2019 Texas Franchise Tax Report  

               FormInformation05-907 (4-19)    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 the 
Change in Accounting Period ......................................  5
                                                                                     Texas Tax Code Chapter 171. Taxpayers should not consider 
Combined Reporting....................................................  7            this tax booklet as authoritative law. Additional information 
Credits .........................................................................  9 about Texas franchise tax can be found online at www.
Disregarded Entities .................................................... 3          comptroller.texas.gov/taxes/franchise.
Due Dates....................................................................  4
Electronic Funds Transfer (EFT) .................................  6                 What’s New for 2019?
                                                                                     Changes to the Requirement for Mandatory TEXNET 
Entities Subject to Tax .................................................  2
                                                                                     Payments
Entities Not Subject to Tax ...........................................  2           Effective Jan. 1, 2019, the mandatory requirement for paying 
Estimated Tax ..............................................................  4      franchise tax through TEXNET is increased to $500,000.  
Exempt Entities............................................................  2       Taxpayers who remitted $500,000 or more in franchise tax 
Extension of Time to File .............................................  5
EZ Computation........................................................... 4          all franchise tax payments in the current calendar year by 
File and Pay Franchise Tax Electronically ...................  1                     TEXNET. The comptroller will notify taxpayers that have 
Final Reports ...............................................................  4
Forfeiture .....................................................................  6  Taxpayers who remitted $10,000 or more in franchise tax 
General Information .....................................................  1
Margin..........................................................................  3  all franchise tax payments in the current calendar year by 
Minimum Franchise Tax ...............................................  4             electronic funds transfer. The comptroller will notify taxpayers 
New Veteran-Owned Businesses ................................  2
Passive Entities ...........................................................  2
                                                                                     File and Pay Franchise Tax Electronically
Penalties and Interest ..................................................  6
Tax Rates.....................................................................  3    W
Tiered Partnership Election ......................................... 9              built-in edits to help you avoid mistakes that could lead to 
Where to File ............................................................... 10     unnecessary billings and the forfeiture of an entity’s right to 
                                                                                     T
                                                                                     available 24 hours a day.
Index of forms:
Form #   Title                                                                       If you owe tax, electronic payment options include credit 
05-102   Public Information Report ........................ 12                       card, electronic check (Web EFT) or TEXNET (enrollment 
05-158-A Franchise Tax Report, page 1 .................. 12                          required).
05-158-B Franchise Tax Report, page 2 .................. 19
                                                                                     TW need
05-160   Credits Summary Schedule ..................... 21
                                                                                     your 11-digit Texas taxpayer number and your 6-digit XT 
05-163   No Tax Due Report ................................... 22                    WlistFTnotice.Wis
05-164   Extension Request ................................... 23                    www.comptroller.texas.gov/taxes/file-pay/.
 ..............................                 24
                                 ..................................... 25            Wnotfwitmore
05-167   Ownership Information Report  ................ 26                           than 10 members.

05-169   EZ Computation ....................................... 26                    tax
05-170   Franchise Tax Payment Form .................. 27                            preparation software. A list of approved providers is available 
05-175   Tiered Partnership Report ........................ 27                       at www.comptroller.texas.gov/taxes/franchise/approved-
05-177   Common Owner Information Report ........ 28                                 providers.php.
05-178   Research and Development Activities  
         Credit Schedule ................................... 28                      Electronic Filing of No Tax Due Reports Required
                                                                                     As of January 1, 2016, No Tax Due Reports must be filed
05-180   Historic Structure Credit Supplement  
         for Credit Claimed on Report ............... 30                             electronically.

                                                                                                                               1

Need a Webfile number?                                           (other than business trusts) may qualify as a passive entity 
Call 800-442-3453, enter the taxpayer number when                and not owe any franchise tax for a reporting period if at least 
prompted and choose option number 1. Our automated               90% of the entity’s federal gross income (as reported on the 
system will require identifying information, such as total       entity’s federal income tax return), for the period upon which 
revenue from a prior report or last payment amount (if greater   the tax is based, is from the following sources: 
.                                                                • dividends, interest, foreign currency exchange gain,
                                                                   periodic and non periodic payments with respect to notional
Entities Subject to Tax                                            principal contracts, option premiums, cash settlements
The franchise tax is imposed on the following entities that        or termination payments with respect to a financial
are either organized in Texas or doing business in Texas:          instrument, and income from a limited liability company;
• corporations;                                                  • distributive shares of partnership income to the extent that
•member                                                            those distributive shares of income are greater than zero;
                                                                 • net capital gains from the sale of real property, net gains
• banks;                                                           from the sale of commodities traded on a commodities
• state limited banking associations;                              exchange and net gains from the sale of securities; and
• 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.
                                                                 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 
•                                                                registered with the Secretary of State (SOS) or the 
• general partnerships where direct ownership is composed        Comptroller’ T
  entirely of natural persons (except for limited liability        entity
  partnerships);                                                 entityAto
• entities exempt under Subchapter B of Chapter 171, Tax         fileaPublicInformationReport05-102)oOwnership
  Code;                                                          Information Report (Form 05-167).
• certain unincorporated passive entities;
• certain grantor trusts, estates of natural persons and         Aent affiliatea
  escrows;
• real estate mortgage investment conduits and certain

• nonprofittrust Chapter                                         A the
  2212, Insurance Code;                                          period upon which the franchise tax report is based, and is 
• qualifi Revenue                                                not registered and is not required to be registered with the 
  Code;                                                          Comptroller’
• a trust exempt under Section 501(c)(9), Internal Revenue       ’
  Code; or
• unincorporated political committees.                           A’

See Rule 3.581 for information on nontaxable entities.           Questionnaire (Form AP-114), a Business Questionnaire 
                                                                 (Form AP-224) or a Trust Questionnaire (Form AP-231) to 
Exempt Entities                                                  registewithComptroller’sofficeanbegifilingfranchise
Some entities may be exempt from the franchise tax. The          tax reports.
exemptions vary depending upon the type of organization. 
Exemptions are not automatically granted to an entity. For       New Veteran-Owned Businesses
more information on franchise tax exemptions, go to www.
                                                                          ENTITIES MUST BE PRE-QUALIFIED
comptroller.texas.gov/taxes/exempt/faq.php.
                                                                 New veteran-owned businesses are not subject to franchise 
Note: New veteran-owned businesses and entities that qualify as   T
  passive are not considered exempt entities.                    veteran-owned business, an entity must meet the following 
                                                                 ’
Passive Entities                                                 • be an entity formed or organized in Texas on or after Jan.
Partnerships (general, limited and limited liability) and trusts   1, 2016, and before Jan. 1, 2020;

2

• be 100% owned by a natural person (or persons), each         Note: Not all entities will qualify to use COGS to compute margin. 
of whom was honorably discharged from a branch of the          See instructions for Item 11. Cost of goods sold (COGS) on 
United States armed services; and                              page 16 for more information.
• provide a letter from the Texas Veterans Commission 
(TVC) verifying the honorable discharge of each owner.         Tax Rates
                                                               The franchise tax rates for reports originally due on or after  
A veteran-owned                                                Jan. 1, 2016: 
T                                                              • 0.75% (0.0075) for most entities
each reporting period the franchise tax is not imposed on the  •  0.375% (0.00375) for qualifying wholesalers and retailers
taxable entity. However, the new veteran-owned business is     •  0.331% (0.00331) for those entities with $20 million or less 
Report.                                                        in annualized total revenue using the EZ computation.

A                                                              Qualifying retailers and wholesalers are entities that are 
a combined group or as part of a tiered partnership.           primarily engaged in retail and/or wholesale trade. Retail 
                                                               trade means the activities described in Division G of the 1987 
Comptroller’                                                   StandardIndustrialClassificati(SICmanuapparel
of the new veteran-owned business changes at any point 
five-year
period a new veteran-owned business no longer meets the        (Automotive Repair Shops); activities involving the rental or 
above criteria, it will become subject to the franchise tax.   leasing of tools, party and event supplies, and furniture under 
                                                               SIC Code 7359; heavy construction equipment rental or 
please                                                         leasing activities under SIC Code 7353; and rental-purchase 
visit the Comptroller’s website at www.comptroller.texas.gov/  agreement activities regulated by Chapter 92, Business & 
taxes/franchise/veteran-business.php.                          Commerce Code. Wholesale trade means the activities 
                                                               described in Division F of the 1987 SIC manual. (The 1987 
If you are a veteran and your entity was formed prior to Jan.  SIC manual is available online at www.osha.gov/pls/imis/ 
1, 2016, please contact the Texas Veterans Commission for      sicsearch.html.)
other resources that may be available to you at 800-252-8387 
or www.tvc.texas.gov/entrepreneurs/.                           An entity is primarily engaged in retail and/or wholesale 
                                                               trade if: 
                                                               1) the total revenue from its activities in retail and wholesale 
Disregarded Entities
An entity’s treatment for federal income tax purposes does     trade is greater than the total revenue from its activities in 
not determine its responsibility for Texas franchise tax.      trades other than the retail and wholesale trades; 
are                                                            2) except for eating and drinking places as described in Major 
disregarded for federal income tax purposes are considered     Group 58 of Division G, less than 50% of the total revenue 
separate legal entities for franchise tax reporting purposes.  from activities in retail and wholesale trade comes from 
respons                                                        the sale of products it produces or products produced by 
tax report unless it is a member of a combined group. If the 
entity is a member of a combined group, the reporting entity   taxable entity also belongs; and 
for the group may elect to treat the entity as disregarded     3) the taxable entity does not provide retail or wholesale 
and will not unwind its operations from its “parent” entity.   utilities, including telecommunications services, electricity 
In this instance, it will be presumed that both the “parent”   or gas. 
entity and the disregarded entity have nexus in Texas for 
                                                               Amodifications
apportionment purposes only. Whether or not the entity is      made to the acquired product do not increase its sales price 
disregarded for franchise tax, it must be listed separately on by more than 10%.
Additionallyis
organized in Texas or has physical presence in Texas, it will 
approp                                                         Annualized Total Revenue
                                                               To determine an entity’s eligibility for the $1,130,000 no tax 
05-102 or 05-167).
                                                               qualificatio
                                                               entity must annualize its total revenue if the period upon 
Margin                                                         which the report is based is not equal to 12 months.
qualifi
the EZ computation or No Tax Due Report, the tax base is       Note: The amount of total revenue used in the tax calculations 
the taxable entity’s margin and is computed in one of the      will NOT change as a result of annualizing revenue. Total 
following ways:                                                revenue will equal the prescribed amounts for the period 
• Total Revenue times 70%                                      upon which the tax is based.
• Total Revenue minus Cost of Goods Sold (COGS)
• Total Revenue minus Compensation                             To annualize total revenue, divide total revenue by the 
• Total Revenue minus $1 million.                              number of days in the period upon which the report is based, 
                                                               and multiply the result by 365.
                                                                                                                    3

Example: A taxable entity’s 2019 franchise tax report is             published before Jan. 1 of each year in the Texas Register, 
based on the period 09-15-2018 through 12-31-2018 (108               the due date will be the next business day.
days), and its total revenue for the period is $400,000. The 
taxable entity’s annualized total revenue is $1,351,852 
                                                                     Annual Reports
($400,000 divided by 108 days multiplied by 365 days).               Due Date
Based on its annualized total revenue, the taxable entity            An annual report is due May 15 of each report year.
would NOT qualify for the $1,130,000 no tax due threshold, 
                                                                     Report Year
report $400,000 as total revenue for the period.                     The year in which the franchise tax report is due. The 2019 
                                                                     annual report is due May 15, 2019.
Estimated Tax
T                                                                    Accounting Period
or payments.                                                         Accounting Year Begin Date: 
                                                                     Enter the day after the end date on the previous franchise 
Minimum Franchise Tax                                                tax report. For example, if the 2018 annual franchise tax 
There is no minimum tax requirement under the franchise              report had an end date of 12-31-17, then the begin date on 
tax provisions. An entity that calculates an amount of tax due       the 2019 annual report should be 01-01-18.
that is less than $1,000 or that has annualized total revenue 
less than or equal to $1,130,000 is not required to pay any          For entities that became subject to the tax in 2018, enter the 
tax. (See note for tiered partnership exception.) The entity,        date the entity became subject to the tax.
however
requirements.                                                        Accounting Year End Date: 
                                                                     Enter the last accounting period end date for federal income 
If an entity meets the $1,130,000 no tax due threshold, it           tax purposes in the year before the year the report is originally 
T                                                                    due.

Note: A tiered partnership election is not allowed if the lower tier Entities that became subject to the tax during the 2018 
  entity, before passing total revenue to the upper tier entities,   calendar year and have a federal accounting year end date 
  has $1,130,000 or less in annualized total revenue or owes         that is prior to the date the entity became subject to the tax, 
  less than $1,000 in tax. If the election is allowed and revenue 
                                                                     will use the day they became subject to the franchise tax as 
  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      accounting
  less than $1,000 or annualized total revenue after the tiered      results in a zero report.
  partnership election is $1,130,000 or less.
                                                                     Example: An entity became subject to the tax on 10-05-18. 
                                                                     The entity’s federal accounting year end date is 08-31. Since 
EZ Computation
Entities with $20 million or less in annualized total revenue        the federal accounting year end date of 08-31-18 is prior to 

05-169).                                                             accounting period begin and end date on the 2019 annual 
                                                                     report will be 10-05-18. This results in a zero report. On the 
Combined groups are eligible for the EZ computation 
method. Upper and lower tier entities, when the tiered               period 10-05-18 through 08-31-19.
partnership election has been made, will qualify for the EZ 
computation method only if the lower tier entity would have          Combined Groups
qualififortEZcomputatmetbeforpasstotal                               For the period that a combined group exists, the combined 
revenue to the upper tier entities.                                  A
                                                                     be included in a combined group report for the accounting 
Entities using the EZ computation method forego any                  period in which it belongs to the combined group. For any 
credits for that report year, including the temporary credit         accounting period that an entity is not part of a combined 
for business loss carryforwards.

                                                                     Final Reports
EZ computation method is 0.331% (0.00331). No margin                 An entity, other than a member of a combined group, 
deduction (COGS, compensation, 70% of revenue or $1                  that ceases doing business in Texas for any reason (i.e., 
million) is allowed when choosing the EZ computation                 termination,withdrawal,merger,etc.)isrequirtfifinal
method.                                                              franchise tax report (Forms 05-158-A and 05-158-B, 05-163 
                                                                     or 05-169) and pay any additional tax, if due.
Due Dates
If the due date (original or extended) of a report falls on          Due Date
a Saturday, Sunday or legal holiday included on the list             A

4

business in Texas.
                                                                 member’filingresponsibility
Note: A Public Information Report or an Ownership Information    entity of the combined group.

                                                                 An entity that joins a combined group, and then ceases 
Accounting Period                                                doing business in Texas in the accounting year that would 
Accounting Year Begin Date: 
The day after the end date on the previous franchise tax         for the data from the accounting year begin date through 
report.                                                          the date before it joined the combined group. The period 
                                                                 beginning with the date the entity joined the combined group 
Accounting Year End Date:                                        through the date the entity ceased doing business in Texas 
The date the taxable entity ceases doing business in Texas.      will be reported on the combined group’s annual report for 
For a Texas entity, the end date is the effective date of        the corresponding period.
termination, merger or conversion into a nontaxable entity. 
For a non-Texas entity, the end date is the date the entity      A member of a combined group that leaves the combined 
ceases doing business in Texas.                                  group, and then ceases doing business in Texas during the 

AT
report using a 12-31-18 accounting year end date. The            entity left the combined group through the date that the entity 
entity wants to end its existence on 08-03-19. To obtain a       ceased doing business in Texas.

                                                                 Change in Accounting Period
01-01-19 through 08-03-19. If the entity is not terminated       Tladonoprovithfili period
                                                                 franchise tax reports. A change in a federal accounting period 
08-16-19,
the date the entity terminated.                                  begin and end dates of an accounting period for franchise tax 
                                                                 reporting purposes. The keys to the period upon which the tax 
Taxable entities must satisfy all tax requirements or state in   is based are the begin and end dates. The begin date will be 
the appropriate articles which entity will be responsible for    the day after the end date on the prior franchise tax report, 
satisfying all franchise tax requirements before they may        and the end date will be the last federal tax accounting period 
terminate legal existence in Texas. All documents required       end date in the year prior to the year in which the report is 
by the Texas Secretary of State (SOS) to terminate legal         originally due. Therefore, a change in a federal accounting 
Tmusttbef5:00                                                    period may result in an accounting period on the franchise 
p.m. on Dec. 31 to avoid liability for the next annual franchise tax report of more or less than 12 months.
tax report. If Dec. 31 falls on a weekend, the documents must 
be received by 5:00 p.m. on the last working day of the year.    A
Postmark dates will not be accepted. You may refer to www.       end from 09-30-18 to a calendar year end of 12-31-18. 
comptroller.texas.gov/taxes/franchise/reinstate-terminate.       Because of the change in the federal accounting period, the 
section                                                          covering
                                                                 the period 10-01-18 through 12-31-18. For franchise tax 
                                                                 reportipurposeentiwo201based
Non-Texas entities that have not registered with the SOS         on the period 10-01-17 through 12-31-18, combining the 
T                                                                relevant information from the two federal income tax reports.
all franchise tax requirements to end their responsibility 
for franchise tax. The entity must notify the Comptroller’s      Example 2: A calendar year entity lost its S-Corp election 
                                                                 under the Internal Revenue Code on June 27, 2018. As a 
business in Texas.
                                                                 S return for the period 01-01-18 through 06-27-18. The 
Combined Groups
If every member of a combined group ceases doing business        second short period federal return for the period 06-28-18 
T                                                                through 12-31-18. For franchise tax reporting purposes, the 
To receive clearance from the Comptroller for termination,       entity would include the period 01-01-18 through 12-31-18 
cancellation, withdrawal or merger, Form 05-359 must also        on its 2019 annual report and would combine the relevant 
                                                                 information from the two federal reports.

A member of a combined group that ceases doing business          Extension of Time to File (Non-EFT)
Tnot report.Tdatthatwould                                        Please see extension requirements for combined reports 
                                                                 and electronic funds transfer (EFT) payors in the respective 
the combined group’s annual report for the corresponding         sections of these instructions.

                                                                                                           5

                                                                TEXNET System. Payments above $25,000 must be initiated 
annual report, by the original due date, it may request an      in the TEXNET System by 8:00 p.m. (CT) on the business 
                                                                day before the due date. For more information, go to www.
for a non-EFT payor will be through Nov. 15, 2019. The 
                                                                comptroller.texas.gov, and click on the TEXNET link.
extension payment must be at least 90% of the tax that will 
be due with the report or 100% of the tax reported as due 
                                                                If an online extension payment is made, the taxable entity 
on the prior franchise tax report (provided the prior report 
                                                                should NOT submit a paper Extension Request (Form 05-
request
                                                                164).
W
bef15,2019.If filed
                                                                Combined Groups
extension request does not meet the payment requirements, 
                                                                If any one member of a combined group receives notice that 
the due date reverts back to May 15, 2019, and penalty and 
                                                                it is required to electronically transfer franchise tax payments, 
interest will apply to any part of the 90% not paid by May 15, 
                                                                then the combined group is required to electronically transfer 
2019, and to any part of the 10% not paid by Nov. 15, 2019.
                                                                payments and comply with the EFT rules. The payment must 
                                                                be remitted as discussed previously; however, the combined 
A taxable entity that became subject to the franchise tax 
                                                                05-
during 2018 may not use the 100% extension option.
                                                                Comptroller’srequest.
combined
                                                                the second extension request. It is the responsibility of the 
                                                                taxpayer to monitor their electronically submitted reports 
as a separate entity in 2019.
                                                                and payments through their software providers to ensure 
Acombine                                                        successful transmission. Questions about the software 
   have                                                         provider’s products should be directed to the provider of 
   a valid extension for all members of the group.              the software.

Electronic Funds Transfer (EFT)                                 Penalties and Interest
Taxable entities that remitted $10,000 or more in franchise 
                                                                Taxpayers will be assessed a $50 penalty when a report is 
1 through Aug. 31) are required to electronically transmit      filedlThpenalwilbassessedregardlessowhether
 Comptroller’                                                   for
subsequent calendar year. Additional information about EFT 
requirements are outlined in Rule 3.9 concerning electronic     is due in addition to any other penalties assessed for the 
                                                                reporting period.

The Schedule of Electronic Funds Transfer Due Dates             Additionally, a penalty of 5% of the tax due will be imposed 
(Form 00-843) is available at www.comptroller.texas.gov/        on an entity that fails to pay the tax when due. If the entity 
forms/00-843.pdf                                                fails to pay the tax within 30 days after the due date, an 
                                                                additional 5% penalty will be imposed.
The extended due date for mandatory EFT payors is different 
from that of other franchise taxpayers. An EFT payor may        Delinquent taxes accrue interest beginning 60 days after the 
                                                                date the tax is due. The interest rate to be charged is the 
by timely making an extension payment electronically using      prime rate plus 1%, as published in The Wall Street Journal 
TEXNET (tax type code 13080 Franchise Tax Extension) or         Saturday
WMandaEFT                                                       Sunday or legal holiday.
the tax that will be due with the report, or 100% of the tax 
reported as due on the prior franchise tax report provided      EFT
year’s2019.                                                     above. Also, failure to follow the EFT requirements could 
                                                                result in an additional 5% penalty being assessed.
An EFT payor may request a second extension to Nov. 15, 
201filethereportbpayinelectronicallybeforeAug.15,               Forfeiture
2019, the balance of the amount of tax that will be reported as 
due on Nov. 15, 2019, using TEXNET (tax type code 13080         information report and/or does not pay tax, penalty or interest 
TW                                                              due within 45 days of the due date, its powers, rights and right 
Extension Request (Form 05-164) if the entity has paid all      to transact business in Texas may be forfeited. Entities that 

                                                                to transact business are subject to having their registration 
For payments of $25,000 or less, a payor has until 10:00        forfeited.
a.m. (CT) on the due date to initiate the transaction in the 
                                                                Upon the forfeiture of the right to transact business, the 
6

                                                                the entity (other than the parent) is no longer subject to 
for each debt of the entity that is created or incurred in this Texas’ jurisdiction to tax or the reporting entity is no longer a 
state after the due date of the report and/or tax and before    member of the combined group. The same entity cannot be 
the privileges are restored. Texas Tax Code Section 171.255.    the reporting entity for more than one report for a reporting 
                                                                period.
Combined Reporting
T                                                               Combined Report
                                                                A combined group must include all taxable entities in the 
lieu of individual reports. The combined group is a single      combined report even if, on a separate entity basis, the 
taxable entity for purposes of calculating franchise tax due    member has $1,130,000 or less in total revenue. The 
and completing the required tax reports.                        combined group may; however, qualify for the No Tax Due 
                                                                Report if the annualized total revenue of the combined group  
  without                                                       is $1,130,000 or less.
nexus in Texas) in which a controlling interest (more than 
50%) is owned by a common owner(s), either corporate or         A combined group may qualify to use the EZ computation if 
noncorporate, or by one or more of the member entities.         its combined annualized total revenue is $20 million or less.

