2024 Texas Franchise Tax Report

Information and Instructions

Form 05-913 (Rev. 9-23)

Topics covered in this booklet: General Information

Amended Reports................................................................. 10 This booklet summarizes the Texas franchise tax law and
Annualized Total Revenue....................................................... 4 rules and includes information that is most useful to the
Annual Reports........................................................................ 5 greatest number of taxpayers preparing Texas franchise
Change in Accounting Period.................................................. 6 tax reports. It is not possible to include all requirements
Combined Reporting............................................................... 7 of Texas Tax Code Chapter 171. Taxpayers should not
Credits................................................................................... 10 consider this tax booklet as authoritative law. Additional
Disregarded Entities................................................................ 3 information about Texas franchise tax is available online at
www.comptroller.texas.gov/taxes/franchise.
Due Dates............................................................................... 5
Electronic Funds Transfer (EFT)............................................. 6
What’s New for 2024
Entities Not Subject to Tax....................................................... 2
Entities Subject to Tax............................................................. 2 No Tax Due Threshold
Estimated Tax.......................................................................... 4 For reports originally due on or after Jan. 1, 2024, the no
Exempt Entities....................................................................... 2 tax due threshold is increased to $2,470,000 and entities
Extension of Time to File (EFT)............................................... 6 whose annualized total revenue from their entire business
Extension of Time to File (Non-EFT)....................................... 6 is less than or equal to that amount are no longer required
EZ Computation...................................................................... 4 to file a No Tax Due Report. However, entities are still
File and Pay Franchise Tax Electronically............................... 2 required to file a Public Information Report (Form 05-102)
Final Reports........................................................................... 5
or an Ownership Information Report (Form 05-167).
For more information, see the discussion on the No Tax
Forfeiture................................................................................. 7
Due Threshold on page 4. See Senate Bill 3, 88th
General Information ................................................................ 1
Legislature, Second Called Session.
Margin..................................................................................... 4
Minimum Franchise Tax........................................................... 4 New Veteran-Owned Businesses
New Veteran-Owned Businesses............................................ 3 For reports originally due on or after Jan. 1, 2024, a
No Tax Due Threshold............................................................. 4 qualifying new veteran-owned business is no longer
Passive Entities....................................................................... 2 required to file a No Tax Due Report during its initial five-
Penalties and Interest.............................................................. 7 year period. See Senate Bill 3, 88th Legislature, Second
Real Estate Investment Trusts (REITs)................................... 3 Called Session.
Tax Rates................................................................................ 4 No Tax Due Report (Form 05-163) No Longer Available
Tiered Partnership Election..................................................... 9 Since qualifying new veteran-owned businesses and entities
What’s New for 2024............................................................... 1 whose annualized total revenue is at or below the no tax
Where to file.......................................................................... 11 due threshold are no longer required to file a No Tax Due
Zero Texas Gross Receipts..................................................... 5 Report, Form 05-163 has been discontinued. The form is
not available for filing a 2024 franchise tax report. Passive
Index of forms: entities and qualifying REITS must file either the Long Form
Form # Title Report (Form 05-158) or the EZ Computation Report (Form
05-102 Public Information Report ....................................13 05-169), but need only blacken the circle that identifies them
05-158-A Long Form Report – Page 1 ................................13 as such entities. Entities with zero Texas gross receipts must
05-158-B Long Form Report – Page 2 ................................20 file either the Long Form Report or the EZ Computation
05-160 Credits Summary Schedule ..................................22 Report to enter total revenue and Texas gross receipts only.
05-164 Extension Request ..............................................23
Compensation Deduction Limit Adjustment
05-165 Extension Affiliate List..........................................24 The limit on the compensation deduction has been adjusted,
05-166 Affiliate Schedule .................................................25 as required by Texas Tax Code Section 171.006(b), and
05-167 Ownership Information Report.............................26 is now $450,000 per person for reports due on or after
05-169 EZ Computation Report .......................................26 Jan. 1, 2024 and before Jan. 1, 2026.
05-170 Payment Form .....................................................27
05-175 Tiered Partnership Report ....................................27 Grants Related to Broadband Deployment in Texas
05-177 Common Owner Information Report....................28 For reports originally due on or after Jan. 1, 2023, proceeds
05-178 Research and Development Activities
from certain grants for broadband deployment in Texas
Credit Schedule....................................................28 may be excluded from total revenue, to the extent those
05-180 Texas Historic Structure Credit Supplement for proceeds were included, and expenses paid using those
Credit Claimed on the Franchise Tax Report.........30
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proceeds may be included as either a cost of goods sold or Entities Subject to Tax
as compensation. Senate Bill 1243, 88th Legislature. The franchise tax is imposed on the following entities that
Landman Services are either organized in Texas or doing business in Texas:
For reports originally due on or after Jan. 1, 2024, the definition • corporations;
of “landman services” is expanded to include services related • limited liability companies (LLCs), including single member
to “other energy sources” for purposes of the exclusion from and series LLCs;
total revenue for certain subcontracting payments. Senate • banks;
Bill 604, 88th Legislature. • state limited banking associations;
• savings and loan associations;
Tax Credit for Qualified Low-income Housing • S corporations;
Developments • professional corporations;
For reports due on or after Jan. 1, 2026 and before Jan. 1, • partnerships (general, limited and limited liability);
2036, a franchise tax credit is available for interest owners • trusts;
in a qualified low-income housing development. House Bill • professional associations;
1058, 88th Legislature. • business associations;
Tax Credit for Rehabilitation of Certified Historic • joint ventures; and
Structures • other legal entities.
The exception to certain depreciation and tax-exempt use
provisions was expanded to all entities exempted from Entities Not Subject to Tax
federal income tax under Section 501(a), Internal Revenue The tax is not imposed on:
Code. Senate Bill 1013, 88th Legislature. • sole proprietorships (except for single member LLCs);
• general partnerships where direct ownership is composed
File and Pay Franchise Tax Electronically entirely of natural persons (except for limited liability
Electronically file and pay your franchise tax report using partnerships);
Webfile. It helps with mathematical computations and has • entities exempt under Subchapter B of Chapter 171, Texas
built-in edits to help you avoid mistakes that could lead to Tax Code;
unnecessary billings and the forfeiture of an entity’s right to • certain unincorporated passive entities;
transact business in Texas. Electronic filing and paying is • certain grantor trusts, estates of natural persons and escrows;
available 24 hours a day. • real estate mortgage investment conduits and certain
qualified real estate investment trusts;
If you owe tax, electronic payment options include • a nonprofit self-insurance trust created under Chapter
credit card, electronic check (Web EFT) or TEXNET 2212, Texas Insurance Code;
(enrollment required). • a trust qualified under Section 401(a), Internal Revenue
To get started with Webfile for franchise tax, you need your Code;
11-digit Texas taxpayer number and your 6-digit XT Webfile • a trust exempt under Section 501(c)(9), Internal Revenue
number listed on your Franchise Tax notice. Webfile is available Code; or
online at www.comptroller.texas.gov/taxes/file-pay/. • unincorporated political committees.

