By: Parker, et al.	S.B. No. 5

Statutes affected:
Introduced: Tax Code 11.145, Tax Code 22.01 (Tax Code 11, Tax Code 22)
Senate Committee Report: Tax Code 11.145, Tax Code 22.01, Tax Code 22.24, Government Code 37.10 (Government Code 37, Tax Code 11, Tax Code 22)
Engrossed: Tax Code 11.145, Tax Code 22.01, Tax Code 22.24, Chapter , Tax Code 37.10, Tax Code 31.01 (Government Code 37, Tax Code 11, Chapter , Tax Code 37, Tax Code 31, Tax Code 22)

	A BILL TO BE ENTITLED
	AN ACT
	relating to an exemption from ad valorem taxation of a portion of
	the appraised value of tangible personal property that is held or
	used for the production of income and a franchise tax credit for the
	payment of certain related ad valorem taxes.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	ARTICLE 1.  INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY AD VALOREM
	TAX EXEMPTION
	SECTION 1.01.  Section 11.145, Tax Code, is amended to read
	as follows:
	Sec. 11.145.  INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY
	[HAVING VALUE OF LESS THAN $2,500]. (a) In this section:
	(1)  "Related business entity" means a business entity
	that:
	(A)  engages in a common business enterprise with
	at least one other business entity; and
	(B)  owns tangible personal property that:
	(i)  is held or used for the production of
	income as part of the common business enterprise; and
	(ii)  is located at the same physical
	address that tangible personal property owned by at least one other
	business entity engaged in the common business enterprise is
	located.
	(2)  "Unified business enterprise" means a common
	business enterprise composed of more than one related business
	entity.
	(b)  Subject to Subsection (f) and except as provided by
	Subsection (d), a [A] person is entitled to an exemption from
	taxation by a taxing unit of $25,000 of the appraised value of the
	tangible personal property the person owns that is held or used for
	the production of income and has taxable situs at the same location
	in the taxing unit [if that property has a taxable value of less
	than $2,500].
	(c) [(b)]  The exemption provided by Subsection (b) [(a)]
	applies to each separate location in a taxing unit in which a person
	holds or uses tangible personal property for the production of
	income, and, for the purposes of Subsection (b) [(a)], all property
	that has taxable situs in each separate location in the taxing unit
	is aggregated to determine taxable value.
	(d)  A person who leases tangible personal property is
	entitled to an exemption from taxation by a taxing unit of $25,000
	of the total appraised value of all the tangible personal property
	the person owns that is held or used for the production of income
	and is subject to a lease, regardless of where the property is
	located in the taxing unit.
	(e)  The exemption provided by Subsection (d) applies to each
	separate taxing unit in which a person holds or uses tangible
	personal property for the production of income.
	(f)  For the purposes of Subsection (b), if a person is a
	related business entity, all property described by that subsection
	that has taxable situs at the same location in a taxing unit and
	that is owned by the person is aggregated with the property
	described by that subsection that has taxable situs at the same
	location in the taxing unit and that is owned by each other related
	business enterprise that composes the same unified business
	enterprise to determine taxable value for the entity.
	(g)  A chief appraiser may investigate a business entity to
	determine whether the entity:
	(1)  is a related business entity; and
	(2)  has aggregated tangible personal property as
	provided by Subsection (f).
	(h)  When calculating an exemption to which the person is
	entitled under this section, a taxing unit shall apply the amount of
	the exemption to tangible personal property other than inventory
	that the person owns and is held or used for the production of
	income before applying the exemption to inventory owned by the
	person.
	(h-1)  For purposes of Subsection (h), "inventory" has the
	meaning assigned by Section 171.701.
	SECTION 1.02.  Section 22.01, Tax Code, is amended by
	amending Subsection (c-1) and adding Subsections (j-1), (j-2),
	(j-3), and (n) to read as follows:
	(c-1)  In this section: