipts from the use of trademarks, franchises or licenses 
and cash compensation paid to undocumented workers for           within Texas.
the period upon which the tax is based. “Undocumented            •  sales or licenses of computer software or programs if the 
worker” means a person who is present and employed in            legal domicile of the payor is Texas;
the United States but not lawfully entitled to be present and    •  the net gain from the Texas-sourced sale of a capital asset 
employed in the United States.                                   or investment (See Rule 3.591);
                                                                 •  sales of intangible property if the legal domicile of the payor 
Compensation of Active Duty Personnel                            is Texas;
A taxable entity may include, as an additional cost, the         •  sales of securities if the legal domicile of the payor is Texas. 
wages and cash compensation paid during the period upon          If securities are sold through an exchange, and the buyer 
which the report is based to an individual for the period the    cannot be identified, then 7.9% of the revenue is a Texas 
individual is serving on active duty as a member of the armed    receipt;
forces of the United States if the individual is a resident of   •  membership or enrollment fees paid for access to benefits 
this state at the time the individual is ordered to active duty, if the payor is legally domiciled in Texas;
plus the cost of training a replacement for the individual.      •  receipts from servicing of loans secured by real property 
                                                                 if the real property is located in Texas;
Aerospace Costs                                                  •  the pro rata share of net income from a passive entity if the 
A qualified entity in the aerospace industry may subtract        passive entity’s principal place of business is in Texas; and
20 percent of costs properly allocated and incurred under        •  receipts from Internet hosting as defined by Texas Tax 
the Federal Acquisition Regulation for the sale of goods or      Code Section 151.108(a) if the customer to whom the 
services to the federal government that the taxable entity       service is provided is located in Texas.
has not already subtracted as compensation. See Texas Tax 
Code Section 171.101(e) and (f).                                 Any item of revenue that is excluded from total revenue 
                                                                 under Texas law or United States law is not included in Texas 
                                                                 gross receipts or gross receipts everywhere. For example, 
                                                                                                                          19

a taxable entity should not include in Texas gross receipts:     24 and Item 25 are the same and greater than zero, enter 
•  income excluded because of IRC Sections 78 or 951- 964;       1.0000. If Item 24 is more than Item 25 and both are greater 
•  dividends and/or interest received from federal obligations;  than zero, enter 1.0000. Otherwise, divide Item 24 by Item 
or                                                               25 and round to 4 places past the decimal.
•  dividends for which a deduction is allowed on Schedule 
C, Form 1120.                                                    Item 27. Apportioned margin
                                                                 Multiply Item 23 by Item 26.
In addition, a taxable entity that is a combined group should 
not include in Texas gross receipts any revenues generated       Item 28. Allowable deductions
by a member of the group that is organized outside of Texas      Each of the following deductions may be subtracted from 
and that does not have nexus in Texas. However, Texas            apportioned margin:
gross receipts will include certain sales of tangible personal   •  A taxable entity may deduct 10% of the amortized cost of 
property made to third party purchasers if the tangible          a solar energy device if the device meets the criteria in 
personal property is ultimately delivered to a purchaser in      Texas Tax Code Section 171.107(b). The deduction may not 
Texas without substantial modification. For example, drop        reduce apportioned margin below zero, and no carryover 
shipments made by a member of a combined group from a            of unused deductions is allowed.
Texas location to a Texas purchaser would be included in         •  A taxable entity may deduct 10% of the amortized cost of 
Texas receipts based on the amount billed to the third party     equipment used in a clean coal project if the equipment 
purchaser if the seller is also a member of the combined         meets the criteria in Texas Tax Code Section 171.108(b). 
group and the seller does not have nexus.                        The deduction may not reduce apportioned margin below 
                                                                 zero, and no carryover of unused deductions is allowed.
Banking Corporations and Savings & Loan Associations:            •  A taxable entity may deduct relocation costs incurred in 
Dividends and interest received by a banking corporation or      relocating the taxable entity’s main office or other principal 
savings and loan association are Texas receipts if they are      place of business to this state from another state if the 
paid by a corporation incorporated in Texas or if they are paid  business meets the criteria in Texas Tax Code Section 
by an entity or person legally domiciled in Texas. A banking     171.109(b). The taxable entity must take the deduction on 
corporation should exclude from its Texas receipts interest      the entity’s first annual report described by Rule 3.584(c) (2). 
earned on federal funds and interest earned on securities        The deduction may not reduce apportioned margin below 
sold under an agreement to repurchase that are held in a         zero, and no carryover of unused deduction is allowed.
correspondent bank domiciled in Texas.
                                                                 Item 29. Taxable margin
Note: If an entity has margin from the sale of management,       Item 27 minus Item 28.
   distribution or administration services to or on behalf of a 
   regulated investment company or margin from the sale of       Item 30. Tax rate
   management, administration, or investment service to an 
                                                                 Enter the appropriate tax rate:
   employee retirement plan see Tex. Tax Code 171.106.
                                                                 •  0.0075 (0.75%) for most entities
                                                                 •  0.00375 (0.375%) for qualifying wholesalers and retailers 
Item 25. Gross receipts everywhere
Any item of revenue excluded from total revenue (Item            Note: If the SIC code on Form 05-158-A does not fit the definition 
10)  must  not  be  included  in  computing  gross  receipts     of qualifying retailers and wholesalers on page 3, the 0.375% 
everywhere.                                                      tax rate will be denied when the report is processed.

Gross receipts everywhere include:                               Item 31. Tax due
•  all sales of tangible personal property;                      Item 29 multiplied by Item 30.
•  all rentals;
•  all services;                                                 Item 32. Tax credits
•  all royalties;                                                Carry the amount of allowable tax credits forward from 
•  all other business receipts;                                  franchise tax Form 05-160.
•  all dividends and interest; and
•  the net gain from the sale of a capital asset                 Item 33. Tax due before discount
or investment (See Rule 3.591).                                  Item 31 minus Item 32. If less than zero, enter zero.

Note: For Items 24 and 25, a capital asset is any asset, other   Item 34. Discount
   than an investment, which is held for use in the production 
                                                                 Discounts do not apply to reports due after Dec. 31, 2009.
   of income, and is subject to depreciation, depletion or 
   amortization. An investment is any non-cash asset not a 
   capital asset.                                                Item 35. Total tax due
                                                                 Must equal the amount of tax due in Item 33 since discounts 
Item 26. Apportionment factor                                    do not apply to reports due after Dec. 31, 2009.
If Texas gross receipts in Item 24 are zero, enter zero. If Item 
                                                                 If this amount is less than $1,000, you owe no tax, but you 

20

must submit this report along with the appropriate information     Item 6. Job creation credit carried forward to this year 
report(s) (Form 05-102 and/or Form 05-167). See note for           from prior years. 
tiered partnership exceptions.                                     Leave blank. Not applicable to reports due after Dec. 31, 2016.

Options for entities paying electronically include credit          Item 7. Research credit carried forward from prior years
card, electronic check (Web EFT) or TEXNET (enrollment             Enter the amount of repealed Subchapter O research and 
required). If paying by check, please complete the franchise       development credit carried forward to this year from years 
tax payment form (05-170). Make the check payable to the           prior to 2008. (Repealed Subchapter O credit may be carried 
Texas Comptroller. Submit both pages of this report (Forms         forward until 2027.)
05-158-A and 05-158-B), all appropriate schedules, the 
appropriate information report(s) (Form 05-102 and/or Form         Item 8. Unused Temporary credit for Business Loss 
05-167), and if applicable, the franchise tax payment form         Carryforward (BLC) from prior years
(Form 05-170) and your payment.                                    Unused temporary credit for BLC carried over to this year 
                                                                   from prior years.
Note: If the tiered partnership election is made and total revenue 
is passed, both the upper and lower tier entities will owe any     Note: This is not the total preserved amount of BLC reported to our 
amount in Item 35, even if the amount is less than $1,000.         office before filing the 2008 report. The amount reported on 
                                                                   this line is for the unused temporary credit from prior years.
Signature Block:  Report  may  be  signed  by  an  officer, 
director or other authorized person. This includes a paid          Item 9. R & D Activities Credit Available
preparer authorized to sign the report.                            Enter the amount of R & D activities credit available which 
                                                                   includes the R & D activities credit and the carryforward from 
Form 05-160                                                        prior years as reported on Form 05-178, Item 14.
Texas Franchise Tax Credits Summary Schedule
A taxable entity that is claiming or carrying forward any credits  Item 10. Eligible historic structure credit 
must file this schedule.                                           Enter the total amount of historic structure credit the entity 
                                                                   established, purchased, or was assigned or allocated since 
Additional Reporting Requirement for Combined Groups               the prior year’s report, adjusted for any sale, assignment or 
with Temporary Credit                                              allocation of the credits.
The reporting entity of a combined group with a temporary 
credit for business loss carryforward preserved for itself and/    Item 11. Historic structure credit carried forward from 
or its affiliates must submit common owner information using       prior years
Webfile or by filing the Common Owner Information Report           Enter the amount of historic structure credit carried forward 
(Form 05-177) . This information must be submitted to satisfy      from prior years adjusted by any carryforward amount that has 
franchise tax filing requirements, even if the combined group      been sold, assigned or allocated since the prior year’s report.
is not claiming the credit on the current year’s report. Submit 
the common owner information before or with your franchise         Item 12. Historic structure credit available
tax report to prevent processing delays. If you submit the         Add Item 10 and Item 11 for total available historic structure 
common owner information after you file your report, it will       credit amount which can be taken in the current year.
NOT immediately process to your account.
                                                                   Item 13. 1992 Temporary credit
                                                                   Leave blank. Not applicable to reports due after Dec. 31, 2012.
PART A – Credit Limit
Item 1. Tax due before credits                                     Part C – Credits Claimed
Enter the amount of tax due before credits as reported on 
Form 05-158-B, Item 31.                                            Item 14. Investment credit claimed
                                                                   Not applicable to reports due after Dec. 31, 2016
Item 2. Credit Limit
Item 1 multiplied by 0.50 (50%).                                   Item 15. Jobs creation credit claimed
                                                                   Not applicable to reports due after Dec. 31, 2016
PART B – Credits Available 
                                                                   Item 16. Research credit claimed
                                                                   Claimed research credit carried forward to this year from 
Item 3. Investment credit installment from prior years
Leave blank. Not applicable to reports due after Dec. 31, 2016.    years prior to 2008. Cannot be greater than Item 2 or Item 7.

Item 4. Investment credit carried forward from prior years         Item 17. Temporary credit for BLC from this year only 
Leave blank. Not applicable to reports due after Dec. 31, 2016.    A qualifying taxable entity must have preserved its right to 
                                                                   take this credit on or before the due date of its 2008 report. 
                                                                   Enter the result of the following calculation in Item 17:
Item 5. Investment credit available 
Leave blank. Not applicable to reports due after Dec. 31, 2016.    •  preserved amount of business loss carryforwards (Item 2 

                                                                                                                            21

 of Form 05-172 filed in 2008)                                         Item 22. Other
•  multiplied by 7.75% (0.0775)                                        Leave blank. Not applicable to reports due after Dec. 31, 2012.
•  multiplied by 4.5% (0.045).
                                                                       Note: Extension payments or prior payments should not be entered 
The unused carryover from a previous report should be                  in this item. Enter extension and prior payments on franchise 
reported in Item 18.                                                   tax Form 05-170, Item 2.