                                                                No
• pass-through entities, including partnerships;                Tax Due Report or the EZ Computation Report, the combined 
• limited liability companies taxed as partnerships under       group’s margin is computed in one of the following ways:
federal law;                                                    • Total Revenue times 70%
• S corporations; and                                           • Total Revenue minus Cost of Goods Sold (COGS)**
• disregarded entities under federal law.                       • Total Revenue minus Compensation
                                                                • Total Revenue minus $1 million

A combined group cannot include:                                **If the entity has qualifying costs. See instructions for Item 11. 
• taxable entities that conduct business outside the United       Cost of goods sold (COGS) on page 16 for more information.
States if 80% or more of the taxable entity’s property 
and payroll are assigned to locations outside the United        A combined group may choose only one method for 
States (See Texas Tax Code Section 171.1014(a) for more         computing margin that applies to all members of the 
details);                                                       combined group.
• new veteran-owned businesses (See the section on New 
Veteran-Owned Businesses);                                      A combined group must look at the total revenue of the group 
• entities exempt under Chapter 171, Subchapter B; or           to determine the applicable tax rate. If the combined group’s 
• passive entities                                              revenue from retail and/or wholesale activities is greater 
                                                                than the revenue from all other activities, then the group 
A enterprise                                                    may qualify as a retailer and/or wholesaler and may use the 
that is made up of separate parts of a single entity or of a    0.375% (0.00375) tax rate as long as it meets all the criteria 
                                                                belowT3.
interdependent, integrated and interrelated through their 
                                                                A combined group may not include taxable entities that 
produces a sharing or exchange of value among them and          provide retail or wholesale electric utilities, if: 
                                                                • the taxable entity’s activity disallows the combined group 
entities are presumed to be engaged in a unitary business.        from qualifying for the retailer or wholesaler tax rate; and
                                                                • the taxable entity’s or entities’ total revenue is less than 
See franchise tax Rule 3.590 for more detailed information 
on combined reporting.
                                                                Accounting Period of the Combined Group
                                                                The combined group’s accounting period is generally 
The combined group’s choice of an entity that is:               determined as follows:
1. the parent entity, if it is a part of the combined group, or • if two or more members of a group file a federal 
2. an entity that is included within the combined group, is       consolidated return, the group’s accounting period is the 
  subject to Texas’ taxing jurisdiction, and has the greatest     federal tax period of the federal consolidated group; 
  Tduring                                                       • in all other cases, the accounting period is the federal tax 
  combin                                                          period of the reporting entity.
  the Texas receipts after eliminations for that period.        See the accounting period begin and end date requirements 

of the group together with all schedules required by the        The accounting year begin and end dates entered on page 
Comptroller. The reporting entity should change only when 

                                                                                                                        7

period on which the combined group report is based.               that have eligible COGS deductions. See instructions on 
                                                                  page 16 for more information.
If the federal tax period of a member differs from the federal 
tax period of the group, the reporting entity will determine    Combined Compensation
the portion of that member’s revenue, cost of goods sold,       A combined group that elects to subtract compensation must 
compensation, etc. to be included by preparing a separate       determine that amount by:
income statement based on federal income tax reporting          1. calculating the compensation for each of its members as 
methods for the months included in the group’s accounting        if each member were an individual taxable entity (See 
period.                                                          instructions for Items 15-17 on Form 05-158-A to compute 
                                                                 compensation on an individual entity basis.); 
affiliates’                                                     2. adding together the amounts of compensation determined 
                                                                 under (1); and 
 and end dates entered on page 1 of the franchise tax report.   3. subtracting from the amount determined under (2) any 
 Forexample,comgrselectsnewlyformentity                          compensation amounts paid from one member of the 
 (formed 07-01-2018) as the reporting entity. The combined       combined group to another member of the combined 
 group’franchisetarepoibaseothaccountingperiod
                                                                 group, but only to the extent the corresponding item of 
 01-01-2018 through 12-31-2018. On page 1 of the franchise 
 tax report, the accounting year begin date is 01-01-2018,       total revenue was subtracted. 
 and the accounting period end date is 12-31-2018. On the 
 an                                                             If any employee, officer, director, etc. is paid by more 
 accounting year begin date of 07-01-2018 and an accounting     than one member of the combined group, that individual’s 
 year end date of 12-31-2018.                                   compensation is capped at $370,000 per 12-month period 
                                                                upon which the report is based when computing the 
                                                                compensation deduction for the group.
When a combined group acquires or forms another taxable 
entity during the period upon which the combined group’s        Combined $1 Million Deduction
report is based, it will be presumed that the newly acquired or A combined group that elects to subtract $1 million to 
formed entity is unitary and will be included in the combined   determine margin is allowed $1 million for the combined 
                                                                group as a whole, not for each member of the group.

instructions                                                    Combined Apportionment 
for additional information.                                     Texas gross receipts of a combined group include only 
                                                                receipts for entities within the group that are organized in 
Combined Total Revenue                                          Texas or that have nexus in Texas. Receipts from transactions 
A combined group must determine its total revenue by:           between members that are excluded from revenue may 
1. calculating the total revenue of each of its members as if   not be included in Texas gross receipts. However, Texas 
the member were an individual taxable entity without regard     gross receipts will include certain sales of tangible personal 
to the $1,130,000 no tax due threshold (See instructions for    property made to third party purchasers if the tangible 
Items 1-9 on Form 05-158-A to compute total revenue on          personal property is ultimately delivered to a purchaser in 
an individual entity basis.);                                   T
2. adding together the total revenues of the members            shipments made by a member of a combined group from a 
determined under (1); and                                       Texas location to a Texas purchaser would be included in 
3. subtracting, to the extent included in (2), items of total   Texas receipts based on the amount billed to the third party 
revenue received from a member of the combined group.           purchaser if the seller is also a member of the combined 
                                                                group and the seller does not have nexus.
Combined Cost of Goods Sold (COGS)
A combined group that elects to subtract COGS must              Gross receipts everywhere for a combined group should 
determine that amount by:                                       include receipts for all entities within the group, regardless 
1. calculating the COGS for each of its members as if the       of whether the entities have nexus in Texas. Receipts from 
 member were an individual taxable entity (See instructions     transactions between members that are excluded from 
 for Items 11-13 on Form 05-158-A to compute COGS on            revenue may not be included in gross receipts everywhere.
 an individual entity basis.);
2. adding together the amounts of COGS determined under         Note: A net loss from the sale of all investments and capital 
 (1); and                                                       assets is not included in gross receipts everywhere and a net 
3. subtracting from the amount determined under (2) any         loss from all Texas-sourced sales of investments and capital 
 COGS amounts paid from one member of the combined               T
 group to another member of the combined group, but only        group, all gains and losses from the sale of investments and 
 to the extent the corresponding item of total revenue was      capital assets for all members of the combined group are 
 subtracted.                                                    added together to determine the net gain or net loss. See 
                                                                franchise tax Rule 3.591 for more detailed information on 
ONLY                                                            apportioning receipts.
8

Additional Reporting Requirement for Combined Groups              election are:
with Temporary Credit                                             •  All taxable entities involved in the tiered partnership election 
The reporting entity of a combined group with a temporary         Report
credit for business loss carryforward preserved for itself and/    (Form 05-102) or Ownership Information Report (Form 05- 
                                                                   167), and the Tiered Partnership Report (Form 05-175).
Report (Form 05-177) by the due date of the report. This          •  Both the upper and the lower tier entities must blacken the 
                                                                   tiered partnership election circle on their tax reports.
requirements, even if the combined group is not claiming          • Total revenue may be passed only to upper tier entities 
the credit on the current year’s report. Submit the Common         that are subject to the Texas franchise tax.
Owner Information Report before or with your franchise            •  Total revenue must be passed to upper tier taxable entities 
tax report to prevent processing delays. If you submit the         based on ownership percentage.
CommOInformatReportaftreport,                                     •  Margin deductions (COGS, compensation, 70% of revenue 
it will NOT immediately process to your account.                   or $1 million) may not be passed to upper tier entities.
                                                                  • The upper and lower tier entities may use the EZ 
                                                                   Computation (Form 05-169) only if the lower tier entity has 
A combined group must timely submit Forms 05-164 and 05-           $20 million or less in annualized total revenue before total 
165 along with the required payment to request an extension        revenue is passed to the upper tier entities.
EFTsections                                                       T
of this booklet for additional information.                        Report (Form 05-163). 

ax                                                                Both the upper and lower tier entities will owe any amount 
EactaxentityidentifitAffiliatSc(Form                              of tax that is calculated as due even if the amount is less 
05-166) is jointly and severally liable for the franchise tax     than $1,000 or annualized total revenue after the tiered 
of the combined group [Texas Tax Code, Sec. 171.1014(i)].         partnership election is $1,130,000 or less.
Notice of any such tax liability must be sent to the reporting 
entity at the address listed on the report and must be            If the upper and lower tier entities have different accounting 
adequ                                                             periods, the upper tier entity must allocate the total revenue 
each member of the combined group. Separate notice to             reported from the lower tier entity to the accounting period 
each member is not required.                                      on which the upper tier entity’s report is based.

Tiered Partnership Election                                       Credits
A “tiered partnership arrangement” means an ownership 
structure in which any of the interests in one taxable entity     Each eligible taxable entity must have preserved its right to 
treated as a partnership or an S corporation for federal          Comptroller’
income tax purposes (a “lower tier entity”) are owned by one      due date of its 2008 report.
or more other taxable entities (an “upper tier entity”). A tiered 
partnership arrangement may have two or more tiers. The           A taxable entity that is a combined group is allowed to take 
tiered partnership election, under Texas Tax Code Section         a credit for eligible members of the combined group (i.e., the 
                                                                  member was subject to the franchise tax on May 1, 2006, 
a tiered partnership arrangement.                                 and preserved the right to take the credit). If a combined 
                                                                  group member leaves the combined group during the a tax 
The tiered partnership election is not an alternative to          period, the original combined group may claim the departing 
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 
to pass its total revenue to its upper tier entities. The upper 
tier entities then report this passed revenue with their own      A taxable entity that established a research and development 
total revenue. It is important to note that this election does    credit on a franchise tax report originally due prior to Jan. 1, 
not allow the lower tier entity to pass its margin deduction      2008, may claim any unused credit carried forward to offset 
(COGS, compensation, 70% of revenue or $1 million) to the         the tax on margin.  
upper tier entities.
                                                                  Credit for Certified Rehabilitation of Certified Historic 
partnership                                                       Structures
                                                                                                                           9

Effective for reports due on or after Jan. 1, 2015, a tax credit       Tthe
of up to 25 percent of eligible costs and expenses incurred            contract during the period on which the report is based.

placed in service on or after Sept. 1, 2013, is allowed.               A taxable entity is not eligible for the franchise tax credit if 
                                                                       the taxable entity, or any member of its combined group, 
To qualify for the historic structure credit, the owner must           received a sales tax exemption under Texas Tax Code 
have an ownership interest in the structure during the                 Section 151.3182 during the period on which the franchise 
calendar year the structure was placed in service and the              tax is based.
total amount of eligible costs and expenses incurred must 
exceed $5,000.                                                         Amended Reports

Comptroller’s                                                          of the amended report along with a cover letter explaining 
ofsubmitttTHistStCredit                                                the reason for the amendment. The entity must write 
  Eligibility                                                          “AMENDED” on the top of the report and submit the 
issued by the Texas Historical Commission and an audited               supporting documentation. If the amended report will result 
Comptroller’                                                           in a refund of taxes previously paid, the claim must comply 
T                                                                      with Texas Tax  Code Section 111.104; the cover letter must 
05-901) to be included with any transactions involving the             state and detail each reason on which the claim is founded.
amount or ownership of the credit.
                                                                       Additionally
If an entity is eligible for a historic structure credit carryforward, entity, a power of attorney must be provided. For combined 
the unused credit may be carried forward for not more than             groups, refunds can only be requested by the reporting entity. 
                                                                       See Rule 3.584 for additional information. 

The historic structure credit may be taken on a franchise tax 
                                                                       Where to file
period                                                                 Reports and payments should be mailed to:
have been applied, including carryforwards.
                                                                           Texas Comptroller of Public Accounts 
The historic structure credit may be sold, assigned, or                    P.O. Box 149348 
allocated an unlimited number of times. The credit may only                Austin, TX  78714-9348 
be allocated to partners, members or shareholders of a pass-
through entity. If the credit is sold, assigned or allocated, Form     If tax is due, and the taxable entity is not required to use 
mustsubmittttComptroller’ofwitthe                                      EFT or does not submit payment online, make the check 
owner’                                                                 or money order payable to the Texas Comptroller. Write the 
days of the transaction. Once the credit is processed as sold,         Texas taxpayer number and the report year on the check or 
assigned or allocated, the credit will be recalculated and all         money order. Complete the Texas Franchise Tax Payment 
parties involved will receive a new Historic Structure Credit          Form (Form 05-170).

for credit accounts with zero balance.                                 Private Delivery Services
                                                                       Texas law conforms to federal law regarding the use of 
Research and Development Activities Credits                            certain designated private delivery services to meet the 
A taxable entity is eligible for a franchise tax credit for 
performing qualified research and incurring qualified                  and payments. If a private delivery service is used, address 
research expenses from activities conducted in Texas.                  the return to:

                                                                           Texas Comptroller of Public Accounts 
An increased amount of credit is allowed for taxable entities              111 E. 17th St.
that contract with public or private institutions of higher                Austin, TX  78701-1334
educatftperfofhave

10

         Instructions for Completing Taxpayer Information 

                      Included on Texas Franchise Tax Forms

Taxpayer number:                                        Report year:                      Due date:                                                          Secretary of State 
Enter the Texas taxpayer number that                    The year the                                                                                         (SOS) file number 
has been assigned to your entity by the                 report is due.                                                                                       or Comptroller file 
Comptroller’                                                                              report, enter the due date that                                    number: 
an assigned number, enter your federal                                                    was provided on the letter you                                     The number assigned 
                                                                                          received.                                                          to the entity by the 
                                                                                                                                                             SOS or Comptroller.