Webfile is not recommended for combined groups with See Rule 3.581 for information on nontaxable entities.
more than 10 members.
Exempt Entities
Franchise tax reports can also be filed using approved Some entities may be exempt from the franchise tax. The
tax preparation software. A list of approved providers is exemptions vary depending upon the type of organization.
available at www.comptroller.texas.gov/taxes/franchise/ Exemptions are not automatically granted to an entity.
approved-providers.php. It is the responsibility of the For more information on franchise tax exemptions, go to
taxpayer to monitor their electronically submitted reports www.comptroller.texas.gov/taxes/exempt/faq.php.
and payments through their software providers to ensure
Note: New veteran-owned businesses and entities that qualify as
successful transmission. Questions about the software
passive are not considered exempt entities. See Rule 3.583
provider’s products should be directed to the provider of for information on exempt entities.
the software.

Need a Webfile number? Passive Entities

Partnerships (general, limited and limited liability) and trusts
Call 800-442-3453, enter the taxpayer number when
(other than business trusts) may qualify as a passive entity
prompted and choose option number 1. Our automated
and not owe any franchise tax for a reporting period if at
system requires identifying information, such as total
least 90% of the entity’s federal gross income (as reported
revenue from a prior report or last payment amount (if
on the entity’s federal income tax return), for the period
greater than zero), before releasing the Webfile number.
upon which the tax is based, is from the following sources:
• dividends, interest, foreign currency exchange gain,
periodic and non-periodic payments with respect to notional
principal contracts, option premiums, cash settlements or

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 termination payments with respect to a financial instrument, New Veteran-Owned Businesses
and income from a limited liability company; ENTITIES MUST BE PRE-QUALIFIED
• distributive shares of partnership income to the extent that New veteran-owned businesses are not subject to franchise
those distributive shares of income are greater than zero; tax for an initial five-year period. To be considered a new
• net capital gains from the sale of real property, net gains veteran-owned business, an entity must meet the following
from the sale of commodities traded on a commodities qualifications as verified by the Comptroller’s office:
exchange and net gains from the sale of securities; and • be an entity formed or organized in Texas on or after Jan.
• royalties from mineral properties, bonuses from mineral 1, 2016, and before Jan. 1, 2020; or on or after Jan. 1,
properties, delay rental income from mineral properties 2022, and before Jan. 1, 2026.
and income from other non-operating mineral interests • be 100% owned by a natural person (or persons), each
including non-operating working interests. of whom was honorably discharged from a branch of the
Passive income does not include rent or income received United States armed services; and
by a non-operator from mineral properties under a joint • provide a letter from the Texas Veterans Commission
operating agreement if the non-operator is a member of an (TVC) verifying the honorable discharge of each owner.
affiliated group and another member of that group is the A taxable entity that is verified as a new veteran-owned
operator under the same joint operating agreement. business is no longer required to file a No Tax Due Report
A passive entity that is registered, or is required to be for the initial five-year period, provided the entity maintains
registered with the Secretary of State (SOS) or the its qualification as a new veteran-owned business. A new
Comptroller’s office, must file either a Long Form Report veteran-owned business is also not required to file a Public
(Form 05-158) or an EZ Computation Report (Form 05-169) Information Report (Form 05-102) or Ownership Information
annually to affirm that the entity qualifies as a passive entity Report (Form 05-167) for that same period.
but need only blacken the circle that identifies it as such. A new veteran-owned business cannot file as a member of
A passive entity is not required to file a Public Information a combined group or as part of a tiered partnership during
Report (Form 05-102) or Ownership Information Report the initial five-year period that the entity is not subject to the
(Form 05-167). franchise tax.
A partnership or trust that qualifies as a passive entity for the The Comptroller’s office must be notified if the ownership
period upon which the franchise tax report is based, and is of the new veteran-owned business changes at any point
not registered and is not required to be registered with the during the initial five-year period. If during the initial five-
SOS or Comptroller’s office, is not required to register or file year period a new veteran-owned business no longer
a franchise tax report with the Comptroller’s office. meets the above criteria, the entity becomes subject to the
A passive entity not registered with the Comptroller’s office franchise tax as of the date it no longer qualifies as a new
that no longer qualifies as a passive entity must file a Nexus veteran-owned business.
Questionnaire (Form AP-114), a Business Questionnaire For the verification process and additional information visit
(Form AP-224) or a Trust Questionnaire (Form AP-231) the Comptroller’s website at www.comptroller.texas.gov/
to register with the Comptroller’s office and begin filing taxes/franchise/veteran-business.php.
franchise tax reports.
If you are a veteran and your entity was formed prior to Jan. 1, 2016,
Real Estate Investment Trusts (REITs) or after Dec. 31, 2019 but before Jan. 1, 2022, contact the Texas
A REIT that meets the qualifications of Texas Tax Code Veterans Commission for other resources that may be available
Section 171.0002(c)(4) for the period upon which a report to you at 800-252-8387 or www.tvc.texas.gov/entrepreneurs/.
is based, is not a taxable entity for that period.
Disregarded Entities
A REIT or its qualified REIT subsidiary entities are not An entity’s treatment for federal income tax purposes does
considered taxable entities if not determine its responsibility for Texas franchise tax.
• the REIT holds interests in limited partnerships or other Therefore, partnerships, LLCs and other entities that are
entities that are taxable entities and that directly hold real disregarded for federal income tax purposes are considered
estate; and separate legal entities for franchise tax reporting purposes.
• the REIT does not directly hold real estate, other than real The separate entity is responsible for filing its own franchise
estate it occupies for business purposes. tax report unless it is a member of a combined group. If the
The REIT must establish its nontaxable status by filing either entity is a member of a combined group, the reporting entity
a Long Form Report (Form 05-158) or an EZ Computation for the group may elect to treat the entity as disregarded
Report (Form 05-169) for the period upon which the report and not unwind its operations from its “parent” entity. In this
is based but need only blacken the circle that identifies it as instance, it is presumed that both the “parent” entity and the
a qualifying REIT. Each REIT or qualified REIT subsidiary disregarded entity have nexus in Texas for apportionment
must file either a Public Information Report (Form 05-102) purposes only. Whether or not the entity is disregarded for
or an Ownership Information Report (Form 05-167). franchise tax, it must be listed separately on the Affiliate
Schedule (Form 05-166). Additionally, if the disregarded
entity is organized in Texas or has nexus in Texas, it is
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required to file a Public Information Report (Form 05-102) Public Information Report (Form 05-102) or Ownership
or an Ownership Information Report (Form 05-167). Information Report (Form 05-167).