If the taxable entity is a combined group, each qualifying             Item 23. Total credits claimed
member of the group should have made a separate                        Add Items 14, 15, 16, 17, 18, 19, 20 and 22. Enter this amount 
preservation of the business loss carryforwards. Use                   on Item 32 of the tax report, Form 05-158-B.
the  cumulative  amount  of  the  preserved  business  loss 
carryforwards in the calculation of the credit.                        Form 05-163 
                                                                       Texas Franchise Tax No Tax Due Report
Note: If a combined group member leaves the combined group             Filing Requirements: No Tax Due Reports must be filed 
  during a tax period, the combined group may claim the                electronically. A taxable entity, including a combined group, 
  departing  member’s  entire  amount  of  credit  and  the 
                                                                       qualifies to file the No Tax Due Report when any of the five 
  member’s entire available credit carryover for the report year. 
  For subsequent reports, the departed member’s credit will no         statements shown in Item 1 through Item 5 are true. Blacken 
  longer be available to the combined group, and the combined          the circle for each true statement.
  group’s credit carryover must be adjusted to remove the 
  portion of carryover related to the departed member.                 Combined report
                                                                       A  combined  group  may  file  a  No Tax  Due  Report. The 
Item 18. Unused Temporary credit for BLC from prior                    determination of whether a combined group is eligible is 
years claimed                                                          based on the total revenue of the combined group as a 
Claimed temporary credit for BLC carried forward to this year          whole after eliminations. Each member of the group must 
from prior years. Cannot exceed Item 8.                                be included in  the combined  group report even if,  on  a 
                                                                       separate entity basis, the member has $1,180,000 or less 
Carryover  of  2008  temporary  credit  for  business  loss            in total revenue.
carryforwards
Enter the amount of credit that exceeded the amount of tax             When filing a combined  No Tax Due Report, an Affiliate 
due on the 2008 or subsequent reports that has not already             Schedule (Form 05-166) containing all of the required 
been used. If the EZ computation was used on a prior report,           information for each member must be submitted. In addition, 
there is no carryover amount from that year.                           an information report must be submitted for each member 
                                                                       that is organized in Texas or has nexus in Texas.
Example: A taxable entity had a business loss credit of 
$2,000 that could be used on the 2020 franchise tax report.            Tiered Partnership Election
The entity had $1,200 tax due, so they used only $1,200 of             A  tiered  partnership  election  is  not  allowed  if  the  lower 
the available business loss credit. They may carry over the            tier entity, before passing total revenue to the upper tier 
remaining $800 to subsequent report years. On the 2021                 entities, has $1,180,000 or less in annualized total revenue 
report, this $800 should be reported in Item 18.                       or owes less than $1,000 in tax. Do NOT blacken the Tiered 
                                                                       Partnership Election circle in this instance.
Item 19. R & D activities credit claimed
Cannot be greater than Item 2 or Item 9.                               If a tiered partnership election is made, the lower tier entity 
                                                                       may file the No Tax Due Report ONLY if the entity passed 
Item 20. Historic structure credit claimed                             100% of its total revenue to upper tier entities. Blacken the 
Cannot be greater than Item 12.                                        Tiered Partnership Election circle in this instance. Upper 
                                                                       tier entities are not eligible to file a No Tax Due Report if the 
Note: To claim the historic structure credit, the following must       tiered partnership election is made.
  be included:
  •  Texas Historic Structure Credit Supplement (Form 05-180)          Item 1. This entity is a passive entity as defined in Texas 
  •  Texas Historic Structure Credit Certificate (Form 05-901)         Tax Code Section 171.0003.
  for each historic structure credit claimed.
                                                                       A partnership (general, limited or limited liability) or trust 
  If the credit is not established prior to filing the report, in lieu (other than a business trust) may qualify as a passive entity 
  of Form 05-901, include the following:                               and not owe any franchise tax for a reporting period if at least 
  •  Certificate of Eligibility issued by the Texas Historical         90% of the entity’s federal gross income (as reported on the 
  Commission;                                                          entity’s federal income tax return), for the period upon which 
  •  Audited Cost Report; and                                          the tax is based, is from the following sources: 
  •  Texas Historic Structure Credit Registration (Form AP-235).       •  dividends, interest, foreign currency exchange gain, 
                                                                       periodic and nonperiodic payments with respect to notional 
Item 21. 1992 Temporary credit less additional tax due                 principal contracts, option premiums, cash settlements 
Leave blank. Not applicable to reports due after Dec. 31, 2012.        or termination payments with respect to a financial 
22

instrument, and income from a limited liability company;          each REIT legally organized as a partnership, trust 
•  distributive shares of partnership income to the extent that   or association.
those distributive shares of income are greater than zero;
•  net capital gains from the sale of real property, net gains    Item 5. This entity is a new veteran-owned business as 
from the sale of commodities traded on a commodities              defined in Texas Tax Code Sec. 171.0005.
exchange and net gains from the sale of securities; and           See the New Veteran-Owned Businesses section of the 
•  royalties from mineral properties, bonuses from mineral        instructions, page 3. Only an entity formed on or after Jan. 1, 
properties, delay rental income from mineral properties           2016 and before Jan. 1, 2020 and verified as a new veteran-
and income from other nonoperating mineral interests              owned business may blacken the circle.
including nonoperating working interests. 
                                                                  Item 6a. Accounting year begin date
Passive income does not include rent or income received by        See the accounting period begin date requirements in the 
a nonoperator from mineral properties under a joint operating     annual and final report sections.
agreement, if the nonoperator is a member of an affiliated 
group and another member of that group is the operator            Item 6b. Accounting year end date
under the same joint operating agreement.                         See the accounting period end date requirements in the 
                                                                  annual and final report sections.
Passive entities are not required to file a Public Information 
Report or Ownership Information Report.                           Item 7. Total Revenue
                                                                  Enter the amount of total revenue using the instructions for 
Passive entities cannot be included in a combined group.          Items 1-10 of Form 05-158-A. A passive entity, a REIT or a 
                                                                  new veteran-owned business may enter zero.
Item 2. This entity’s annualized total revenue is below 
the no tax due threshold.                                         Signature Block:  Report  may  be  signed  by  an  officer, 
If annualized total revenue is less than or equal to $1,180,000,  director or other authorized person. This includes a paid 
the entity qualifies to file the No Tax Due Report. See the       preparer authorized to sign the report.
annualized total revenue section of these instructions for 
more information.                                                 Form 05-164 
Note: The $1,180,000 no tax due threshold does not apply to an    Texas Franchise Tax Extension Request
upper tier entity if a tiered partnership election is made.       Filing Requirements: Any entity (including a combined group) 
                                                                  that cannot file its annual (including the first annual) or final 
                                                                  report by the original due date may request an extension 
Item 3. This entity has zero Texas gross receipts. 
The apportionment factor of an entity with zero Texas gross       of time to file on or before the due date. A combined group 
receipts is zero; therefore, no tax is due. See the instructions  must also file an Extension Affiliate List (Form 05-165) with 
for Item 24 of Form 05-158-B for additional information on        the extension request.
computing Texas gross receipts.
                                                                  An extension for an annual, non-EFT (electronic funds 
                                                                  transfer)  payor  will  be  through  Nov.  15,  2021.  When 
Item 4. This entity is a Real Estate Investment Trust 
                                                                  submitting the extension request, the taxable entity must 
(REIT) that meets the qualifications specified in Texas 
                                                                  remit at least 90% of the tax that will be due with this year’s 
Tax Code Section 171.0002(c)(4).
A REIT that meets the qualifications  of Texas Tax Code           report or 100% of the tax reported as due for the previous 
Section 171.0002(c)(4), is not a taxable entity for the period    calendar year (provided that the report due in the previous 
upon which the report is based. The REIT must establish           calendar year was filed on or before May 14, 2021) in order 
its nontaxable status by filing a No Tax Due Report for the       for the extension to be valid.
period upon which the report is based.
                                                                  A taxable entity that became subject to the franchise tax 
                                                                  during 2020, filing its first annual report, may not use the 
A  REIT  or  its  qualified  REIT  subsidiary  entities  are  not 
                                                                  100% extension option.
considered taxable entities if:
•  the REIT holds interests in limited partnerships or other 
                                                                  An entity that was included as an affiliate on a 2020 combined 
entities that are taxable entities and that directly hold real 
                                                                  group report may not use the 100% extension option if filing 
estate; and
                                                                  as a separate entity in 2021.
•  the REIT does not directly hold real estate, other than real 
estate it occupies for business purposes.
                                                                  Combined Report Extensions
                                                                  If the extension request is being made on behalf of a 
An information report must be submitted by each REIT or 
                                                                  combined group, the reporting entity must also submit Texas 
qualified REIT subsidiary:
                                                                  Franchise Tax Extension Affiliate List (Form 05-165).
•  a Public Information Report (Form 05-102) for each REIT 
                                                                  Final Reports: A taxable entity may request a 45-day 
legally organized as a corporation or LLC or 
                                                                  extension and must remit with the extension request at least 
•  an Ownership Information Report (Form 05-167) for 
                                                                  90% of the tax that will be due with the final report.
                                                                                                                        23