Taxpayer name:
The legal name 
                                     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 
                        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 nancial 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 

engaged in a unitary                     Accounting year end date:
business, please blacken                 See the accounting year 
the circle accordingly.                  end date requirements in                                                                                            NAICS code: 
                                                                                                                                                             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 
                                                                                          SIC code: 
See the accounting year begin            reporting section.                                                                                                  the overall business 
date requirements in the                                                                                                                                     activity of a combined 
                                                                                                                                                             group. The North 
sections. Also see the                                                                    however, if left blank, the tax rate 
accounting period                                                                         will default to 0.75%. See “Tax                                    American Industry 
information in the                                                                        Rates” on page 3 to determine if 
combined                                                                                  you qualify for the wholesale/retail                               (NAICS) codes are 
                                                                                                                                                             online at www.census.
reporting        Tiered Partnership:                                                                                                                         gov/eos/www/naics/.
                                                                                          appropriate wholesale or retail 
section.         If you are making a tiered partnership 
                 election and are the upper tier entity 
                                                                                          (SIC) code. Otherwise, enter a 
                 including revenue passed to you by the 
                                                                                          code that is appropriate for the 
                 lower tier entity, or if you are the lower 
                                                                                          taxable entity or the code that 
                 tier entity excluding revenue passed to an 
                 upper tier entity, blacken this circle and 
                                                                                          of a combined group.  The SIC 
                 complete Form 05-175. Do not blacken 
                                                                                          codes are online at www.osha.gov/
                 this circle just because you own an 
                                                                                          pls/imis/sicsearch.html.
                 interest in another entity.

                                                                                                                                                                                    11

                           Specific Line Instructions for 

                     Each Report Included in this Booklet

Form 05-102 
                                                                Limited
Texas Franchise Tax Public Information Report
Filing Requirements:       limited                              Partnerships must include all general partners.
institution
   Public                                                       Professional associations should report the members of their 
InformatReporttsatt                                             executive committee.
PIR is due on the date the franchise tax report is due. The 
officer                                                         Sections B and C: Complete both sections as applicable 
A
 professional
instthat separate                                               Processing, Accessing and Correcting Information Reported 
franchise tax report or that is part of a combined group        on the PIR: 
tLLC,limitpartprofessional                                      TNon-T
T                                                               limited partnerships and professional associations registered 
and does not have physical presence in Texas).                  with the Secretary of State (SOS) are sent to the SOS, as 
                                                                required by law.

             the                                                processin
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/
  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 
(TT                                                             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

made on this form. The changes can be made online or on         Comptroller
forms downloaded from their website at www.sos.texas.gov/.

If there are no changes to the information in Section A of this 
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 

Section A: Report the name, title and mailing address of        efwith
  limited                                                       ComptrollerA partnership,

                                                                letter explaining the error.
 professional
                                                                Signature Block: officer,
president and secretary and all directors. One person may       director or other authorized person. This includes a paid 
offices.Domesticnon-profitcorporationsmustlistall               preparer authorized to sign the report.
Dif
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 
anyNon-Texas

12

or that does not have $1,130,000 or less in annualized total     Item 1. Gross receipts or sales
(quali T
veteran-                                                          purposes, enter the amount from Form 1120 line 1c.
owned business, see the Passive Entities section on page 
V                                                                 tax purposes, enter the amount from Form 1120S line 1c.

                                                                  purposes, enter the amount from Form 1065 line 1c.
Note: If a tiered partnership election is made and revenue is    • 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 taxable
  less than $1,000 or annualized total revenue after the tiered 
                                                                  a sole proprietorship for federal tax purposes, enter the 
  partnership election is $1,130,000 or less.
                                                                  amount from Form 1040 Schedule C line 3.
                                                                 • those
The instructions for Items 1-7 and 9 below are for taxable 
                                                                  mentioned above, enter an amount that is substantially 
                                                                  equivalent to the amounts discussed in this section.
a combined group. A combined group should follow these 
                                                                 Item 2. Dividends
a combinations and eliminations schedule, and then add 
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 
                                                                 •FortaxentityfiasScorporatforfedertax
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 
separatftret 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 
                                                                 • 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 
                                                                 T
                                                                  registered
separate return for federal income tax purposes.
                                                                  andfilingaasolproprietorshipfofederalpurposes,
                                                                  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.
                                                                 • those
part of a combined group. A combined group should follow 
                                                                  mentioned above, enter an amount that is substantially 
                                                                  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 
items of revenue were eliminated.
                                                                  purposes, enter the amount from Form 1120 line 5.
                                                                 •FortaxentityfiasScorporatforfedertax
                                                                  purposes, enter the amount from Form 1120S Schedule 
Before you begin
                                                                  K line 4.
The line items indicated in this section refer to specific 
lines from the 2018 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 
                                                                 • purposes,
that in computing total revenue for a subsequent report 
                                                                  enter the amount from Form 1041 line 1.
year, total revenue:
                                                                 T
                                                                  taxentitregistassmemberfiling
• 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.
                                                                 • 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                                                  a sole proprietorship for federal tax purposes, enter the 
                                                               amount from Form 1040 Schedule D, to the extent that it 
purposes, enter the amount from Form 1120 line 6.
•FortaxentityfiasScorporatforfedertax
purposes, enter the amount from Form 1120S Schedule            • those
K line 3a and the amount from Form 8825 lines 18a and          mentioned above, enter an amount that is substantially 
19.                                                            equivalent to the amounts discussed in this section.

purposes, enter the amount from Form 1065 Schedule K           Item 7. Other income
line 3a and the amount from Form 8825 line 18a.
• purposes,                                                    1the
enter the amount from Form 1040 Schedule E line 23a.           extent not already included; and any total revenue passed 
taxable                                                        from a lower tier entity under the tiered partnership election.
a sole proprietorship for federal tax purposes, enter the 
amount from Form 1040 Schedule E line 23a, to the extent       tax purposes, enter the amount from Form 1120S line 5 
                                                               and the amount from Form 1120S Schedule K to the extent 
• 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.
                                                               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 
                                                               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.
                                                               • purposes,
                                                               enter the amount from Form 1041 line 8 to the extent not 
Item 5. Royalties
                                                               already included; the amount from Form 1040 Schedule 
purposes, enter the amount from Form 1120 line 7.              C line 6, that has not already been included; the amount 
•FortaxentityfiasScorporatforfedertax                          from Form 1040 Schedule E line 32 and line 37; the amount 
purposes, enter the amount from Form 1120S Schedule            from Form 1040 Schedule F line 9 plus line 1b, or Form 
K line 6.                                                      1040 Schedule F line 44; and any other and total revenue 
                                                               passed from a lower tier entity under the tiered partnership 
purposes, enter the amount from Form 1065 Schedule K           election.
line 7.                                                        taxable
• purposes,                                                    a sole proprietorship for federal tax purposes, enter the 
enter the amount from Form 1040 Schedule E line 23b.           ordinary income or loss from partnerships, S corporations, 
taxable                                                        estates and trusts from Form 1040 Schedule E, to the 
a sole proprietorship for federal tax purposes, enter the 
amount from Form 1040 Schedule E line 23b, to the extent       line 9 plus line 1b, or Form 1040 Schedule F line 44, to 

• those                                                        Form 1040 Schedule C line 6, that has not already been 
mentioned above, enter an amount that is substantially         included; and any total revenue passed from a lower tier 
equivalent to the amounts discussed in this section.           entity under the tiered partnership election.
                                                               • those
                                                               mentioned above, enter an amount that is substantially 
Item 6. Gains/losses
                                                               equivalent to the amounts discussed in this section.
purposes, enter the amounts from Form 1120 line 8 and 
line 9.                                                        Item 8. Total gross revenue
                                                               Total the amounts entered on Items 1 through 7.
tax purposes, enter the amount from Form 1120S line 4 
and Form 1120S Schedule K lines 7, 8a and 9.                   Item 9. Exclusions from gross revenue
                                                               Only the following items may be excluded from gross 
purposes, enter the amount from Form 1065 line 6 and           revenue. See Rule 3.587 for additional information.
Form 1065 Schedule K lines 8, 9a and 10.
• purposes,
enter the amount associated with gains/losses from Form 
1041 lines 4 and 7.                                            purposes, enter the amount from Form 1120 line 15.
taxable
                                                               tax purposes, enter the amount from Form 1120S line 10.
14

                                                                      fmandatby:law,dutcontract
purposes, enter the amount from Form 1065 line 12.                    or subcontract (limited to sales commissions to non- 
                                                                      employees, the tax basis of securities underwritten, and a 
andfilingaasolproprietorshipfofederalpurposes,                        entity’
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 
• 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 
• those
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  
                                                                       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 
from another taxable entity treated as a partnership or               and loans sold as determined under the Internal Revenue 
as an S corporation for federal income tax purposes. Net              Code. 
distributive income for the calculation of total revenue is the 
net amount of income, gain, deduction or loss of the pass-
through entity that is included in the federal taxable income         Enter the amount of dividends and interest from federal 
of the taxable entity. (If this amount is negative, it will be        obligations to the extent included in gross revenue. See 
added in computing total revenue.)                                    Rule 3.587(b).

A taxable entity that owns an interest in a passive entity 
must not enter an amount on this item to deduct the taxable           A
entity’s share of the net income of the passive entity unless         enter an amount equal to the principal repayment of loans.
the income was included in the computation of the total               •  A taxable entity that is a professional employer organization 
revenue of another taxable entity. See Rule 3.587.                    may enter an amount equal to payments received from 
                                                                      a client for wages, payroll taxes, employee benefits 
election                                                              and workers’ compensation benefits for the covered 
       the total revenue passed by the lower tier entity to the upper employees. A professional employer organization cannot 
       tier entity cannot be deducted as net distributive income.     exclude payments received from a client for payments 
                                                                      made to independent contractors assigned to the client 
Schedule C Dividends Received                                         and reportable on Internal Revenue Service Form 1099.
For a taxable entity reporting a Schedule C dividends                 • A taxable entity that is a pharmacy cooperative may 
received deduction, enter the amount reported on Form 
1120 line 29b to the extent the relating dividend income is           wholesalers that are distributed to the pharmacy 
included in gross revenue.                                            cooperative’s shareholders.
                                                                      • A taxable entity that is a health care provider may enter 
                                                                      100% of revenues (including copayments, deductibles and 
A taxable entity may exclude, to the extent included in gross         coinsurance) from Medicaid, Medicare, CHIP, workers’ 
revenue (Items 1-7 above), its share of income directly               compensation claims and TRICARE, and actual costs for 
attributable to another entity that is treated as disregarded         uncompensated care. Healthcare institutions may enter 
for federal income tax purposes but that is not treated as            only 50% of these exclusions. See Texas Tax Code Section 
disregarded in a combined group report for franchise tax              171.101institution.
purposes. A taxable entity cannot exclude its share of                To calculate the cost of uncompensated care, see Rule 
income directly attributable to another entity that is treated as     3.587(b)(1).
disregarded for federal income tax purposes and is treated            •  A taxable entity that is a management company may enter 
as disregarded in a combined group report for franchise tax            costs
reporting purposes.                                                   incurred in its conduct of the active trade or business of a 
                                                                      managed entity.
                                                                      • A taxable entity may enter amounts received that are 
To the extent included in gross revenue:                              directly derived from the operation of a facility that is 
A                                                                     located on property owned or leased by the federal 
                                                                                                             15