Margin A combined group must include all taxable entities in the

Unless a taxable entity qualifies and chooses to file using combined group report even if, on a separate entity basis,
the EZ computation, the tax base is the taxable entity’s the member has $2,470,000 or less in annualized total
margin and is computed in one of the following ways: revenue. If a combined group’s annualized total revenue
• Total Revenue times 70% is $2,470,000 or less, the combined group is no longer
• Total Revenue minus Cost of Goods Sold (COGS) required to file a No Tax Due Report or Affiliate Schedule.
• Total Revenue minus Compensation Each individual member of the combined group must file a
• Total Revenue minus $1 million. Public Information Report or Ownership Information Report
if that entity is organized in Texas or has nexus in Texas.
Note: Not all entities qualify to use COGS to compute margin. See
instructions for “Item 11. Cost of goods sold (COGS)” on Note: A tiered partnership election is not allowed if the lower tier
page 17 for more information. entity, before passing total revenue to the upper tier entities,
has $2,470,000 or less in annualized total revenue. If the
Tax Rates election is allowed and revenue is passed, both the upper
and lower tier entities owe any amount of tax that is calculated
The franchise tax rates for reports originally due on or after
as due even if the annualized total revenue after the tiered
January 1, 2016: partnership election is $2,470,000 or less.
• 0.75% (0.0075) for most entities
• 0.375% (0.00375) for qualifying wholesalers and retailers Annualized Total Revenue
• 0.331% (0.00331) for those entities with $20 million or less To determine an entity’s eligibility for the $2,470,000 no tax
in annualized total revenue using the EZ computation. due threshold and qualification for the EZ computation, an
Qualifying retailers and wholesalers are entities that are entity must annualize its total revenue if the period upon
primarily engaged in retail or wholesale trade. Retail trade which the report is based is not equal to 12 months.
means the activities described in Division G of the 1987 Note: The amount of total revenue used in the tax calculations
Standard Industrial Classification (SIC) Manual; apparel rental does NOT change as a result of annualizing total revenue.
activities classified in Industry 5999 or 7299 of the SIC Manual; Total revenue equals the prescribed amounts for the period
activities classified as SIC Industry Group 753 (Automotive upon which the tax is based.
Repair Shops); activities involving the rental or leasing of
To annualize total revenue, divide total revenue by the
tools, party and event supplies, and furniture under SIC Code
number of days in the period upon which the report is
7359; heavy construction equipment rental or leasing activities
based, and multiply the result by 365.
under SIC Code 7353; and rental-purchase agreement
activities regulated by Chapter 92, Business & Commerce Example: A taxable entity’s 2024 franchise tax report is
Code. Wholesale trade means the activities described in based on the period 09-15-2023 through 12-31-2023 (108
Division F of the 1987 SIC Manual. (The 1987 SIC Manual days), and its total revenue for the period is $800,000. The
is available online at www.osha.gov/pls/imis/sicsearch.html.) taxable entity’s annualized total revenue is $2,703,703.70
($800,000 divided by 108 days multiplied by 365 days).
An entity is primarily engaged in retail or wholesale trade if:
Based on its annualized total revenue, the taxable entity
1) the total revenue from its activities in retail or wholesale
does NOT qualify for the $2,470,000 no tax due threshold,
trade is greater than the total revenue from its activities
but is eligible to file using the EZ computation. The entity
in trades other than the retail and wholesale trades;
reports $800,000 as total revenue for the period.
2) except for eating and drinking places as described in Major
Group 58 of Division G, less than 50% of the total revenue Estimated Tax
from activities in retail or wholesale trade comes from the Texas law does not require the filing of estimated tax reports
sale of products it produces or products produced by an or payments.
entity that is part of an affiliated group to which the taxable
entity also belongs; and Minimum Franchise Tax
3) the taxable entity does not provide retail or wholesale There is no minimum tax requirement under the franchise tax
utilities, including telecommunications services, electricity provisions. Additionally, an entity that calculates an amount
or gas. of tax due that is less than $1,000 is not required to pay
Note: See franchise tax Rule 3.584(b)(3) to determine if a taxable any tax. (See the section on Tiered Partnership Election for
entity produces a product that it sells. the tiered partnership exception.) The entity, however, must
submit all required reports to satisfy its filing requirements.
No Tax Due Threshold
For reports originally due on or after Jan. 1, 2024, the no EZ Computation
tax due threshold is increased to $2,470,000 and entities Entities with $20 million or less in annualized total revenue may
whose annualized total revenue from their entire business choose to file using the EZ Computation Report (Form 05-169).
is less than or equal to that amount are no longer required
Combined groups are eligible for the EZ computation
to file a No Tax Due Report. Such entities must still file a
method. Upper and lower tier entities, when the tiered
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partnership election has been made, qualify for the EZ the federal accounting year end date of 08-31-2023 is prior
computation method only if the lower tier entity would have to the date the entity first became subject to the tax, both the
qualified for the EZ computation method before passing accounting period begin and end date on the 2024 annual
total revenue to the upper tier entities. report will be 10-05-2023. This results in a zero report. On
the 2025 annual report, the entity will file with an accounting
Entities using the EZ computation method forego any period 10-05-2023 through 08-31-2024.
credits for that report year, including the temporary credit
for business loss carryforwards. Combined Groups
A taxable entity is only included in a combined group report
The franchise tax rate for entities choosing to file using the EZ for the accounting period in which it belongs to the combined
computation method is 0.331% (0.00331). No margin deduction group. For any accounting period that an entity is not part
(COGS, compensation, 70% of revenue or $1 million) is allowed of a combined group, the entity must file a separate report.
when choosing the EZ computation method.
Final Reports
Zero Texas Gross Receipts An entity, other than a member of a combined group,
The apportionment factor of an entity with zero Texas gross that ceases doing business in Texas for any reason (i.e.,
receipts is zero; therefore, no tax is due. The entity must file termination, withdrawal, merger, etc.) is required to file a
a Long Form Report (Form 05-158) or, if qualified, the EZ final franchise tax report (Long Form Report, Forms 05-
Computation Report (Form 05-169) to calculate total revenue 158-A and 05-158-B, or EZ Computation Report, Form 05-
and enter zero for Texas gross receipts. See instructions 169) and pay any additional tax, if due.
for Item 24 of Form 05-158-B for additional information on
computing Texas gross receipts. An entity with zero Texas Due Date
gross receipts must also file a Public Information Report (Form A final report is due 60 days after the entity ceases doing
05-102) or an Ownership Information Report (Form 05-167). business in Texas.
Note: A Public Information Report (Form 05-102) or an Ownership
Due Dates Information Report (Form 05-167) is not required to be filed
If the due date (original or extended) of a report falls on with the final report.
a Saturday, Sunday or legal holiday included on the list
published before Jan. 1 of each year in the Texas Register, Accounting Period
the due date is the next business day Accounting Year Begin Date:
The day after the end date on the previous franchise tax report.
Annual Reports
Due Date Accounting Year End Date:
An annual report is due May 15 of each report year. The date the taxable entity ceases doing business in Texas.
For a Texas entity, the end date is the effective date of
Report Year termination, merger or conversion into a nontaxable entity.
The year in which the franchise tax report is due. The 2024 For a non-Texas entity, the end date is the date the entity
annual report is due May 15, 2024. ceases doing business in Texas.
Accounting Period Example: A Texas entity filed a 2024 annual franchise
Accounting Year Begin Date: tax report using a 12-31-2023 accounting year end date.
Enter the day after the end date on the previous franchise tax The entity wants to end its existence on 08-03-2024. To
report. For example, if the 2023 annual franchise tax report obtain a certificate of account status for termination, the
had an end date of 12-31-2022, then the begin date on the entity must file a final report and pay tax for the accounting
2024 annual franchise tax report should be 01-01-2023. period from 01-01-2024 through 08-03-2024. If the entity
is not terminated until 08-16-2024, the entity must file an
For entities that became subject to the tax in 2023, enter
amended final report. The amended final report is due the
the date the entity became subject to the tax.
60th day after 08-16-2024, the date the entity terminated.
Accounting Year End Date:
Taxable entities must satisfy all tax requirements or state
Enter the last accounting period end date for federal
in the appropriate articles which entity is responsible for
income tax purposes in the year before the year the report
satisfying all franchise tax requirements before they may
is originally due.
terminate legal existence in Texas. You may obtain a
Entities that became subject to the tax during the 2023 certificate of account status for termination, cancellation,
calendar year and have a federal accounting year end date withdrawal or merger from the Comptroller using Webfile
that is prior to the date the entity became subject to the tax, or submit the Request for Certificate of Account Status
should use the day they became subject to the franchise (Form 05-359). All documents required by the Texas
tax as the accounting year end date on the first annual Secretary of State (SOS) to terminate legal existence in
franchise tax report. This results in a zero report. Texas must be received in that office before 5:00p.m. on
Dec. 31 to avoid liability for the next annual franchise tax
Example: An entity became subject to the tax on 10-05-2023. report. If Dec. 31 falls on a weekend, the documents must
The entity’s federal accounting year end date is 08-31. Since be received by 5:00 p.m. on the last working day of the