Electronic Funds Transfer (EFT): Conditions for                    Note: See Form 96-590, TEXNET Payment Instruction Booklet, 
requiring a taxable entity to pay via EFT are outlined in          for  additional  information  concerning  requirements  for 
Rule 3.9 concerning electronic filing and electronic funds         EFT payments.
transfers. Information about the EFT requirements can be 
viewed at www.comptroller.texas.gov/programs/systems/              Item 1. Extension payment
docs/96-590.pdf.                                                   Enter the amount submitted with this request.

The extension rules for mandatory EFT payors are different         Signature Block:  Report  may  be  signed  by  an  officer, 
from that of other taxpayers. In order to extend the due           director or other authorized person. This includes a paid 
date of the report from May 17, 2021 to Aug. 16, 2021, a           preparer authorized to sign the report.
taxable entity that is required to pay by EFT must make their 
extension payment electronically via TEXNET using tax type         Form 05-165 
Code 13080 (Franchise Tax Extension) or Webfile in a timely        Texas Franchise Tax Extension Affiliate List
fashion that permits the payment to be posted on or before         Filing Requirements: A reporting entity filing an extension 
May 17, 2021. With the extension request, taxable entities         request on behalf of a combined group, must file the extension 
must remit at least 90% of the amount of tax that will be due      affiliate list along with the Extension Request (Form 05-164). 
with this year’s report or 100% of the tax reported as due for     If the combined group is required to pay using TEXNET and 
the previous calendar year on the report due in the previous       makes an extension payment electronically, it is not required 
calendar year. If the taxable entity elects to pay 100% of         to file Form 05-164, but must submit an Extension Affiliate List 
the tax reported as due for the previous calendar year, the        (Form 05-165).The filing of this list by itself does not constitute 
previous year’s report must be filed on or before May 14,          a valid extension. Attach as many forms as necessary to 
2021 in order for the extension to be valid.                       report all members of the combined group.

Combined groups that are mandatory EFT payors must file            Column 1 – Legal name of affiliate
the required Extension Affiliate List (Form 05-165) by mail        Enter  the  legal  name  of  each  affiliate  in  the  combined 
unless the extension request is submitted through Webfile.         group. Affiliates can be any type of taxable entity including 
                                                                   corporations, LLCs, partnerships (general, limited and limited 
An EFT payor may request a second extension through                liability), business trusts, professional associations, etc.
Nov. 15, 2021 to file the report by paying electronically on or 
before Aug. 16, 2021, the balance of the amount of tax that        Column 2 – Affiliate’s Texas Taxpayer Number
will be reported as due on Nov. 15, 2021, using tax type Code      Enter the assigned Texas taxpayer number of the affiliate. If 
13080 (Franchise Tax Extension), Webfile or by submitting          the affiliate does not have a taxpayer identification number, 
a paper Extension Request (Form 05-164) if the entity has          enter the affiliate’s federal employer identification number 
paid all of the tax due with its first extension. If an electronic (FEIN). If the affiliate does not have an FEIN, leave blank.
extension payment is made, then the taxpayer should not 
submit a paper Extension Request (Form 05-164).                    Column 3 – Blacken this circle if affiliate does not have 
                                                                   nexus in Texas
A combined group should not resubmit an Extension Affiliate        Blacken the circle if the affiliate is not organized in Texas 
List (Form 05-165) when requesting a second extension.             and does not have nexus in Texas.

24

Form 05-166 
Texas Franchise Tax Affiliate Schedule

Filing Requirements: A reporting entity filing a combined report on behalf of an affiliated group engaged in a unitary business 
must complete the required information for each member of the group, including the reporting entity, on this form (Form 05-166). 
Attach as many forms as necessary. 

Additional Reporting Requirement for Combined Groups with Temporary Credit – The reporting entity of a combined group with 
a temporary credit for business loss carryforward preserved for itself and/or its affiliates must submit common owner information 
using Webfile or by filing Form 05-177. This information must be submitted to satisfy franchise tax filing requirements, even if the 
combined group is not claiming the credit on the current year’s report. Submit the common owner information before or with your 
franchise tax report to prevent processing delays. If you submit the common owner information after you file your report, it will 
NOT immediately process to your account.