government and managed or operated primarily to house            annualized total revenue is less than or equal to $1,130,000, 
members of the armed forces of the United States.                and the entity is not an upper or lower tier entity making the 
A
company may exclude from revenue a payment made                  No Tax Due Report. If the annualized total revenue is $20 
to an artist in connection with the provision of a live 
entertainment event or live event promotion services.            Computation (Form 05-169).
•Atentitthat logistics
company may exclude from revenue subcontracting                  Note: The tiered partnership election is not allowed if the lower tier 
payments made by the taxable entity to nonemployee                entity, before passing total revenue to the upper tier entities, 
agents for the performance of delivery services on behalf         owes no tax. An upper or lower tier entity making a tiered 
                                                                  partnershipelectionqualifietousethcomputation
of the taxable entity.
                                                                  lowerwould
• A taxable entity that is a pharmacy network may exclude         computation before passing total revenue to the upper tier 
reimbursements, pursuant to contractual agreements, for           entities.
payments to pharmacies in the pharmacy network.
• A taxable entity that is primarily engaged in the business     Item 11. Cost of goods sold (COGS)
of transporting aggregates may exclude subcontracting 
payments made by the taxable entity to independent               AONLY
contractors for delivery services performed on behalf of          entity sells real or tangible personal property in the ordinary 
the taxable entity.                                               course of business OR if the taxable entity has qualifying 
• A taxable entity primarily engaged in the business of           COGS under any one of the exceptions noted in Texas Tax 
transporting barite may exclude subcontracting payments           ONLYqualifying
made by the taxable entity to nonemployee agents for              COGS to compute margin.
transportation services performed on behalf of the taxable 
entity.
• A taxable entity primarily engaged in the business of          sold in the ordinary course of business. Tangible personal 
performing landman services may exclude subcontracting           propertyincludescomputerprogramsasasfilms,sound
payments made by the taxable entity to nonemployees              recordings, videotapes, live and prerecorded television and 
for the performance of landman services on behalf of the         radio programs, books and other similar property. Tangible 
taxable entity.                                                  personal property does not include intangible property or 
• A taxable entity may exclude the actual cost paid by the       services.
taxable entity for a vaccine.
• A taxable entity primarily engaged in the business of          Generally, a taxable entity in the service industry will not 
transporting goods by waterways that does not subtract           have qualifying COGS as they do not sell tangible personal 
the cost of goods sold in computing its taxable margin may       property or real property in the ordinary course of business. 
exclude direct costs of providing transportation services by     However, if a transaction contains elements of both a sale 
intrastate or interstate waterways to the same extent that a     of tangible personal property and a service, a taxable entity 
taxable entity that sells in the ordinary course of business     may subtract as COGS the cost otherwise allowed by this 
real or tangible personal property would be authorized by        section in relation to the tangible personal property sold.  
Texas Tax Code Section 171.1012 to subtract those costs          The labor costs related to the services performed are not 
as COGS in computing its taxable margin, notwithstanding         eligible COGS.
Texas Tax Code Section 171.1012(e)(3).
•  A taxable entity that is registered as a motor carrier under  A taxable entity may make a subtraction under this section 
T flow-                                                          in relation to the COGS only if that entity owns the goods. 
through revenue derived from taxes and fees.                     A taxable entity that is a member of a combined group may 
• A taxable entity primarily engaged in the business of          subtract allowable costs as COGS if the goods for which 
providing services as an agricultural aircraft operation may     the costs are incurred are owned by another member of the 
exclude the cost of labor, equipment, fuel and materials         A
used in providing those services.                                is not a member of the combined group may only be included 
                                                                 in COGS if the transaction is made at arm’s length.
Intercompany eliminations – combined reports
To the extent included in total revenue, subtract items of total A taxable entity that is subject to Internal Revenue Code, 
revenue received from members of the combined group.             263A, 460 or 471 may choose to expense or capitalize 
                                                                 allowable costs associated with the goods purchased or 
Tiered partnership election                                      produced. All other taxable entities will expense allowable 
For a lower tier entity that makes the tiered partnership        costs associated with the goods purchased or produced.
election, enter the total revenue passed to the upper tier 
entities.                                                        Expensing COGS - An entity that elects to expense allowable 
                                                                 costs will have no beginning or ending inventory. The entity 
Item 10. Total revenue                                           should include all allowable costs as described below for the 
Item 8 minus Item 9. If less than zero, enter zero. If the       accounting period on which the report is based.

16

Capitalized COGS - If the entity elects to capitalize COGS,       of which would otherwise be treated as COGS of the 
the calculation will include those allowable costs that were in   partnership, but only to the extent that those costs are 
inventory at the beginning of the period upon which the tax       related to goods distributed to the contributing taxable 
is based plus allowable costs capitalized during the period       entity as goods-in-kind in the ordinary course of production 
minus allowable costs in ending inventory at the end of the       activities rather than being sold by the partnership. 
period.
                                                                  In addition to the items previously listed, COGS includes 
The election to expense or capitalize allowable costs is          the following costs in relation to the taxable entity’s goods: 
                                                                  • deterioration of the goods;
the other. The election is for the entire period on which the     • obsolescence of the goods;
report is based and may not be changed after the due date         •  spoilage and abandonment, including the costs of rework, 
.                                                                 reclamation and scrap (does NOT include impairment 
                                                                  costs/expenses);
Note: Generally COGS for Texas franchise tax reporting purposes   • if the property is held for future production, preproduction 
  will not equal the amount used for federal income tax           direct costs allocable to the property, including storage 
       purposes.
  Typically, this amount cannot be found on a federal income 
                                                                  • postproduction direct costs allocable to the property, 
  tax report or on an income statement. It is a calculated 
                                                                  excluded below;
Cost of goods sold includes all direct costs of acquiring or      • the cost of insurance on a plant or a facility, machinery, 
producing the goods, including:                                   equipment or materials directly used in the production of 
• labor costs including W-2 wages, IRS Form 1099 wages,           the goods;
                                                                  • the cost of insurance on the produced goods;
•costofmatthat intpartofspecific                                  • the cost of utilities, including electricity, gas and water, 
  property produced;                                              directly used in the production of the goods;
• cost of materials that are consumed in the course of            • the costs of quality control, including replacement of 
  performing production activities;                               defective components pursuant to standard warranty 
•  handling costs, including costs attributable to processing,    policies, inspection directly allocable to the production of 
  assembling, repackaging and inbound transportation;             the goods and repairs and maintenance of goods; and
• storage costs (except for the rental of a storage facility),    • licensing or franchise costs, including fees incurred in 
  including the costs of carrying, storing or warehousing         securing the contractual right to use a trademark, corporate 
  property;                                                       plan, manufacturing procedure, special recipe or other 
• depreciation, depletion and amortization reported on            similar right directly associated with the goods produced.
  the federal income tax return on which the report under 
  this chapter is based, to the extent associated with and        Cost of goods sold does not include:
  necessary for the production of goods, including recovery       • any amounts excluded from revenue;
  described by, Sec. 197, Internal Revenue Code, and              officers’
  property described in Sec. 179, Internal Revenue Code;          • the cost of renting or leasing equipment, facilities or real 
• the cost of renting or leasing equipment, facilities or real    property that is not used for the production of the goods;
  property used for the production of the goods, including        •  selling costs, including employee expenses related to sales 
  pollution control equipment and intangible drilling and         and credit card fees;
  dry hole costs (does NOT include impairment costs/              •  distribution costs, including outbound transportation 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 
  goods, including all research or experimental expenditures      in the solicitation of contracts not awarded to the taxable 
  described by Sec. 174, Internal Revenue Code;                   entity;
• geological and geophysical costs incurred to identify and       • interest, including interest on debt incurred or continued 
  locate property that has the potential to produce minerals;
• taxes paid in relation to acquiring or producing any            the goods;
  material, including property taxes paid on building and         • income taxes, including local, state, federal and foreign 
  equipment, and taxes paid in relation to services that are      income taxes, and franchise taxes that are assessed on 
  a direct cost of production;                                    the taxable entity based on income;
• the cost of producing or acquiring electricity sold; and        • strike expenses, including costs associated with hiring 
• a contribution to a partnership in which the taxable entity     employees to replace striking personnel; however, COGS 
  owns an interest that is used to fund activities, the costs     does include the wages of the replacement personnel, 
                                                                  costs of security and legal fees associated with settling 
                                                                                                                        17

strikes; and                                                      of whether it is a positive or negative amount; and
• costs of operating a facility that is located on property      • stock awards and stock options deducted for federal 
owned or leased by the federal government and managed             income tax purposes. 
or operated primarily to house members of the armed 
forces of the United States.                                     officerdirector
                                                                 one member of the combined group, that individual’s 
Item 12. Indirect or administrative overhead costs               compensation is capped at $370,000, per 12-month period 
A taxable entity may subtract, as part of COGS, indirect/        upon which the tax is based.
administrative overhead costs, including all mixed service 
costs, such as security services, legal services, data           Net distributive income for the calculation of compensation 
processing services, accounting services, personnel              is the amount of income, gain, deduction and loss relating 
operationandgeneralfinancialplanninandfinancial                  to a pass-through entity or disregarded entity reportable to 
management costs, that it can demonstrate are allocable to       the owner for the tax year of the entity regardless of whether 
the acquisition or production of goods. This amount is limited   an actual distribution was made.
to 4% of total indirect/administrative overhead costs. Any 
specifica                                                        If net distributive income is a negative number, it must 
may not be included in indirect or administrative overhead       be included in the computation of compensation as a 
costs.                                                           negative number. There is no cap or limitation on “negative” 
                                                                 compensation.
Item 13. Other
The only allowable amounts to be entered on this line            To compute Net Distributive Income from a partnership:
are related to undocumented worker compensation and              From IRS Form 1065 K-1, add boxes 1, 2, 3, 4, 5, 6a, 7, 8, 
compensation of active duty personnel. These amounts             9a, 10 and 11. Subtract from that result Box 12, the Box 13 
will offset one another. The result can be either a negative     dedu L
(undocumented worker compensation) or a positive number          16 (Foreign taxes).
(active duty personnel compensation).
                                                                 To compute Net Distributive Income from an S corporation:
Undocumented Worker Compensation                                 From IRS Form 1120S K-1, add boxes 1, 2, 3, 4, 5a, 6, 7, 
A taxable entity must exclude from COGS any compensation         8a, 9 and 10. Subtract from that result Box 11, the Box 12 
for undocumented workers for the period upon which the tax       amountsthatrepresentdeductions, LB14
is based. “Undocumented worker” means a person who is            (Foreign taxes).
present and employed in the United States but is not lawfully 
entitled to be present and employed in the United States.        A
                                                                  federal tax purposes may include in compensation the net 
Compensation of Active Duty Personnel                             distributive income to the single member that is a natural 
                                                                  person.
A taxable entity may include, as an additional cost, the 
wages and cash compensation paid during the period upon 
which the report is based to an individual for the period the    Wages and cash compensation DOES NOT include:
individual is serving on active duty as a member of the armed    • payments on IRS Forms 1099; 
forces of the United States if the individual is a resident of   • amounts excluded from gross revenue; 
this state at the time the individual is ordered to active duty, • an employer’s share of employment taxes; 
plus the cost of training a replacement for the individual.      •  amounts paid to an employee whose primary employment 
                                                                  is directly associated with the operation of a facility that 
                                                                  is located on property owned or leased by the federal 
Item 15. Wages and cash compensation
“Wages and cash compensation” means the following                 government and managed or operated primarily to house 
                                                                  members of the armed forces of the United States. 
employees for the accounting period, limited to $370,000 per 
                                                                 Note: A professional employer organization may only include wages 
person, prorated for the period upon which the tax is based:      entity’
• Medicare wages and tips on Form W-2;                            maynotwages,benefits,workers’compensation
• net distributive income reported to a natural person from       A
a limited liability company treated as a sole proprietor for      entity that is a client that contracts with a professional 
federal income tax purposes, regardless of whether it is a        employer organization (or a temporary employment 
positive or negative amount;
• net distributive income reported to natural persons             may include amounts paid to the professional employer 
from partnerships, trusts and limited liability companies         organization relating to the covered employees for wages 
                                                                  (W
treated as partnerships for federal income tax purposes, 
                                                                  Item 17 (Other – Compensation of Active Duty Personnel), 
regardless of whether it is a positive or negative amount;        and may include amounts paid for employee benefits 
• net distributive income reported to natural persons from        workers’ by
limited liability companies and corporations treated as S         any
corporations for federal income tax purposes, regardless          administrative fee, payroll taxes or other amounts related to 
18