5
year. Postmark dates are not accepted. You may refer to Because of the change in the federal accounting period, the
www.comptroller.texas.gov/taxes/franchise/reinstate-terminate.php entity is required to file a short period federal return covering
for more information on filing requirements. This section does not the period 10-01-2023 through 12-31-2023. For franchise tax
apply to financial institutions. reporting purposes, the entity files its 2024 report based on
the period 10-01-2022 through 12-31-2023, combining the
Non-Texas entities that have not registered with the SOS office, relevant information from the two federal income tax reports.
but have been doing business in Texas, must satisfy all franchise
tax requirements to end their responsibility for franchise tax. The Example 2: A calendar year entity lost its S-Corp election
entity must notify the Comptroller’s office in writing and include under the Internal Revenue Code on June 27, 2023. As a
the date the entity ceased doing business in Texas. result, the entity is required to file a short period federal S
return for the period 01-01-2023 through 06-27-2023. The
Combined Groups entity did not change its accounting year end and filed a
If every member of a combined group ceases doing business second short period federal return for the period 06-28-2023
in Texas, a final combined group report must be filed and paid. through 12-31-2023. For franchise tax reporting purposes,
To receive clearance from the Comptroller for termination, the entity includes the period 01-01-2023 through 12- 31-
cancellation, withdrawal or merger, a Request for Certificate 2023 on its 2024 annual report and combines the relevant
of Account Status must also be filed. In all other cases, for information from the two federal reports.
the period a combined group exists, the combined group
files only annual reports. Extension of Time to File (Non-EFT)
A member of a combined group that ceases doing business See extension requirements for combined group reports
in Texas does not file a final report. The period that would and electronic funds transfer (EFT) payors in the respective
have been reported on the final report is included in the sections of these instructions.
combined group’s annual report for the corresponding If an entity cannot file its annual report, including the first
accounting period. A Request for Certificate of Account annual report, by the original due date, it may request an
Status must be filed to end that member’s filing responsibility extension of time to file the report. If granted, the extension
and to identify the reporting entity of the combined group. for a non-EFT payor is through Nov. 15, 2024. The extension
An entity that joins a combined group, and then ceases payment must be at least 90% of the tax that will be due with
doing business in Texas in the accounting year that would the report or 100% of the tax reported as due on the prior
be covered by a final report, is required to file a final report franchise tax report (provided the prior report was filed on or
for the period from the accounting year begin date through before May 14, 2024). The extension request must be made
the date before it joined the combined group. The period using Webfile or Form 05-164 and must be postmarked on
beginning with the date the entity joined the combined or before May 15, 2024. If a timely filed extension request
group through the date the entity ceased doing business does not meet the payment requirements, the due date
in Texas is reported on the combined group’s annual report reverts to May 15, 2024, and penalty and interest apply to
for the corresponding period. any part of the 90% not paid by May 15, 2024, and to any
part of the 10% not paid by Nov. 15, 2024.
A member of a combined group that leaves the combined
group, and then ceases doing business in Texas during the A taxable entity that became subject to the franchise tax
accounting year that would be covered by a final report, is during 2023 may not use the 100% extension option.
required to file a final report for the period from the date An entity that was included as an affiliate on a 2023 combined
the entity left the combined group through the date that the group report may not use the 100% extension option if filing
entity ceased doing business in Texas. as a separate entity in 2024.
Change in Accounting Period Note: A combined group must file the Extension Request (Form
Texas law does not typically provide for the filing of short 05-164) and an Extension Affiliate List (Form 05-165) to have
period franchise tax reports. a valid extension for all members of the group.

A change in a federal accounting period or the loss of a Electronic Funds Transfer (EFT)
federal filing election does not change the begin and end Taxable entities that remitted $10,000 or more in franchise
dates of an accounting period for franchise tax reporting tax payments during the preceding state fiscal year (Sept.
purposes. The keys to the period upon which the tax is 1 through Aug. 31) are required to electronically transmit
based are the begin and end dates. The begin date is the franchise tax payments to the Comptroller’s office for the
day after the end date on the prior franchise tax report, subsequent calendar year. Additional information about
and the end date is the last federal tax accounting period EFT requirements is outlined in Rule 3.9 concerning
end date in the year prior to the year in which the report is electronic filing and electronic fund transfers.
originally due. Therefore, a change in a federal accounting
period may result in an accounting period on the franchise The Schedule of Electronic Funds Transfer Due Dates (Form 00-843)
tax report of more or less than 12 months. is available at www.comptroller.texas.gov/forms/00-843.pdf

Example 1: A fiscal year entity changes its accounting year

end from 09-30-2023 to a calendar year end of 12-31-2023.
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Extension of Time to File (EFT) Late EFT payments are subject to the same penalties noted
The extended due date for mandatory EFT payors is above. Also, failure to follow the EFT requirements could
different from that of other franchise taxpayers. An EFT result in an additional 5% penalty being assessed.
payor may extend the filing date from May 15, 2024, to
Aug. 15, 2024 by timely making an extension payment Forfeiture
electronically using TEXNET (tax type code 13080 If an entity does not file its franchise tax report and all
Franchise Tax Extension) or Webfile. Mandatory EFT required information reports and/or does not pay tax,
payors must remit at least 90% of the tax that will be due penalty or interest due within 45 days of Notice of Intent to
with the report, or 100% of the tax reported as due on the Forfeit Right to Transact Business, its powers, rights and
prior franchise tax report provided the prior year’s report right to transact business in Texas may be forfeited. Entities
was filed on or before May 14, 2024. An EFT payor may that fail to file or pay within 120 days of the forfeiture of
request a second extension to Nov. 15, 2024, to file the the right to transact business are subject to having their
report by paying electronically before Aug. 15, 2024, the registration forfeited.
balance of the amount of tax that will be reported as due Upon the forfeiture of the right to transact business, the
on Nov. 15, 2024, using TEXNET (tax type code 13080 officers and directors of the entity become personally liable
Franchise Tax Extension), Webfile, or by submitting a for each debt of the entity that is created or incurred in
paper Extension Request (Form 05-164) if the entity has this state after the due date of the report and/or tax and
paid all of the tax due with its first extension. before the privileges are restored. Texas Tax Code Section
For payments of $1,000,000 or less, a payor has until 171.255.
10:00 a.m. (CT) on the due date to initiate the transaction
in the TEXNET System. Payments above $1,000,000 Combined Reporting
must be initiated in the TEXNET System by 8:00 p.m. Taxable entities that are part of an affiliated group engaged
(CT) on the business day before the due date. For more in a unitary business must file a combined group report in
information, go to www.comptroller.texas.gov, and select lieu of individual reports. The combined group is a single
the TEXNET link. taxable entity for purposes of calculating franchise tax due
and completing the required tax reports.
If an online extension payment is made, the taxable
entity should NOT submit a paper Extension Request An affiliated group is a group of entities (with or without
(Form 05-164). nexus in Texas) in which a controlling interest (more than
50%) is owned by a common owner(s), either corporate or
Combined Groups noncorporate, or by one or more of the member entities.
If any one member of a combined group receives notice
that it is required to electronically transfer franchise An affiliated group can include:
tax payments, then the combined group is required to • pass-through entities, including partnerships;
electronically transfer payments and comply with the • limited liability companies taxed as partnerships under
EFT rules. The payment must be remitted as discussed federal law;
previously; however, the combined group must also • S corporations; and
submit an Extension Affiliate List (Form 05-165) to the • disregarded entities under federal law.
Comptroller’s office for the first extension request. Do A combined group cannot include:
not resubmit an Extension Affiliate List when filing for the • taxable entities that conduct business outside the United
second extension request. States if 80% or more of the taxable entity’s property
and payroll are assigned to locations outside the United
Penalties and Interest States (See Texas Tax Code Section 171.1014(a) for
Taxpayers are assessed a $50 penalty when a report is more details);
filed late. The penalty is assessed regardless of whether • new veteran-owned businesses during the initial five-year
the taxpayer subsequently files the report or any tax is due period that the entity is not subject to the franchise tax (see
for the period covered by the late-filed report. This $50 the section on New Veteran-Owned Businesses);
penalty is due in addition to any other penalties assessed • entities exempt under Chapter 171, Subchapter B; or
for the reporting period. • passive entities.
Additionally, a penalty of 5% of the tax due is imposed on A unitary business is defined as a single economic enterprise
an entity that fails to pay the tax when due. If the entity that is made up of separate parts of a single entity or of a
fails to pay the tax within 30 days after the due date, an commonly controlled group of entities that are sufficiently
additional 5% penalty is imposed. interdependent, integrated and interrelated through their
Delinquent taxes accrue interest beginning 60 days after activities so as to provide a synergy and mutual benefit that
the date the tax is due. The interest rate to be charged is produces a sharing or exchange of value among them and
the prime rate plus 1%, as published in The Wall Street a significant flow of value to the separate parts. All affiliated
Journal on the first day of each calendar year that is not a entities are presumed to be engaged in a unitary business.
Saturday, Sunday or legal holiday. The presumption is rebuttable.

7
See franchise tax Rule 3.590 for more detailed information revenue for the combined group.
on combined reporting.
Accounting Period of the Combined Group
Reporting Entity 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;
Texas business activity during the first period upon which • in all other cases, the accounting period is the federal tax
the first combined group report is based, as measured by period of the reporting entity.
the Texas receipts after eliminations for that period.
See the accounting period begin and end date requirements
The reporting entity must file a combined group report on in the annual and final report sections.
behalf of the group together with all schedules required by
the Comptroller. The reporting entity should change only The accounting year begin and end dates entered on page 1
when the entity (other than the parent) is no longer subject of the franchise tax report must reflect the full accounting
to Texas’ taxing jurisdiction or the reporting entity is no period on which the combined group report is based.
longer a member of the combined group. The same entity If the federal tax period of a member differs from the federal tax
cannot be the reporting entity for more than one report for period of the group, the reporting entity determines the portion
a reporting period. of that member’s revenue, cost of goods sold, compensation,
Combined Group Report etc. to be included by preparing a separate income statement
A combined group must include all taxable entities in the based on federal income tax reporting methods for the months
combined group report even if, on a separate entity basis, included in the group’s accounting period.
the member has $2,470,000 or less in annualized total Note: The affiliates’ accounting year begin and end dates on the
revenue. However, if the combined group’s annualized affiliate schedule must be within the accounting year begin
total revenue is $2,470,000 or less, the combined group and end dates entered on page 1 of the franchise tax report.
is no longer required to file a No Tax Due Report or an For example, a combined group adds a newly formed entity
Affiliate Schedule. Each individual member of the combined (formed 07-01-2023). The combined group’s franchise
tax report is based on the accounting period 01-01-2023
group must file a Public Information Report or Ownership
through 12-31-2023. On page 1 of the franchise tax report,
Information Report if that entity is organized in Texas or has the accounting year begin date is 01-01-2023, and the
nexus in Texas. accounting period end date is 12-31-2023. On the affiliate
schedule, the newly formed entity is listed with an accounting
A combined group may qualify to use the EZ computation if
year begin date of 07-01-2023 and an accounting year end
its combined annualized total revenue is $20 million or less. date of 12-31-2023.
Unless a combined group qualifies and chooses to file the EZ Newly Formed or Acquired Entities
Computation Report (Form 05-169), the combined group’s When a combined group acquires or forms another taxable
margin is computed in one of the following ways: entity during the period upon which the combined group’s
• Total Revenue times 70% report is based, it is presumed that the newly acquired or
• Total Revenue minus Cost of Goods Sold (COGS)** formed entity is unitary and is included in the combined
• Total Revenue minus Compensation filing. The presumption is rebuttable.
• Total Revenue minus $1 million
See the annual and final report sections of these instructions
**If the entity has qualifying costs. See instructions for “Item 11.
Cost of goods sold (COGS)” on page 17 for more information.
for additional information.

A combined group may choose only one method for computing Combined Total Revenue
margin that applies to all members of the combined group. A combined group must determine its total revenue by:
1. calculating the total revenue of each of its members as
A combined group must look at the total revenue of the if the member were an individual taxable entity without
group to determine the applicable tax rate. If the combined regard to the $2,470,000 no tax due threshold (See
group’s revenue from retail or wholesale activities is greater instructions for Items 1-9 on Form 05-158-A to compute
than the revenue from all other activities, then the group may total revenue on an individual entity basis.
qualify as a retailer or wholesaler and may use the 0.375% 2. adding together the total revenues of the members
(0.00375) tax rate if it meets all the criteria specified, except determined under (1); and
as provided below. See Tax Rates, page 4. 3. subtracting, to the extent included in (2), items
of total revenue received from a member of the
A combined group may not include a taxable entity that combined group.
provides retail or wholesale electric utilities, if:
• the taxable entity’s activity prevents the combined group Combined Cost of Goods Sold (COGS)
from qualifying for the retail or wholesale tax rate; and A combined group that elects to subtract COGS must
• the taxable entity’s revenue from providing retail or determine that amount by:
wholesale utilities is less than five percent of the total 1. calculating the COGS for each of its members as if the
8
 member were an individual taxable entity (See instructions Additional Reporting Requirement for Combined Groups
for Items 11-13 on Form 05-158-A to compute COGS on with Temporary Credit
an individual entity basis.); The reporting entity of a combined group with a temporary
2. adding together the amounts of COGS determined under credit for business loss carryforward preserved for itself and/ or
(1); and its affiliates must submit a Common Owner Information Report
3. subtracting from the amount determined under (2) any (Form 05-177) by the due date of the report. This information
COGS amounts paid from one member of the combined must be submitted to satisfy franchise tax filing requirements,
group to another member of the combined group, but even if the combined group is not claiming the credit on the
only to the extent the corresponding item of total revenue current year’s report. However, the Common Owner Information
was subtracted. Report is not required for any report year in which the combined
Note: COGS amounts may be computed ONLY for those affiliates that group’s annualized total revenue is under the no tax due
have eligible COGS deductions. See instructions for “Item 11. threshold. Submit the Common Owner Information Report before
Cost of goods sold (COGS)” on page 17 for more information. or with your franchise tax report to prevent processing delays. If
you submit the Common Owner Information Report after you file
Combined Compensation
your report, it will NOT immediately process to your account.
A combined group that elects to subtract compensation
must determine that amount by: Combined Extensions
1. calculating the compensation for each of its members as The reporting entity of a combined group must timely submit an
if each member were an individual taxable entity (See Extension Request (Form 05-164) and an Extension Affiliate List
instructions for Items 15-17 on Form 05-158-A to compute (Form 05-165) along with the required payment, if applicable, to
compensation on an individual entity basis.) request an extension of time to file its report. See the Extensions
2. adding together the amounts of compensation determined and EFT sections of this booklet for additional information.
under (1); and
3. subtracting from the amount determined under (2) any Liability for the Tax
compensation amounts paid from one member of the Each taxable entity identified on the Affiliate Schedule
combined group to another member of the combined (Form 05-166) is jointly and severally liable for the franchise
group, but only to the extent the corresponding item of tax of the combined group. See Texas Tax Code, Section
total revenue was subtracted. 171.1014(i). Notice of any such tax liability is sent to the
reporting entity at the address listed on the report and is
If any employee, officer, director, etc. is paid by more deemed sufficient and adequate notice of such liability to
than one member of the combined group, that individual’s each member of the combined group. Separate notice to
compensation is capped at $450,000 per 12-month period each member is not required.
upon which the report is based when computing the
compensation deduction for the group. Tiered Partnership Election
A “tiered partnership arrangement” means an ownership
Combined $1 Million Deduction structure in which any of the interests in one taxable entity
A combined group that elects to subtract $1 million to treated as a partnership or an S corporation for federal
determine margin is allowed $1 million for the combined income tax purposes (a “lower tier entity”) are owned by
group, not for each member of the group. one or more other taxable entities (an “upper tier entity”). A
Combined Apportionment tiered partnership arrangement may have two or more tiers.
Texas gross receipts of a combined group include only receipts The tiered partnership election, under Texas Tax Code
for entities within the group that are organized in Texas or that Section 171.1015, is not mandatory; it is a filing option for
have nexus in Texas. Receipts from transactions between entities in a tiered partnership arrangement.
members that are excluded from revenue may not be included The tiered partnership election is not an alternative to
in Texas gross receipts. However, Texas gross receipts will combined reporting. Combined reporting is mandatory for
include certain sales of tangible personal property made to taxable entities that meet the ownership and unitary criteria.
third party purchasers if the tangible personal property is Therefore, the tiered partnership election is not allowed if
ultimately delivered to a purchaser in Texas without substantial the lower tier entity is included in a combined group.
modification. For example, drop shipments made by a member
of a combined group from a Texas location to a Texas purchaser The tiered partnership election allows the lower tier entity to pass
would be included in Texas receipts based on the amount billed its total revenue to its upper tier entities. The upper tier entities
to the third party purchaser if the seller is also a member of the then report this passed revenue with their own total revenue. It
combined group and the seller does not have nexus. is important to note that this election does not allow the lower
tier entity to pass its margin deduction (COGS, compensation,
Gross receipts everywhere for a combined group should 70% of revenue or $1 million) to the upper tier entities.
include receipts for all entities within the group, regardless
of whether the entities have nexus in Texas. Receipts from A tiered partnership election is not allowed if the lower tier
transactions between members that are excluded from entity, before passing total revenue to the upper tier entities,
revenue may not be included in gross receipts everywhere. has $2,470,000 or less in annualized total revenue or owes
less than $1,000.

9
The requirements for filing under the tiered partnership election are: in the certified rehabilitation of a certified historic structure
• All taxable entities involved in the tiered partnership election placed in service on or after Sept. 1, 2013, is allowed.
must file a franchise tax report, a Public Information Report
(Form 05-102) or Ownership Information Report (Form 05- To qualify for the historic structure credit, the owner must
167), and the Tiered Partnership Report (Form 05-175). have an ownership interest in the structure during the
• Both the upper and the lower tier entities must blacken the calendar year the structure was placed in service and the
tiered partnership election circle on their tax reports. total amount of eligible costs and expenses incurred must
• Total revenue may be passed only to upper tier entities exceed $5,000.
that are subject to the Texas franchise tax. The entity must first establish the credit with the Comptroller’s
• Total revenue must be passed to upper tier taxable entities office by submitting the Texas Historic Structure Credit
based on ownership percentage. Registration (Form AP-235), the Certificate of Eligibility
• Margin deductions (COGS, compensation, 70% of revenue issued by the Texas Historical Commission and an audited
or $1 million) may not be passed to upper tier entities. cost report. The Comptroller’s office will issue the owner of
• The upper and lower tier entities may use the EZ the credit a Texas Historic Structure Credit Certificate (Form
Computation (Form 05-169) only if the lower tier entity has 05-901) to be included with any transactions involving the
$20 million or less in annualized total revenue before total amount or ownership of the credit.
revenue is passed to the upper tier entities.
If an entity is eligible for a historic structure credit
Both the upper and lower tier entities owe any amount carryforward, the unused credit may be carried forward for
of tax that is calculated as due even if the amount is less not more than five consecutive years.
than $1,000 or annualized total revenue after the tiered
partnership election is $2,470,000 or less. The historic structure credit may be taken on a franchise
tax report only after all other credits available for that filing
If the upper and lower tier entities have different accounting period have been applied, including carryforwards.
periods, the upper tier entity must allocate the total revenue
reported from the lower tier entity to the accounting period The historic structure credit may be sold, assigned, or
on which the upper tier entity’s report is based. allocated an unlimited number of times. The credit may
only be allocated to partners, members or shareholders
Credits of a pass-through entity. If the credit is sold, assigned
2008 Temporary Credit for Business Loss Carryforwards or allocated, a Texas Sale, Assignment or Allocation
Each eligible taxable entity must have preserved its right to of Historic Structure Credit (Form 05-179) must be
take the credit with the Comptroller’s office on or before the submitted to the Comptroller’s office with the credit
due date of its 2008 report. owner’s Historic Structure Credit Certificate within 30 days
of the transaction. Once the credit is processed as sold,
A taxable entity that is a combined group is allowed to take a assigned or allocated, the credit is recalculated and all
credit for eligible members of the combined group (i.e., the. parties involved will receive a new Historic Structure Credit
member was subject to the franchise tax on May 1, 2006, and Certificate to reflect a credit balance or letter of explanation
preserved the right to take the credit). If a combined group for credit accounts with zero balance.
member leaves the combined group during a tax period, the
original combined group may claim the departing member’s Research and Development Activities Credit conducted in
yearly credit and the member’s available credit carryover Texas under Subchapter M.
for that report year. For subsequent reports, the departed A taxable entity is eligible for a franchise tax credit for
member’s yearly credit is no longer available to the combined performing qualified research and incurring qualified
group, and the combined group’s credit carryover must be research expenses from activities conducted in Texas.
adjusted to remove the portion of carryover related to the “Qualified research” and “qualified research expense” are
departed member. Additionally, the credit and any unused defined by Section 41 of the Internal Revenue Code.
credit carryover does not follow the departed member to a
An increased amount of credit is allowed for taxable entities
separately filed report or another combined group report.
that contract with public or private institutions of higher
See Rule 3.594 for additional information regarding this credit. education for the performance of qualified research and
have qualified research expenses incurred in Texas under
Economic Development Credit the contract during the period on which the report is based.
A taxable entity that established a research and development
credit on a franchise tax report originally due prior to Jan. 1, A taxable entity is not eligible for the franchise tax credit if
2008 under repealed Subchapter O, may claim any unused the taxable entity, or any member of its combined group,
credit carried forward to offset the tax on margin until the received a sales tax exemption under Texas Tax Code
earlier of the expiration of the unused credit or Dec. 31, 2027. Section 151.3182 during the period on which the franchise
tax is based.
Credit for Certified Rehabilitation of Certified Historic Structures
Effective for reports due on or after Jan. 1, 2015, a tax credit Amended Reports
of up to 25 percent of eligible costs and expenses incurred If an entity needs to amend a report, it must file all pages
of the amended report along with a cover letter explaining

10
the reason for the amendment. The entity must write
“AMENDED” on the top of the report and submit the
supporting documentation. If the amended report results in
a refund of taxes previously paid, the claim must comply
with Texas Tax Code Section 111.104; the cover letter
must state and detail each reason on which the claim is
founded. A taxpayer represented by an authorized agent
must include a Power of Attorney (Form 01-137) or other
written authorization.

Where to file
Reports and payments should be mailed to:
Texas Comptroller of Public Accounts
P.O. Box 149348
Austin, TX 78714-9348
If tax is due, and the taxable entity is not required to use
EFT or does not submit payment online, make the check
or money order payable to the Texas Comptroller. Write the
Texas taxpayer number and the report year on the check or
money order. Complete the Texas Franchise Tax Payment
Form (Form 05-170).
Private Delivery Services
Texas law conforms to federal law regarding the use of
certain designated private delivery services to meet the
“timely mailing as timely filing/paying” rule for tax reports
and payments. If a private delivery service is used, address
the return to:
Texas Comptroller of Public Accounts
111 E. 17th St.
Austin, TX 78701-1334

11
 Instructions for Completing Taxpayer Information
Included on Texas Franchise Tax Forms
Taxpayer number: Report year: Secretary of State
Enter the Texas taxpayer number that Due date: (SOS) file number
The year the
has been assigned to your entity by the For annual filers, enter May 15, 2024. or Comptroller file
report is due.
Comptroller’s office. If you do not have If you are filing a final report, enter number:
an assigned number, enter your federal the due date that was provided on the The number assigned to
employer identification number (FEIN). letter you received. the entity by the SOS or
Comptroller.

Taxpayer name:
The legal name of
the entity filing the
report.

Mailing address:
The mailing address
of the entity filing the
report. If there is a
change of address
for this entity, blacken
the circle.

Combined Report:
If this report is being
filed on behalf of an
affiliated group of
entities engaged in
a unitary business, Accounting year end date:
blacken the circle. See the accounting year end NAICS code:
date requirements in the annual Enter the code that
and final report sections. Also Passive Entity and/or REIT: is appropriate for the
see the accounting period If your entity qualifies as a taxable entity or the code
information in the combined passive entity as defined in that reflects the overall
reporting section. Texas Tax Code Sec. 171.0003 business activity of a
or is a REIT that meets the combined group. The
Accounting year begin date: qualifications specified in Texas North American Industry
See the accounting year begin Tax Code Sec. 171.0002(c)(4) Classification System
date requirements in the annual for the period, blacken the (NAICS) codes are online
and final report sections. Also appropriate circle and complete at www.census.gov/naics/.
see the accounting period the “Taxpayer Information” part
information in the combined of this form only.
reporting section.

SIC code:
This field determines the tax rate. Completion of the field is
optional; however, if left blank, the tax rate defaults to 0.75%.
Tiered Partnership: See “Tax Rates” on page 4 to determine if you qualify for
If you are making a tiered partnership election and the reduced tax rate and, if qualified, enter the appropriate
are the upper tier entity including revenue passed to retail or wholesale Standard Industrial Classification (SIC)
you by the lower tier entity, or if you are the lower tier code. Otherwise, enter a code that is appropriate for the
entity excluding revenue passed to an upper tier entity, majority of the taxable entity’s total revenue or the code
blacken this circle and complete a Tiered Partnership that reflects the overall business activity of a combined
Report (Form 05-175). Do not blacken this circle just group. The SIC codes are online at www.osha.gov/pls/imis/
because you own an interest in another entity. sicsearch.html.
12
 Specific Line Instructions for
Each Report Included in this Booklet

Form 05-102 incorporation or organization.

Texas Franchise Tax Public Information Report • Limited Partnerships must include all general partners.
Filing Requirements: Each corporation, LLC, limited • Professional associations should report the members of
partnership, professional association and financial institution their executive committee.
that has a franchise tax responsibility must file a Public Sections B and C: Complete both sections as applicable
Information Report (PIR) to satisfy their filing obligation. for the entity for which this report is filed.
The PIR is due on the date the franchise tax report is due.
The report must be completed and signed by an officer, Processing, Accessing and Correcting Information
director or other authorized person. A separate PIR must Reported on the PIR:
be filed for each corporation, LLC, limited partnership, Reports filed by Texas and Non-Texas corporations,
professional association and financial institution that files a LLCs, limited partnerships and professional associations
separate franchise tax report or that is part of a combined registered with the Secretary of State (SOS) are sent to the
group (unless the corporation, LLC, limited partnership, SOS, as required by law.
professional association or financial institution is not After processing, officer and director information from the
organized in Texas and does not have nexus in Texas). report is made available on the Comptroller’s Franchise
Even if the franchise tax report is filed and all taxes paid, Account Status website, www.comptroller.texas.gov/taxes/
the right to transact business may be forfeited for failure to franchise/coas-instructions.php. If the information is not
file the completed and signed PIR. The effects of forfeiture available online, you may request a copy of the most recent
include the denial of the entity’s right to sue or defend PIR by contacting us at open.records@cpa.texas.gov, or
in a Texas court, and each officer and director becomes write to:
personally liable for certain debts of the entity (Texas Tax Comptroller of Public Accounts
Code Sections 171.251, 171.252 and 171.255). Forfeiture Open Records Section
provisions do not apply to financial institutions (Texas Tax P. O. Box 13528
Code Sections 171.259 and 171.260). Austin, TX 78711-3528