Item 2. Affiliate taxpayer number                                                            Item 3. Affiliate NAICS code
Enter the Texas taxpayer number that has been assigned to                                    Enter the code that is appropriate for the affiliate. NAICS 
the affiliated entity by the Comptroller’s office. If the affiliate                          codes can be found at www.census.gov/eos/www/naics/.
does not have an assigned number, enter the FEIN. If the 
affiliate does not have a separate FEIN, leave blank.                                   Item 6. Affiliate reporting                                          Item 7. Affiliate reporting   
                                                                                          begin date                                                          end date
                                                                                           Enter the begin date of                                             Enter the end date of the  
                                          Item 5. Blacken circle                             the affiliate’s accounting                                         affiliate’s accounting 
Item 4. Blacken circle if 
                                          if this affiliate does NOT                          period that will be included                                        period that will be 
disregarded for franchise tax 
                                          have NEXUS in Texas                                  in the combined report. See        included in the 
If this affiliate is a disregarded entity 
                                          Blacken this circle if the            note under “Accounting                                                              combined report. 
for federal income tax reporting 
                                          affiliate is not organized              Period of the Combined                                                              See note under 
purposes, the reporting entity may 
                                          in Texas and does not                                              Group” (Page 7).                                         “Accounting Period 
blacken this circle and treat the  
                                          have nexus (i.e., nexus) in                                                                                                   of the Combined
entity as disregarded for franchise 
                                          Texas.                                                                                                                          Group” (Page 7).
tax reporting purposes. Blackening 
this circle means that the          1. Legal name of affi liate                                              2. Affi liate taxpayer number (if none, use FEI number)         3. Affiliate NAICS  code
disregarded entity will not
unwind its operations from          4. Blacken circle if entity is 5. Blacken circle if this affi liate does               6. Affi liate reporting begin date        7. Affi liate reporting end date  
its “parent” entity and both        disregarded for franchise tax  NOT haveNEXUSin Texas                                   m m d              d    y y               m m d                   dy y
entities are considered to  
have nexus in Texas for             8. Gross receipts subject to throwback in other states (before eliminations)           9. Gross receipts everywhere (before eliminations)
purposes of apportionment.                                                                              0 0                                                                                      0 0
If circle is blackened, enter       10. Gross receipts in Texas (before eliminations)                                      11. Cost of goods sold or compensation (before eliminations)
zero in Items 8-11.                                                                                     0 0                                                                                      0 0

                                                                                              Item 11. Cost of goods 
Item 8. Gross receipts subject  
                                                                                              sold (COGS) or compensation                                            Item 9. Gross  
to throwback in other states
Leave this field blank. Previously,       Item 10. Gross receipts                             The reporting entity will make                                         receipts 
Texas Tax Code Section                    in Texas                                            an election on behalf of the                                           everywhere
171.103(c) required that                  The amount entered is the                           combined group to compute                                              The amount entered 
Texas gross receipts subject              portion of gross receipts                           margin using one of the                                                should equal the 
to throwback provisions in                everywhere that are                                 following four calculations:                                           gross revenue of 
other states be reported for              attributable to Texas before                        • 70% of total revenue                                                 the entity before 
each member of the combined               intercompany eliminations                           • Total revenue minus COGS                                             intercompany 
group. Texas Tax Code Section             but after exclusions                                • Total revenue minus                                                  eliminations but after 
171.103(c) has been repealed.             from revenue. See the                                         compensation                                                 other exclusions 
                                          instructions for Item 24 of                         • Total Revenue minus $1 million                                       from revenue. To 
                                          Form 05-158-B and Rule                                                                                                     determine gross 
                                          3.591 for more information                          If the reporting entity elects                                         receipts everywhere, 
                                          on determining Texas                                the COGS or compensation                                               review the 
                                          receipts. Not required for                          method, enter the applicable                                           instructions for Items 
                                          affiliates that do not have                         amount for each member of the                                          1-7 and Item 9 of
                                          nexus in Texas.                                     combined group.                                                        Form 05-158-A.
                                                                                                                                                                                                     25

Form 05-167                                                          was filed, may file a sworn statement to that effect with the 
                                                                     Comptroller. An entity that made an error on its OIR may 
Texas Franchise Tax Ownership Information 
                                                                     file an amended OIR with a cover letter explaining the error.
Report
Filing Requirements: The Ownership Information Report 
                                                                     Signature Block:  Report  may  be  signed  by  an  officer, 
(OIR)  is  to  be  filed  for  each  taxable  entity  other  than  a 
                                                                     director or other authorized person. This includes a paid 
legally formed corporation, limited liability company, limited 
                                                                     preparer authorized to sign the report.
partnership, professional association or financial institution. 

The OIR is due on the date the franchise tax report is due           Form 05-169 
and must be completed and signed by a partner, member,               Texas Franchise Tax EZ Computation Report
owner, or other authorized person of the taxable entity. A           Filing Requirements: Any entity (including a combined 
separate OIR is to be filed by each taxable entity that files        group) that has annualized total revenue of $20 million or 
a separate franchise tax report or that is part of a combined        less is eligible to use the EZ computation to report their 
group (unless the taxable entity is not organized in Texas           franchise tax. Upper and lower tier entities, when the tiered 
and does not have nexus in Texas).                                   partnership election has been made, will qualify for the EZ 
                                                                     computation only if the lower tier entity would have qualified 
Even if the franchise tax report is filed and all taxes paid, the    for the EZ computation before total revenue is passed to the 
entity’s right to transact business may be forfeited for failure     upper tier entities. Taxable entities that elect this method to 
to file the completed, signed OIR. The effects of forfeiture         file are not eligible to take any credits or deductions. When 
may include the denial of the taxable entity’s right to sue or       using the EZ computation, the current year’s portion of the 
defend in a Texas court, and each partner, member or owner           temporary credit for business loss carryforwards may not 
may become personally liable for certain debts of the entity         be used and may not be carried over to a future period. If a 
(Texas Tax Code Sections 171.251, 171.252 and 171.255).              combined group elects to use the EZ computation method 
                                                                     to report its franchise tax, the reporting entity is required to 
Address changes can be indicated by blackening the circle            provide the requested information on Texas Franchise Tax 
after the Taxpayer Name.                                             Affiliate Schedule (Form 05-166) for each member of the 
                                                                     combined group. 
Changes to the registered agent or registered office must 
be filed directly with the Secretary of State, and cannot be         Item 1. Gross receipts or sales
made on this form. The changes can be made online or on              See instructions for Item 1 on Form 05-158-A (page 13).
forms downloaded from their website at www.sos.texas.gov/.
                                                                     Item 2. Dividends
Section A:                                                           See instructions for Item 2 on Form 05-158-A (page 13).
Report the name, title and mailing address of each general 
partner and each person or entity that owns an interest of           Item 3. Interest
10% or more of the taxable entity as of the date that the            See instructions for Item 3 on Form 05-158-A (page 13).
report is filed.
                                                                     Item 4. Rents
Trusts should report their trustee information and not check         See instructions for Item 4 on Form 05-158-A (page 14).
any box (partner or other). Associations should report 
information for the individuals who have authority to sign           Item 5. Royalties
a contract on behalf of the association and not check any            See instructions for Item 5 on Form 05-158-A (page 14).
box (partner or other). All other entities should report their 
executive board members and check the other box. If there            Item 6. Gains/losses
is no FEIN for the owner(s), please leave the field blank. (Do       See instructions for Item 6 on Form 05-158-A (page 14).
not enter any Social Security numbers.)
                                                                     Item 7. Other income
Section B:                                                           See instructions for Item 7 on Form 05-158-A (page 14).
Registered Agent and Registered Office - This should include 
the entity’s registered agent or agent for service of process        Item 8. Total gross revenue
in accordance with Texas Tax Code Section 171.354.                   See instructions for Item 8 on Form 05-158-A (page 14).

Changes that occur after the report is filed should be reported      Item 9. Exclusions from gross revenue
to the Comptroller on the next OIR the entity is required to         Do  not  enter  COGS  or  compensation  amounts  as  they 
file. The Comptroller will not accept changes during the year,       cannot be deducted if electing to use the EZ computation. 
except as noted below.                                               See instructions for Item 9 on Form 05-158-A (page 14).

An individual whose name was included on the report but              Item 10. Total Revenue
who was not associated with the entity on the date the report        See instructions for Item 10 on Form 05-158-A (page 16).

26

Item 11. Gross receipts in Texas                                   Item 2. Enter prior payment
See instructions for Item 24 on Form 05-158-B (page                Enter prior payments, such as an extension payment.
19) and Rule 3.591 for more information on determining 
Texas receipts.                                                    Item 3. Net tax due
                                                                   Item 1 minus Item 2.
Item 12. Gross receipts everywhere
See instructions for Item 25 on Form 05-158-B (page                Item 4. Penalty
20) and Rule 3.591 for information on determining gross            A $50 late filing penalty will be assessed if a franchise tax 
receipts everywhere.                                               report (Long Form, EZ Computation or No Tax Due Form) 
                                                                   is filed after the due date. The $50 penalty is due in addition 
Item 13. Apportionment factor                                      to any other penalties assessed for the reporting period.
See instructions for Item 26 on Form 05-158-B (page 20).
                                                                   If the taxable entity did not file an extension request on or 
Item 14. Apportioned revenue                                       before the due date, and the franchise tax payment is not 
Multiply Item 10 by Item 13.                                       postmarked on or before the due date, then a penalty of 5% 
                                                                   of the tax reported as due will be assessed (multiply Item 3 
Item 15. Tax due before discount                                   by 0.05). If the payment is more than 30 days delinquent, 
Multiply Item 14 by 0.331% (0.00331).                              an additional 5% penalty will be assessed.

Item 16. Discount                                                  For the first annual and final franchise tax report, if the timely 
Discounts do not apply to reports due after Dec. 31, 2009.         extension payment is not at least 90% of the tax that will 
                                                                   be due, then penalty will apply to any tax not paid by the 
Item 17. Total tax due                                             original due date.
Item 17 must equal Item 15.
                                                                   If there is a timely filed extension request for an annual 
If this amount is less than $1,000, you owe no tax, but you        report, and the extension payment was not at least 100% of 
must submit this report along with the appropriate information     the tax reported as due for the previous calendar year (on 
report(s) (Form 05-102 and/or Form 05-167).                        the report due in 2020, filed on or before May 14, 2021) or 
                                                                   90% of the tax that will be due with the 2021 annual report, 
Options for entities paying electronically include credit          then penalty will apply to any part of the 90% not paid on or 
card, electronic check (Web EFT) or TEXNET (enrollment             before May 17, 2021, and any part of the 10% not paid on 
required). If paying by check, please complete the franchise       or before Nov. 15, 2021.
tax payment from (05-170). Make the check payable to 
the Texas Comptroller. Submit this report, all appropriate         For taxable entities required to pay their franchise tax by 
schedules, the appropriate information report(s) (Form 05-         EFT, see Rule 3.585 for penalty calculations.
102 and/or Form 05-167), and if applicable, the franchise tax 
payment form (Form 05-170) and your payment.                       Item 5. Interest
                                                                   If any amount of the required tax payment is not made within 
Note: If the tiered partnership election is made and total revenue 60 days of the original or extended due date, interest will be 
is passed, both the upper and lower tier entities will owe any     assessed beginning on the 61st day.
amount in Item 17, even if the amount is less than $1,000 or 
annualized total revenue after the tiered partnership election 
                                                                   For more information on interest calculations, see 
is $1,180,000 or less.
                                                                   www.comptroller.texas.gov/taxes/file-pay/interest.php.
Signature Block:  Report  may  be  signed  by  an  officer, 
director or other authorized person. This includes a paid          Form 05-175 
preparer authorized to sign the report.                            Texas Franchise Tax Tiered Partnership Report
                                                                   Filing requirements: This form must be completed by all 
Form 05-170                                                        upper and lower tier entities making the tiered partnership 
                                                                   election under Texas Tax Code Section 171.1015.
Texas Franchise Tax Payment Form
Filing  requirements: Any taxable  entity that owes  any 
                                                                   The tiered partnership election under Texas Tax Code Section 
amount of franchise tax where the tax was not remitted 
                                                                   171.1015 is not mandatory; it is a filing option for entities 
electronically is required to submit the payment form 
                                                                   in a tiered partnership arrangement. A “tiered partnership 
with a check or money order made payable to the Texas 
                                                                   arrangement” means an ownership structure in which any of 
Comptroller. Please put the reporting entity’s Texas taxpayer 
                                                                   the interests in one taxable entity treated as a partnership or 
number and the report year on the check.
                                                                   an S corporation for federal income tax purposes (a “lower 
                                                                   tier entity”) are owned by one or more other taxable entities 
Item 1. Total tax due on this report
                                                                   (an “upper tier entity”). The tiered partnership election is not 
Enter the amount of tax due as reflected on Form 05-158-B, 
                                                                   an alternative to combined reporting. Combined reporting is 
Item 35, or Form 05-169, Item 17.
                                                                                                                            27

mandatory for taxable entities that meet the ownership and           Note: An upper tier entity may also be a lower tier entity if there are 
unitary criteria. Therefore, the tiered partnership election is not  multiple tiers. If this is true for the upper tier entity filing this 
allowed if the lower tier entity is included in a combined group.    report, then complete both upper and lower tier information 
                                                                     as requested above.
If the lower tier entity has $1,180,000 or less in annualized 
total revenue or owes less than $1,000 in tax before passing         Form 05-177
total revenue to the upper tier entities, this election is not       Texas Franchise  Tax  Common  Owner 
allowed. If the election is made and total revenue is passed,        Information Report
both the upper and lower tier entities will owe any amount           Filing requirements: The reporting entity of a combined 
of tax that is calculated as due even if the amount is less          group with a temporary credit for business loss carryforward 
than $1,000 or annualized total revenue after the tiered             preserved for itself and/or its affiliates must submit common 
partnership election is $1,180,000 or less.                          owner information by the due date of the report each year. 
                                                                     This information must be submitted to satisfy franchise 
Lower Tier Entities:                                                 tax filing requirements, even if the combined group is not 
If the entity filing this report is a lower tier entity, then enter  claiming the credit on the current year’s report. Failure to 
the requested information below for each upper tier entity           satisfy all franchise tax filing requirements will negatively 
to which revenue was passed.                                         impact  the  reporting  entity’s  and  affiliate’s  franchise  tax 
                                                                     account status with our office.
Item 1. Enter the lower tier entity’s total revenue before 
revenue is passed to upper tier entities.                            Common Owner Identification 
                                                                     The common owner is the entity or individual that owns 
Item 2. Enter the Texas taxpayer number or FEIN of the               more than 50 percent (directly or indirectly) of each 
upper tier entity to which the total revenue was passed.             affiliate of the combined group. The reporting entity is not 
                                                                     necessarily the common owner. Enter only one common 
Item 3. Enter the amount of total revenue excluded by the            owner identification number.
lower tier entity that was passed to the upper tier entity.
                                                                     If the common owner is a business, enter the 11-digit Texas 
Item 4. Enter the legal name and address of the upper tier           taxpayer number or the federal employer identification number. 
entity to which the total revenue was passed.
                                                                     If the common owner is an individual, enter the 11-digit Texas 
Item 5. Enter the state of formation of the upper tier entity.       taxpayer number or Social Security number. 

Item 6. Leave blank.                                                 Common Owner Name
                                                                     Enter the business name of the common owner or the first 
Item 7. Blacken this circle.                                         name, middle initial and last name of the individual that 
                                                                     is the common owner. The common owner identification 
Upper Tier Entities:                                                 number and common owner name should be for the same 
If the entity filing this report is an upper tier entity, then enter entity or individual.
the requested information below for each lower tier entity 
that total revenue was passed from.                                  Dates
                                                                     Enter the date this entity or individual became the common 
Item 1. Enter the lower tier entity’s total revenue before           owner of the combined group. The start date is not the same as 
revenue is passed to upper tier entities.                            the combined group accounting period date or privilege period.

Item 2. Enter the Texas taxpayer number or FEIN of the               If applicable, enter the date this entity or individual ceased 
lower tier entity from which the total revenue was passed.           being the common owner of the combined group.

Item 3. Enter the amount of total revenue included by the            Check the box if this entity or individual is still the common owner.
upper tier entity that was passed from the lower tier entity.
                                                                     Form 05-178
Item 4. Enter the legal name and address of the lower tier 
entity from which total revenue was passed.                          Texas Franchise Tax Research and Development 
                                                                     Activities Credit Schedule
Item 5. Enter the state of formation of the lower tier entity.       Subchapter M provides an option to receive a franchise 
                                                                     tax credit for certain research and development activities. 
Item 6. Blacken this circle.                                         A taxable entity is not eligible for the franchise tax credit if 
                                                                     the taxable entity, or any member of its combined group, 
Item 7. Leave blank.                                                 received  a  sales  tax  exemption  under Texas Tax  Code 
                                                                     Section 151.3182 during the period on which the franchise 
                                                                     tax is based.
28

Qualified  research  and  qualified  research  expense,  as         incurred in Texas under contract with one or more public or 
defined by Section 41 of the Internal Revenue Code, are             private institutions of higher education in the first preceding 
limited to research conducted in Texas. An increased amount         tax period. 
of credit is allowed for taxable entities that contract with public 
or private institutions of higher education for the performance     Item 3a. Total QRET in 2nd preceding tax period
of qualified research and have qualified research expenses          Enter the total amount of qualifying expenses for research 
incurred in Texas under the contract during the period on           conducted in Texas in the second preceding tax period.
which the report is based. The credit may be carried forward 
no more than 20 consecutive reports.                                Item 3b. QRET under higher education contracts for the 
                                                                    2nd preceding tax period
The credit for any report equals 5.0 percent of the difference      Enter the amount of expenses reported in Item 3a that were 
between qualified research expenses in Texas (QRET) and             incurred in Texas under contract with one or more public 
50 percent of the average amount of QRET incurred during            or private institutions of higher education in the second 
the three tax periods preceding the period on which the             preceding tax period.
report is based. If the taxable entity contracts with one or 
more public or private institutions of higher education for the     Item 4a. Total QRET in 3rd preceding tax period
performance of qualified research and the taxable entity has        Enter the total amount of qualifying expenses for research 
QRET under contract during the period on which the report           conducted in Texas in the third preceding tax period.
is based, the credit for the report equals 6.25 percent of the 
difference between all QRET incurred during the period on           Item 4b. QRET under higher education contracts for the 
which the report is based and 50 percent of the average             3rd preceding tax period
amount of all qualified research expenses incurred during           Enter the amount of expenses reported in Item 4a that were 
the three tax periods preceding the period on which the             incurred in Texas under contract with one or more public or 
report is based.                                                    private institutions of higher education in the third preceding 
                                                                    tax period. 
If the taxable entity has no QRET in one or more of the 
three tax periods preceding the period on which the report is       Note: If the entity has no qualifying expenses for research 
based, the credit for the period on which the report is based       conducted in Texas for one or more of the three preceding 
equals 2.5 percent of the QRET incurred during that period.         periods, skip to Item 10. 
If the taxable entity contracts with one or more public or 
private institutions of higher education for the performance of     Item 5. Average QRET for preceding periods
qualified research and the taxable entity has QRET incurred         Add Items 2a, 3a and 4a, then divide by 3. 
under contract during the period on which the report is based, 
but has no QRET in one or more of the three tax periods             Item 6. Average QRET X 50%
preceding the period on which the report is based, the credit       Multiply Item 5 by 0.50. 
for the period on which the report is based equals 3.125 
percent of all QRET incurred during that period.                    Item 7. QRET Difference
                                                                    Subtract Item 6 from Item 1a. If less than zero, enter zero. 
Filing requirements: Any entity (including a combined 
group) creating or claiming a Research and Development              Item 8. Credit
(R&D) Activities credit must file this report.                      If the entity does not have any qualifying expenses for 
                                                                    research conducted in Texas under contracts with public or 
Item 1a. Total QRET for the period covered by this report           private institutions of higher education for the period covered 
Enter the total amount of qualifying expenses for research          by the report (Item 1b), multiply Item 7 by 0.05. 
conducted in Texas for the period covered by the report.
                                                                    Item 9. Credit
Item 1b. QRET under higher education contracts for the              If the entity has expenses that were incurred in Texas under 
period covered by this report                                       contracts with public or private institutions of higher education 
Enter the amount of expenses reported in Item 1a that were          for the period covered by the report (Item 1b), multiply Item 
incurred in Texas under contract with one or more public or         7 by 0.0625.
private institutions of higher education for the period covered 
                                                                    Note: If the entity has 3 preceding periods of qualifying research 
by the report. 
                                                                    expenses, skip to Item 12. 

Item 2a. Total QRET in 1st preceding tax period                     Item 10. Credit
Enter the total amount of qualifying expenses for research 
                                                                    If the entity does not have any qualifying expenses for 
conducted in Texas in the first preceding tax period.
                                                                    research conducted in Texas under contracts with public or 
                                                                    private institutions of higher education for the period covered 
Item 2b. QRET under higher education contracts for the 
1st preceding tax period                                            by the report (Item 1b), multiply Item 1a by 0.025. 
Enter the amount of expenses reported in Item 2a that were 
                                                                                                                          29

Item 11. Credit                                                  Item 2. Legal name 
If the entity has qualifying research expenses incurred in       Enter the legal name of the entity with the historic structure credit. 
Texas under contracts with public or private institutions of     Do not enter a doing business as (DBA) name in this space.
higher education for the period covered by the report and 
Item 1b is greater than zero, multiply Item 1a by 0.03125.       Item 3. Certificate of Eligibility Number 
                                                                 Enter the Certificate of Eligibility number issued by the Texas 
Item 12. R & D activities credit                                 Historical Commission (THC).
Enter the amount reported in one of these items: Item 8, 9, 
10 or 11.                                                        Item 4. Historic Structure Credit Certificate Number
                                                                 Enter the Historic Structure Credit Certificate number issued 
Item 13. R & D activities credit carried forward from            by the Comptroller’s office. The 10-digit number is found in 
prior years                                                      the top-right corner of the Historic Structure Credit Certificate 
Enter unused R & D activities credit carried forward from        (Form 05-901) issued by the Comptroller.
prior years. 
                                                                 Item 5. Credit Claimed
Item 14. R & D Activities Credit Available                       Enter the amount of credit claimed against the certificate in 
Enter the sum of Item 12 and Item 13 here, and enter it in       Item 4 of the same section. The amount claimed must not 
Item 9 of Form 05-160.                                           exceed your total franchise tax liability and must not exceed 
                                                                 the amount of the certificate.
Item 15. Average number of research and development 
positions                                                        Item 6. Total Credit Claimed
Enter the average number of research and development             Enter the total amount of Historic Structure Credit claimed 
positions for the period covered by the report. Divide the       in Item 5 of each historic structure credit listed on this page.  
sum of the number of research and development positions          If you have no additional pages, enter this amount in Item 
in Texas at the end of each month by the number of months        20 of the Credit Summary Schedule, Form 05-160.  If you 
in the period covered by the report.                             have additional pages, you must total the amount from Item 
                                                                 6 of all attached pages and enter the amount in Item 20 of 
Item 16. Average salary of research and development              the Credit Summary Schedule, Form 05-160. 
positions
Enter the average salary for research and development            Note: For each historic structure credit claimed, all applicable 
positions for the period covered by the report. Divide the       Historic Structure Credit Certificates (Form 05-901) must be 
total salary paid for research and development positions by      filed with this supplement to claim the credit. 
the average number of research and development positions 
for the period covered by the report. 
                                                                 For additional information on all instructions in this booklet, 
Form 05-180                                                      refer to the following franchise tax rules:
Texas Historic Structure Credit Supplement for 
Credit Claimed on the Franchise Tax Report                       3.574   New Veteran-Owned Business 
Filing requirements: An entity that has established a historic   3.581   Margin: Taxable and Nontaxable Entities
structure credit or has received a credit through a sale,        3.582   Margin: Passive Entities
assignment, or allocation, must file this form in order to claim 3.583   Margin: Exemptions
the credit. In addition to submitting this form, you must also   3.584   Margin: Reports and Payments
submit all applicable Historic Structure Credit Certificates     3.585   Margin: Annual Report Extensions
(Form 05-901).  The total amount of credit claimed from Item     3.586   Margin: Nexus
6 of this form must be entered on the Texas Franchise Tax        3.587   Margin: Total Revenue
Credits Summary Schedule (Form 05-160) Item 20. This form        3.588   Margin: Cost of Goods Sold
and information are not required to be submitted if a historic   3.589   Margin: Compensation
structure credit is not being claimed on the current report.     3.590   Margin: Combined Reporting
                                                                 3.591   Margin: Apportionment
Item 1. Owner ID                                                 3.592   Margin: Additional Tax
Enter the ID number of the entity that owns the historic         3.593   Margin: Franchise Tax Credit
structure credit. The ID number is an 11-digit number issued     3.594   Margin: Temporary Credit for Business Loss  
by the Comptroller’s office upon establishment, assignment,      Carryforwards
purchase, or allocation of the credit.  The ID number can        3.598   Margin: Tax Credit for Certified Rehabilitation  
be the same as the owner’s Texas taxpayer number.  If the        of Certified Historic Structures
owner is an affiliate, their information must be included on     3.599   Margin: Research and Development Activities 
the franchise tax report. The owner claiming the credit must     Credit
be subject to franchise tax.
                                                                 All of these rules can be viewed on the Comptroller’s website 
                                                                 at www.comptroller.texas.gov.

30