  the covered employees. In addition, the client may not include amount is less than zero, enter zero.
  1099
.                                                                Item 24. Gross receipts in Texas
Note: A management company may not include as wages or cash      Texas gross receipts and gross receipts everywhere 
  compensation any amounts reimbursed by a managed entity.       should be reported for the same accounting period used 
  A managed entity includes as compensation reimbursements 
  made to the management company for wages and                   in the calculation of total revenue. Gross receipts means 
  compensation as if the reimbursed amounts had been paid        all revenues reportable by a taxable entity on its federal 
  to employees of the managed entity.                            tax return, without deduction for the COGS or other costs 
                                                                 incurred unless otherwise provided for by law.
Item 16. Employee benefits
  directors,                                                     “Gross receipts in Texas” means:
owners, partners and employees, including workers’               • sales of tangible personal property when the property is 
cocaretiThe                                                        delivered or shipped to a purchaser within Texas;
bene                                                             •  sales of real property located in Texas, including royalties 
per person but is only deductible to the extent deductible for     from oil, gas or other mineral interests;
federal income tax purposes.                                     • receipts from services performed within Texas;
                                                                 • rentals of property situated in Texas;
Item 17. Other                                                   • royalties from use of patents or copyrights within Texas;
The only allowable amounts to be entered on this line            •  receipts from the use of trademarks, franchises or licenses 
are related to undocumented worker compensation and                within Texas.
compensation of active duty personnel. These amounts             • sales or licenses of computer software or programs if the 
will offset one another. The result can be either a negative       legal domicile of the payor is Texas;
(undocumented worker compensation) or a positive number          •  net gain from the Texas-sourced sales of investments and 
(active duty personnel compensation).                              capital assets determined by a separate calculation of all 
                                                                   Texas-sourced net gains and losses. A net loss from all the 
Undocumented Worker Compensation                                   Texas-sourced sales of investments and capital assets is 
A taxable entity must exclude from compensation any wages          not included in Texas receipts.
and cash compensation paid to undocumented workers for           •  sales of intangible property if the legal domicile of the payor 
the period upon which the tax is based. “Undocumented              is Texas;
worker” means a person who is present and employed in            •  sales of securities if the legal domicile of the payor is Texas. 
the United States but not lawfully entitled to be present and      If securities are sold through an exchange, and the buyer 
employed in the United States.                                     T
                                                                   receipt;
Compensation of Active Duty Personnel                            •benefits
A taxable entity may include, as an additional cost, the           if the payor is legally domiciled in Texas;
wages and cash compensation paid during the period upon          • receipts from servicing of loans secured by real property 
which the report is based to an individual for the period the      if the real property is located in Texas;
individual is serving on active duty as a member of the armed    • the pro rata share of net income from a passive entity if 
forces of the United States if the individual is a resident of     the passive entity’s principal place of business is in Texas; 
this state at the time the individual is ordered to active duty,   and
plus the cost of training a replacement for the individual.      •  TTax
                                                                   Code Section 151.108(a) if the customer to whom the 
                                                                   service is provided is located in Texas.
Form 05-158-B 
Texas Franchise Tax Report – Page 2                              Any item of revenue that is excluded from total revenue 
Item 19. 70% of revenue                                          under Texas law or United States law is not included in Texas 
Multiply Item 10 times 70%. If less than zero, enter zero.       gross receipts or gross receipts everywhere. For example, 
                                                                 a taxable entity should not include in Texas gross receipts:
Item 20. Revenue less COGS                                       •  income excluded because of IRC Sections 78 or 951- 964;
Item 10 minus Item 14 – COGS. If less than zero, enter zero.     •  dividends and/or interest received from federal obligations; 
                                                                   or
Item 21. Revenue less compensation                               • dividends for which a deduction is allowed on Schedule 
Item 10 minus Item 18 – Compensation. If less than zero,           C, Form 1120. 
enter zero.
                                                                 In addition, a taxable entity that is a combined group should 
Item 22. Revenue less $1 million                                 not include in Texas gross receipts any revenues generated 
Item 10 minus $1 million. If less than zero, enter zero.         by a member of the group that is organized outside of Texas 
                                                                 and that does not have nexus in Texas. However, Texas 
Item 23. Margin                                                  gross receipts will include certain sales of tangible personal 
Enter the lowest amount from Items 19, 20, 21, or 22. If the     property made to third party purchasers if the tangible 
                                                                                                                    19

personal property is ultimately delivered to a purchaser in       The deduction may not reduce apportioned margin below 
T                                                                 zero, and no carryover of unused deductions is allowed.
shipments made by a member of a combined group from a             • A taxable entity may deduct relocation costs incurred in 
Texas location to a Texas purchaser would be included in          relocatttentity’ofot
Texas receipts based on the amount billed to the third party      place of business to this state from another state if the 
purchaser if the seller is also a member of the combined          business meets the criteria in Texas Tax Code Section 
group and the seller does not have nexus.                         171.109(b). The taxable entity must take the deduction on 
                                                                  entity’
Banking Corporations and Savings & Loan Associations:             (2). The deduction may not reduce apportioned margin 
Dividends and interest received by a banking corporation or       below zero, and no carryover of unused deduction is 
savings and loan association are Texas receipts if they are       allowed.
paid by a corporation incorporated in Texas or if they are paid 
by an entity or person legally domiciled in Texas. A banking      Item 29. Taxable margin
corporation should exclude from its Texas receipts interest       Item 27 minus Item 28.
earned on federal funds and interest earned on securities 
sold under an agreement to repurchase that are held in a          Item 30. Tax rate
correspondent bank domiciled in Texas.                            Enter the appropriate tax rate:
                                                                  • 0.0075 (0.75%) for most entities
Item 25. Gross receipts everywhere                                •  0.00375 (0.375%) for qualifying wholesalers and retailers 
Any item of revenue excluded from total revenue (Item 
10) must not be included in computing gross receipts              05-158-Adefinition
everywhere.                                                       of qualifying retailers and wholesalers on page 3, the 0.375% 
                                                                  tax rate will be denied when the report is processed.
Gross receipts everywhere include:
• all sales of tangible personal property;                        Item 31. Tax due
• all rentals;                                                    Item 29 multiplied by Item 30.
• all services;
• all royalties;                                                  Item 32. Tax credits
• all other business receipts;                                    Carry the amount of allowable tax credits forward from 
• all dividends and interest; and                                 franchise tax Form 05-160.
• the net gain from the sales of all investments and capital 
assets.                                                           Item 33. Tax due before discount
                                                                  Item 31 minus Item 32. If less than zero, enter zero.
Note: other
      than an investment, which is held for use in the production Item 34. Discount
      of income, and is subject to depreciation, depletion or     Discounts do not apply to reports due after Dec. 31, 2009.
      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 
24 and Item 25 are the same and greater than zero, enter          must submit this report along with the appropriate information 
1.0000. If Item 24 is more than Item 25 and both are greater      report(s) (Form 05-102 and/or Form 05-167). See note for 
than zero, enter 1.0000. Otherwise, divide Item 24 by Item        tiered partnership exceptions.
25 and round to 4 places past the decimal.
                                                                  If this amount is $1,000 or more, please complete the 
Item 27. Apportioned margin                                       franchise tax payment form (Form 05-170), unless the entity 
Multiply Item 23 by Item 26. If less than zero, enter zero.       is required to pay electronically. Make the check payable 
                                                                  to the Texas Comptroller. Submit both pages of this report 
Item 28. Allowable deductions                                     (Forms 05-158-A and 05-158-B), all appropriate schedules, 
Each of the following deductions may be subtracted from           the appropriate information report(s) (Form 05-102 and/or 
apportioned margin:                                               Form 05-167), the franchise tax payment form (Form 05-170) 
• A taxable entity may deduct 10% of the amortized cost           and your payment. 
of a solar energy device if the device meets the criteria 
in Texas Tax Code Section 171.107(b). The deduction               Note: If the tiered partnership election is made and total revenue 
may not reduce apportioned margin below zero, and no              is passed, both the upper and lower tier entities will owe any 
carryover of unused deductions is allowed.                        amount in Item 35, even if the amount is less than $1,000.
• A taxable entity may deduct 10% of the amortized cost of 
equipment used in a clean coal project if the equipment           Signature Block:    officer,
meets the criteria in Texas Tax Code Section 171.108(b).          director or other authorized person. This includes a paid 

20

preparer authorized to sign the report.                           Note:Tnotttamountoftour

                                                                       this line is for the unused temporary credit from prior years.
Form 05-160 
Texas Franchise Tax Credits Summary Schedule                      Item 9. R & D Activities Credit Available
A taxable entity that is claiming or carrying forward any credits 
                                                                  Enter the amount of R & D activities credit available which 
                                                                  includes the R & D activities credit and the carryforward from 
                                                                  prior years as reported on Form 05-178, Item 14.
Additional Reporting Requirement for Combined Groups 
with Temporary Credit
                                                                  Item 10. Eligible historic structure credit 
The reporting entity of a combined group with a temporary 
                                                                  Enter the total amount of historic structure credit the entity 
credit for business loss carryforward preserved for itself and/ 
                                                                  established, purchased, or was assigned or allocated since 
itaffiliatmustsubmitinformatusing
                                                                  the prior year’s report, adjusted for any sale, assignment or 
W
                                                                  allocation of the credits.
(Form 05-177) . This information must be submitted to satisfy 
franchistrequirements,iftgroup
                                                                  Item 11. Historic structure credit carried forward from 
is not claiming the credit on the current year’s report. Submit 
                                                                  prior years
the common owner information before or with your franchise 
                                                                  Enter the amount of historic structure credit carried forward 
tax report to prevent processing delays. If you submit the 
                                                                  from prior years adjusted by any carryforward amount that 
owne
                                                                  has been sold, assigned or allocated since the prior year’s 
NOT immediately process to your account.
                                                                  report.
PART A – Credit Limit
                                                                  Item 12. Historic structure credit available
                                                                  Add Item 10 and Item 11 for total available historic structure 
Item 1. Tax due before credits                                    credit amount which can be taken in the current year.
Enter the amount of tax due before credits as reported on 
Form 05-158-B, Item 31.
                                                                  Item 13. 1992 Temporary credit

Item 2. Credit Limit                                              2012.
Item 1 multiplied by 0.50 (50%).
                                                                  Part C – Credits Claimed
PART B – Credits Available 
                                                                  Item 14. Investment credit claimed
Item 3. Investment credit installment from prior years            Not applicable to reports due after Dec. 31, 2016
2016.
                                                                  Item 15. Jobs creation credit claimed
                                                                  Not applicable to reports due after Dec. 31, 2016
Item 4. Investment credit carried forward from prior years
                                                                  Item 16. Research credit claimed
2016. 
                                                                  Claimed research credit carried forward to this year from 
                                                                  years prior to 2008. Cannot be greater than Item 2 or Item 7.
Item 5. Investment credit available 
                                                                  Item 17. Temporary credit for BLC from this year only 
2016.
                                                                  A qualifying taxable entity must have preserved its right to 
                                                                  take this credit on or before the due date of its 2008 report. 
Item 6. Job creation credit carried forward to this year 
from prior years.                                                 Enter the result of the following calculation in Item 17:
                                                                  • preserved amount of business loss carryforwards (Item 2 
2016.
                                                                  • multiplied by 7.75% (0.0775)
Item 7. Research credit carried forward from prior years          • multiplied by 4.5% (0.045).
Enter the amount of repealed Subchapter O research and 
development credit carried forward to this year from years 
                                                                  The unused carryover from a previous report should be 
prior to 2008. (Repealed Subchapter O credit may be carried 
                                                                  reported in Item 18.
forward until 2027.)
                                                                  If the taxable entity is a combined group, each qualifying 
Item 8. Unused Temporary credit for Business Loss                 member of the group should have made a separate 
Carryforward (BLC) from prior years                               preservation of the business loss carryforwards. Use 
                                                                  the cumulative amount of the preserved business loss 
from prior years.
                                                                  carryforwards in the calculation of the credit.
                                                                                                                           21

Note: If a combined group member leaves the combined group          on Item 32 of the tax report, Form 05-158-B.
     during a tax period, the combined group may claim the 
     departmember’entamountofcreditthe
     member’year.                                                   Form 05-163 
     member’no                                                      Texas Franchise Tax No Tax Due Report
     longer be available to the combined group, and the combined    Filing Requirements: As of January 1, 2016, No Tax Due 
     group’    the                                                  RepbefileelectronicallyAtaxableentityincluding
     portion of carryover related to the departed member.            T

Item 18. Unused Temporary credit for BLC from prior                 Item 5 are true. Blacken the circle for each true statement.
years claimed
year                                                                Combined report
from prior years. Cannot exceed Item 8.                             Acomgrmayfi TaxReport.The
                                                                    determination of whether a combined group is eligible is 
Carryover of 2008 temporary credit for business loss                based on the total revenue of the combined group as a 
carryforwards                                                       whole after eliminations. Each member of the group must 
Enter the amount of credit that exceeded the amount of tax          be included in the combined group report even if, on a 
due on the 2008 or subsequent reports that has not already          separate entity basis, the member has $1,130,000 or less 
been used. If the EZ computation was used on a prior report,        in total revenue.
there is no carryover amount from that year.
                                                                     TReport,Affiliate
Example: A taxable entity had a business loss credit of             Schedule (Form 05-166) containing all of the required 
$2,000 that could be used on the 2018 franchise tax report.         information for each member must be submitted. In addition, 
The entity had $1,200 tax due, so they used only $1,200 of          an information report must be submitted for each member 
the available business loss credit. They may carry over the         that is organized in Texas or has physical presence in Texas.
remaining $800 to subsequent report years. On the 2019 
report, this $800 should be reported in Item 18.                    T
                                                                    A tiered partnership election is not allowed if the lower 
Item 19. R & D activities credit claimed                            tier entity, before passing total revenue to the upper tier 
Cannot be greater than Item 2 or Item 9.                            entities, has $1,130,000 or less in annualized total revenue 
                                                                    or owes less than $1,000 in tax. Do NOT blacken the Tiered 
Item 20. Historic structure credit claimed                          Partnership Election circle in this instance.
Cannot be greater than Item 12. 
                                                                    If a tiered partnership election is made, the lower tier entity 
Note: To claim the historic structure credit, the following must be TONLY
     included:                                                      100% of its total revenue to upper tier entities. Blacken the 
     • T05-180)
      T                                                             Tiered Partnership Election circle in this instance. Upper 
      for each historic structure credit claimed.                   T
                                                                    tiered partnership election is made.

                                                                    Item 1. This entity is a passive entity as defined in Texas 
     • CertificatofEligibilityissbytTexasHistorical                 Tax Code Sec. 171.0003.
      Commission;                                                   A partnership (general, limited or limited liability) or trust 
     •  Audited Cost Report; and                                    (other than a business trust) may qualify as a passive entity 
      T AP-                                                         and not owe any franchise tax for a reporting period if at least 
      235).
                                                                    90% of the entity’s federal gross income (as reported on the 
                                                                    entity’s federal income tax return), for the period upon which 
Item 21. 1992 Temporary credit less additional tax due
                                                                    the tax is based, is from the following sources: 
                                                                    • dividends, interest, foreign currency exchange gain, 
2012. 
                                                                     periodic and nonperiodic payments with respect to notional 
                                                                     principal contracts, option premiums, cash settlements 
Item 22. Other
                                                                     or termination payments with respect to a financial 
                                                                     instrument, and income from a limited liability company;
2012.
                                                                    •  distributive shares of partnership income to the extent that 
Note:entered                                                         those distributive shares of income are greater than zero;
     franchise                                                      • net capital gains from the sale of real property, net gains 
                                                                     from the sale of commodities traded on a commodities 
                                                                     exchange and net gains from the sale of securities; and
Item 23. Total credits claimed                                      • royalties from mineral properties, bonuses from mineral 
Add Items 14, 15, 16, 17, 18, 19, 20 and 22. Enter this amount       properties, delay rental income from mineral properties 

22

and income from other nonoperating mineral interests             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 
nonoperato
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 

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:   officer,
If annualized total revenue is less than or equal to $1,130,000, director or other authorized person. This includes a paid 
T                                                                preparer authorized to sign the report.
annualized total revenue section of these instructions for 
more information.                                                Form 05-164 
Note: The $1,130,000 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) 

                                                                 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      A
receipts is zero; therefore, no tax is due. See the instructions 
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, 2019. 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 171.0002(c)(4).
AREIT TTCode                                                     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 
T                                                                for the extension to be valid.
period upon which the report is based.
                                                                 A taxable entity that became subject to the franchise tax 
AREIT REIT not
considered taxable entities if:                                  100% extension option.
• the REIT holds interests in limited partnerships or other 
entities that are taxable entities and that directly hold real   combined
estate; and
•  the REIT does not directly hold real estate, other than real  as a separate entity in 2019.
estate it occupies for business purposes.
An information report must be submitted by each REIT or          If the extension request is being made on behalf of a 
                                                                 combined group, the reporting entity must also submit Texas 
• a Public Information Report (Form 05-102) for each REIT        T

• an Ownership Information Report (Form 05-167) for              Final Reports: A taxable entity may request a 45-day 
each REIT legally organized as a partnership, trust or           extension and must remit with the extension request at least 
association.
Item 5. This entity is a new veteran-owned business as           Electronic Funds Transfer (EFT): Conditions for requiring a 
                                                                 taxable entity to pay via EFT are outlined in Rule 3.9 concerning 
defined in Texas Tax Code Sec. 171.0005.
See the New Veteran-Owned Businesses section of the               Information
instructions, page 2. Only an entity formed on or after Jan.     about the EFT requirements can be viewed at www.comptroller.
                                                                 texas.gov/programs/systems/docs/96-590.pdf.

                                                                                                            23

The extension rules for mandatory EFT payors are different     Item 1. Extension payment
from that of other taxpayers. In order to extend the due       Enter the amount submitted with this request.
date of the report from May 15, 2019 to Aug. 15, 2019, a 
taxable entity that is required to pay by EFT must make their  Signature Block: officer,
extension payment electronically via TEXNET using tax type     director or other authorized person. This includes a paid 
Co1308TExtensiWetimely                                         preparer authorized to sign the report.
fashion that permits the payment to be posted on or before 
May 15, 2019. With the extension request, taxable entities     Form 05-165 
must remit at least 90% of the amount of tax that will be due 
                                                               Texas Franchise Tax Extension Affiliate List
with this year’s report or 100% of the tax reported as due for                  A
                                                               Filing Requirements:
the previous calendar year on the report due in the previous   request on behalf of a combined group, must file the 
calendar year. If the taxable entity elects to pay 100% of      Request
the tax reported as due for the previous calendar year, the    (Form 05-164). If the combined group is required to pay using 
year’                                                          TEXNET and makes an extension payment electronically, 
2019 in order for the extension to be valid.                   require

EFT                                                            itself does not constitute a valid extension. Attach as many 
                                                               forms as necessary to report all members of the combined 
ebfile.                                                        group.
An EFT payor may request a second extension through 
                                                               Column 1 – Legal name of affiliate
Nov                                                             combined
before Aug. 15, 2019, the balance of the amount of tax that 
will be reported as due on Nov. 15, 2019, using tax type Code  limited
TW                                                             liability), business trusts, professional associations, etc.
a paper Extension Request (Form 05-164) if the entity has 
                                                               Column 2 – Affiliate’s Texas Taxpayer Number
extension payment is made, then the taxpayer should not        T
submit a paper Extension Request (Form 05-164).                number
                                                               affiliate’
AgroExtenAffiliate

                                                               Column 3 – Blacken this circle if affiliate does not have 
                                                               nexus in Texas
    payments.                                                   T
                                                               and does not have nexus (i.e., physical presence) in Texas.

24

Form 05-166 
Texas Franchise Tax Affiliate Schedule

Filing Requirements:A
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 
information

the combined group is not claiming the credit on the current year’s report. Submit the common owner information before or with 

will NOT immediately process to your account.

                                                                                           Item 3. Affiliate NAICS code
Item 2. Affiliate taxpayer number
Enter the Texas taxpayer number that has been assigned to  
’s                                                                                         codes can be found at www.census.gov/eos/www/naics/.

                                                                                      Item 6. Affiliate reporting                             Item 7. Affiliate reporting   
does not have a separate FEIN, leave blank.                                             begin date                                             end date
                                                                                         Enter the begin date of                                Enter the end date of the  
                                    Item 5. Blacken circle 
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 
                                    Blacken this circle if the            note under “Accounting                                                     combined report. 
for federal income tax reporting 
                                                                                                   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., physical                                                                                           of the Combined
entity as disregarded for franchise 
                                    presence) in Texas.                                                                                                    Group” (Page 7).
tax reporting purposes. Blackening 
this circle means that the         1. Legal name of aliate                                                2. Aliate taxpayer number (if none, use FEI number)    3. Aliate NAICS  code
disregarded entity will not  
unwind its operations from          4. Blacken circle if entity is  5. Blacken circle if this aliate does       6. Aliate reporting begin date                7. Aliate reporting end date
its “parent” entity and both        disregarded for franchise tax       NOT have NEXUS in Texas                   m  m  d  d           y  y                      m  m  d      d  y  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                                                                                         0 0                                                                                0 0
Items 8-11.

                                                                                           Item 11. Cost of goods 
Item 8. Gross receipts subject  
                                                                                           sold (COGS) or compensation                                  Item 9. Gross  
to throwback in other states
                                    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 following  should equal the 
to throwback provisions in          everywhere that are                                    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 the                           receipts everywhere, 
                                    on determining Texas                                   COGS or compensation method,                                 review the 
                                    receipts. Not required for                             enter the applicable amount for                              instructions for Items 
                                                                                           each member of the combined                                  1-7 and Item 9 of 
                                    nexus in Texas.                                        group.                                                       Form 05-158-A.
                                                                                                                                                                                         25

Form 05-167                                                      ef
                                                                 Comptroller. An entity that made an error on its OIR may 
Texas Franchise Tax Ownership Information 
                                                                 error.
Report
Filing Requirements: The Ownership Information Report 
                                                                 Signature Block: officer,
    a
                                                                 director or other authorized person. This includes a paid 
legally formed corporation, limited liability company, limited 
                                                                 preparer authorized to sign the report.

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 
                                                                 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 physical presence in Texas).                   partnership election has been made, will qualify for the EZ 

                                                                 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 
ef
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.
                                                                 combined group. 

                                                                 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).

                                                                 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
(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).
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).

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 
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 19)            Enter prior payments, such as an extension payment.
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 20)            Item 4. Penalty
and Rule 3.591 for information on determining gross receipts       Afiling
everywhere.                                                        T

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).

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                                                  Fothannuaanfinfranchisetareport,ithtimely
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.
                                                                    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).
                                                                   90% of the tax that will be due with the 2019 annual report, 
If this amount is $1,000 or more, please complete the              then penalty will apply to any part of the 90% not paid on or 
franchise tax payment Form 05-170, unless the entity is            before May 15, 2019, and any part of the 10% not paid on 
required to pay electronically. Make the check payable to          or before Nov. 15, 2019.
the Texas Comptroller. Submit this report, all appropriate 
schedules, the appropriate information report(s) (Form 05-         For taxable entities required to pay their franchise tax by 
102 and/or Form 05-167), the franchise tax payment form            EFT, see Rule 3.585 for penalty calculations.
(Form 05-170) and your payment. 
                                                                   Item 5. Interest
Note: If the tiered partnership election is made and total revenue If any amount of the required tax payment is not made within 
is passed, both the upper and lower tier entities will owe any     60 days of the original or extended due date, interest will be 
amount in Item 17, even if the amount is less than $1,000 or       assessed beginning on the 61st day.
annualized total revenue after the tiered partnership election 
is $1,130,000 or less.
                                                                   For more information on interest calculations, see www.
                                                                   comptroller.texas.gov/taxes/file-pay/interest.php.
Signature Block:  officer,
director or other authorized person. This includes a paid 
preparer authorized to sign the report.                            Form 05-175 
                                                                   Texas Franchise Tax Tiered Partnership Report
Form 05-170                                                        Filing requirements: This form must be completed by all 
                                                                   upper and lower tier entities making the tiered partnership 
Texas Franchise Tax Payment Form                                   election under Texas Tax Code Section 171.1015.
Filing requirements: Any taxable entity that owes any 
amount of franchise tax where the tax was not remitted 
                                                                   The tiered partnership election under Texas Tax Code Section 
electronically is required to submit the payment form 
with a check or money order made payable to the Texas 
                                                                   a tiered partnership arrangement. A “tiered partnership 
Comptroller. Please put the reporting entity’s Texas taxpayer 
                                                                   arrangement” means an ownership structure in which any of 
number and the report year on the check.
                                                                   the interests in one taxable entity treated as a partnership or 
                                                                   an S corporation for federal income tax purposes (a “lower 
Item 1. Total tax due on this report
                                                                   tier entity”) are owned by one or more other taxable entities 
                                                                   (an “upper tier entity”). The tiered partnership election is not 
Item 35, or Form 05-169, Item 17.
                                                                   an alternative to combined reporting. Combined reporting is 

                                                                                                                            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 allowed if the lower tier entity is included in a combined  report, then complete both upper and lower tier information 
group.                                                          as requested above.

If the lower tier entity has $1,130,000 or less in annualized   Form 05-177
total revenue or owes less than $1,000 in tax before passing    Texas Franchise Tax Common Owner 
total revenue to the upper tier entities, this election is not  Information Report
allowed. If the election is made and total revenue is passed,   Filing requirements: The reporting entity of a combined 
both the upper and lower tier entities will owe any amount      group with a temporary credit for business loss carryforward 
of tax that is calculated as due even if the amount is less 
than $1,000 or annualized total revenue after the tiered        owner information by the due date of the report each year. 
partnership election is $1,130,000 or less.                     This information must be submitted to satisfy franchise 

ier                                                             claiming the credit on the current year’s report. Failure to 
entity                                                          filing
the requested information below for each upper tier entity      entity’affiliate’tax
to which revenue was passed.

Item 1. Enter the lower tier entity’s total revenue before 
revenue is passed to upper tier entities.                       The common owner is the entity or individual that owns more 

Item 2. Enter the Texas taxpayer number or FEIN of the          combined group.  The reporting entity is not necessarily the 
upper tier entity to which the total revenue was passed.        owneridentification
                                                                number.
Item 3. Enter the amount of total revenue excluded by the 
lower tier entity that was passed to the upper tier entity.     If the common owner is a business, enter the 11-digit Texas 
                                                                taxpayer number or the federal employer identification 
Item 4. Enter the legal name and address of the upper tier      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.                                                         Common Owner Name

Item 7. Blacken this circle.                                    name, middle initial and last name of the individual that is the 
                                                                owner
Entities:                                                       and common owner name should be for the same entity or 
entity                                                          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 
revenue is passed to upper tier entities.                       as the combined group accounting period date or privilege 
                                                                period.
Item 2. Enter the Texas taxpayer number or FEIN of the 
lower tier entity from which the total revenue was passed.      If applicable, enter the date this entity or individual ceased 
                                                                being the common owner of the combined group.
Item 3. Enter the amount of total revenue included by the 
upper tier entity that was passed from the lower tier entity.   Check the box if this entity or individual is still the common 
                                                                owner.
Item 4. Enter the legal name and address of the lower tier 
entity from which total revenue was passed.
                                                                Form 05-178
Item 5. Enter the state of formation of the lower tier entity.  Texas Franchise Tax Research and Development 
                                                                Activities Credit Schedule
Item 6. Blacken this circle.                                    Subchapter M provides an option to receive a franchise 
                                                                tax credit for certain research and development activities. 
Item 7.                                                         A taxable entity is not eligible for the franchise tax credit if 
                                                                the taxable entity, or any member of its combined group, 
28

received a sales tax exemption under Texas Tax Code                 Item 2b. QRET under higher education contracts for the 
Section 151.3182 during the period on which the franchise           1st preceding tax period
tax is based.                                                       Enter the amount of expenses reported in Item 2a that were 
                                                                    incurred in Texas under contract with one or more public or 
Qualified research and qualified research expense, as 
                                                                    tax period. 
limited to research conducted in Texas. An increased amount 
of credit is allowed for taxable entities that contract with public Item 3a. Total QRET in 2nd preceding tax period
or private institutions of higher education for the performance     Enter the total amount of qualifying expenses for research 
qualifi                                                             conducted in Texas in the second preceding tax period.
incurred in Texas under the contract during the period on 
which the report is based. The credit may be carried forward        Item 3b. QRET under higher education contracts for the 
no more than 20 consecutive reports.                                2nd preceding tax period
                                                                    Enter the amount of expenses reported in Item 3a that were 
The credit for any report equals 5.0 percent of the difference      incurred in Texas under contract with one or more public 
qualifiT                                                            or private institutions of higher education in the second 
50 percent of the average amount of QRET incurred during            preceding tax period.
the three tax periods preceding the period on which the 
report is based. If the taxable entity contracts with one or        Item 4a. Total QRET in 3rd preceding tax period
more public or private institutions of higher education for the     Enter the total amount of qualifying expenses for research 
rehas                                                               conducted in Texas in the third preceding tax period.
QRET under contract during the period on which the report 
is based, the credit for the report equals 6.25 percent of the      Item 4b. QRET under higher education contracts for the 
difference between all QRET incurred during the period on           3rd preceding tax period
which the report is based and 50 percent of the average             Enter the amount of expenses reported in Item 4a that were 
                                                                    incurred in Texas under contract with one or more public or 
the three tax periods preceding the period on which the             private institutions of higher education in the third preceding 
report is based.                                                    tax period. 

If the taxable entity has no QRET in one or more of the             Note: If the entity has no qualifying expenses for research 
three tax periods preceding the period on which the report is       conducted in Texas for one or more of the three preceding 
based, the credit for the period on which the report is based       periods, skip to Item 10. 
equals 2.5 percent of the QRET incurred during that period. 
If the taxable entity contracts with one or more public or          Item 5. Average QRET for preceding periods
private institutions of higher education for the performance of     Add Items 2a, 3a and 4a, then divide by 3. 
thetentitQRET
under contract during the period on which the report is based,      Item 6. Average QRET X 50%
but has no QRET in one or more of the three tax periods             Multiply Item 5 by 0.50. 
preceding the period on which the report is based, the credit 
for the period on which the report is based equals 3.125            Item 7. QRET Difference
percent of all QRET incurred during that period.                    Subtract Item 6 from Item 1a. If less than zero, enter zero. 

Filing requirements: Any entity (including a combined               Item 8. Credit
group) creating or claiming a Research and Development              If the entity does not have any qualifying expenses for 
                                                                    research conducted in Texas under contracts with public or 
                                                                    private institutions of higher education for the period covered 
Item 1a. Total QRET for the period covered by this report           by the report (Item 1b), multiply Item 7 by 0.05. 
Enter the total amount of qualifying expenses for research 
conducted in Texas for the period covered by the report.            Item 9. Credit
                                                                    If the entity has expenses that were incurred in Texas under 
Item 1b. QRET under higher education contracts for the              contracts with public or private institutions of higher education 
period covered by this report                                       for the period covered by the report (Item 1b), multiply Item 
Enter the amount of expenses reported in Item 1a that were          7 by 0.0625.
incurred in Texas under contract with one or more public or 
                                                                    Note: If the entity has 3 preceding periods of qualifying research 
private institutions of higher education for the period covered 
                                                                    expenses, skip to Item 12. 
by the report. 
                                                                    Item 10. Credit
Item 2a. Total QRET in 1st preceding tax period                     If the entity does not have any qualifying expenses for 
Enter the total amount of qualifying expenses for research          research conducted in Texas under contracts with public or 
T                                                                   private institutions of higher education for the period covered 
                                                                                                                          29

by the report (Item 1b), multiply Item 1a by 0.025.             credit. Do not enter a doing business as (DBA) name in this 
                                                                space.
Item 11. Credit 
If the entity has qualifying research expenses incurred in      Item 3.  Certificate of Eligibility Number 
Texas under contracts with public or private institutions of    EnCertificateEligibilityTexas
higher education for the period covered by the report and       Historical Commission (THC).
Item 1b is greater than zero, multiply Item 1a by 0.03125. 
                                                                Item 4. Historic Structure Credit Certificate Number  
Item 12. R & D activities credit                                issued
Enter the amount reported in one of these items: Item 8, 9,     Comptroller’
10 or 11.                                                       Certificate
                                                                (Form 05-901) issued by the Comptroller.
Item 13. R & D activities credit carried forward from 
prior years                                                     Item 5.  Credit Claimed
Enter unused R & D activities credit carried forward from 
prior years.                                                    Item 4 of the same section. The amount claimed must not 
                                                                exceed your total franchise tax liability and must not exceed 
Item 14. R & D Activities Credit Available
Enter the sum of Item 12 and Item 13 here, and enter it in 
Item 9 of Form 05-160.                                          Item 6.  Total Credit Claimed
                                                                Enter the total amount of Historic Structure Credit claimed 
Item 15. Average number of research and development             in Item 5 of each historic structure credit listed on this page.  
positions                                                       If you have no additional pages, enter this amount in Item 
Enter the average number of research and development            20 of the Credit Summary Schedule, Form 05-160.  If you 
positions for the period covered by the report. Divide the      have additional pages, you must total the amount from Item 
sum of the number of research and development positions         6 of all attached pages and enter the amount in Item 20 of 
in Texas at the end of each month by the number of months       the Credit Summary Schedule, Form 05-160. 
in the period covered by the report. 
                                                                Note: applicable
Item 16. Average salary of research and development 
positions
Enter the average salary for research and development 
positions for the period covered by the report. Divide the 
total salary paid for research and development positions by     For additional information on all instructions in this booklet, 
the average number of research and development positions        refer to the following franchise tax rules:
for the period covered by the report. 
                                                                3.574  New Veteran-Owned Business 
Form 05-180                                                     3.581  Margin: Taxable and Nontaxable Entities
Texas Historic Structure Credit Supplement for                  3.582  Margin: Passive Entities
Credit Claimed on the Franchise Tax Report                      3.583  Margin: Exemptions
Filing requirements: An entity that has established a historic  3.584  Margin: Reports and Payments
structure credit or has received a credit through a sale,       3.585  Margin: Annual Report Extensions
claim                                                           3.586  Margin: Nexus
the credit.  In addition to submitting this form, you must also 3.587  Margin: Total Revenue
                                                                3.588  Margin: Cost of Goods Sold
(Form 05-901).  The total amount of credit claimed from Item    3.589  Margin: Compensation
6 of this form must be entered on the Texas Franchise Tax       3.590  Margin: Combined Reporting
Credits Summary Schedule (Form 05-160) Item 20. This form       3.591  Margin: Apportionment
and information are not required to be submitted if a historic  3.592  Margin: Additional Tax
structure credit is not being claimed on the current report.    3.593  Margin: Franchise Tax Credit
                                                                T 
Item 1. Owner ID                                                           Carryforwards
Enter the ID number of the entity that owns the historic        T
structure credit.  The ID number is an 11-digit number issued 
bytComptroller’soffiestablishment,assignment,                   3.599  Margin: Research and Development Activities 
purchase, or allocation of the credit.  The ID number can        Credit
be the same as the owner’s Texas taxpayer number.  If the 
                                                                All of these rules can be viewed on the Comptroller’s website 
the franchise tax report.  The owner claiming the credit must   at www.comptroller.texas.gov.
be subject to franchise tax.

Item 2. Legal name 
Enter the legal name of the entity with the historic structure 

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