Address changes can be indicated by blackening the circle Changes to officer and director information that occur after
after the Taxpayer name. the report is filed should be reported to the Comptroller
on the next PIR the corporation, LLC, limited partnership,
Changes to the registered agent or registered office must be professional association, or financial institution is required
filed directly with the Secretary of State, and cannot be made to file. The Comptroller will not accept changes during the
on this form. The changes can be made online or on forms year, except as noted below.
downloaded from their website at www.sos.texas.gov/.
An individual whose name was included on the report, but
If there are no changes to the information in Section who was not an officer or director on the date the report
A of this report, then blacken the circle as indicated and was filed, may file a sworn statement to that effect with
complete Sections B and C. If no information is displayed the Comptroller. A corporation, LLC, limited partnership,
or preprinted on this form, complete all applicable items. professional association, or financial institution that made
Section A: Report the name, title and mailing address of an error on its PIR may file an amended PIR with a cover
each officer and director of the corporation, LLC, limited letter explaining the error.
partnership, professional association, or financial institution Signature Block: Report must be signed by an officer,
as of the date the report is filed. director or other authorized person. This includes a paid
• Texas profit corporations and Texas professional preparer authorized to sign the report.
corporations must list all officers, which must include the
president and secretary and all directors. One person may Form 05-158-A
hold all offices. Texas Franchise Tax Report – Page 1
• Texas non-profit corporations must list all officers. Different Filing Requirements: Any entity (including a combined
persons must hold the offices of president and secretary. group) that does not qualify to file using the EZ computation
There is a minimum of three directors. or that does not have $2,470,000 or less in annualized total
• Texas limited liability companies must list all managers and, revenue should file this report. If you are a passive entity,
if the company is member-managed, list all members. All Real Estate Investment Trust (REIT), or a new veteran-
officers, if any, must be listed. owned business, see the respective sections of these
• Non-Texas entities must list all officers and directors instructions for specific filing information.
that are required by the laws of the state or country of

13
Note: If a tiered partnership election is made and revenue is passed, enter the amount from Form 1040 Schedule C line 3.
both the upper and lower tier entities owe any amount of • For a taxable entity that is a single member LLC filing as
tax that is calculated as due, even if the amount is less a sole proprietorship for federal tax purposes, enter the
than $1,000 or annualized total revenue after the tiered amount from Form 1040 Schedule C line 3.
partnership election is $2,470,000 or less.
• For a taxable entity filing a federal tax form other than those
The instructions for Items 1-7 and 9 below are for taxable mentioned above, enter an amount that is substantially
entities that are filing as a separate entity and not as part of equivalent to the amounts discussed in this section.
a combined group. A combined group should follow these
Item 2. Dividends
specific instructions for each member of the group, creating
• For a taxable entity filing as a corporation for federal tax
a combinations and eliminations schedule, and then add
purposes, enter the amount from Form 1120 line 4.
across each item to determine the amounts to report for
• For a taxable entity filing as an S corporation for federal tax
the group. Intercompany eliminations should be reported
purposes, enter the amount from Form 1120S Schedule
on Item 9 as an exclusion from revenue
K line 5a.
The amounts referenced in the instructions presume that • For a taxable entity filing as a partnership for federal tax
a separate federal income tax return was filed by each purposes, enter the amount from Form 1065 Schedule K
separate taxable entity. If a taxable entity was part of a line 6a.
federal consolidated return or was disregarded for federal • For a taxable entity filing as a trust for federal tax purposes,
tax purposes and is not being treated as disregarded in a enter the amount from Form 1041 line 2a.
combined group report for franchise tax purposes, report • To the extent dividends earned by the LLC are included
the amounts on Items 1-7 and 9 as if the entity had filed a for a taxable entity registered as a single member LLC
separate return for federal income tax purposes. and filing as a sole proprietorship for federal tax purposes,
enter the amount associated with dividends from Form
The instructions for Items 11-13 and 15-17 below are 1040 Schedule C line 6.
also for taxable entities that are filing as a separate entity • For a taxable entity filing a federal tax form other than those
and not as part of a combined group. A combined group mentioned above, enter an amount that is substantially
should follow these specific instructions for each member equivalent to the amounts discussed in this section.
of the group, add across each item, and then subtract any
intercompany eliminations to determine the amounts to Item 3. Interest
report. Eliminations may be made only to the extent that • For a taxable entity filing as a corporation for federal tax
the related items of revenue were eliminated. purposes, enter the amount from Form 1120 line 5.
• For a taxable entity filing as an S corporation for federal tax
purposes, enter the amount from Form 1120S Schedule
Before you begin K line 4.
The line items indicated in this section refer to specific • For a taxable entity filing as a partnership for federal tax
lines from the 2023 Internal Revenue Service (IRS) purposes, enter the amount from Form 1065 Schedule K
forms. The statute and administrative rules base line 5.
total revenue on specific line items from the 2006 IRS • For a taxable entity filing as a trust for federal tax purposes,
forms and state that in computing total revenue for a enter the amount from Form 1041 line 1.
subsequent report year, total revenue: • To the extent interest earned by the LLC is included for a
taxable entity registered as a single member LLC and filing
• is based on the 2006 equivalent line numbers on any as a sole proprietorship for federal tax purposes, enter the
subsequent version of that form and amount associated with interest from Form 1040 Schedule
• is computed based on the Internal Revenue Code in C line 6.
effect for the federal tax year beginning on Jan. 1, 2007. • For a taxable entity filing a federal tax form other than those
mentioned above, enter an amount that is substantially
The actual line numbers in the statute and rules are not equivalent to the amounts discussed in this section.
updated to reflect subsequent changes in the federal • The amount reported must be zero or greater. We do
form line numbering. Although the instructions are not allow a negative amount on Item 3 of this report. The
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.
Item 4. Rents
Item 1. Gross receipts or sales • For a taxable entity filing as a corporation for federal tax
• For a taxable entity filing as a corporation for federal tax purposes, enter the amount from Form 1120 line 6.
purposes, enter the amount from Form 1120 line 1c. • For a taxable entity filing as an S corporation for federal tax
• For a taxable entity filing as an S corporation for federal purposes, enter the amount from Form 1120S Schedule K
tax purposes, enter the amount from Form 1120S line 1c. line 3a and the amount from Form 8825 lines 18a and 19.
• For a taxable entity filing as a partnership for federal tax • For a taxable entity filing as a partnership for federal tax
purposes, enter the amount from Form 1065 line 1c. purposes, enter the amount from Form 1065 Schedule K
• For a taxable entity filing as a trust for federal tax purposes, line 3a and the amount from Form 8825 line 18a.

14
• For a taxable entity filing as a trust for federal tax purposes, from a lower tier entity under the tiered partnership election.
enter the amount from Form 1040 Schedule E line 23a. • For a taxable entity filing as an S corporation for federal
• For a taxable entity that is a single member LLC filing as tax purposes, enter the amount from Form 1120S line 5
a sole proprietorship for federal tax purposes, enter the and the amount from Form 1120S Schedule K to the extent
amount from Form 1040 Schedule E line 23a, to the extent not already included; and any total revenue passed from
that it relates to the LLC. a lower tier entity under the tiered partnership election.
• For a taxable entity filing a federal tax form other than those • For a taxable entity filing as a partnership for federal tax
mentioned above, enter an amount that is substantially purposes, enter the amount from Form 1065 line 4 and line
equivalent to the amounts discussed in this section. 7; the amount from Form 1065 Schedule K line 11, to the
extent not already included; the amount from Form 1040
Note: Do not include in Item 4 net rental income (loss) passed
through from a partnership or S corporation on IRS Form
Schedule F line 9 plus line 1b, or Form 1040 Schedule F
K-1; report this amount in Item 7. This amount must also be line 44; and any total revenue passed from a lower tier
included in Item 9 when subtracting “net distributive income entity under the tiered partnership election.
from a taxable entity treated as a partnership or as an S • For a taxable entity filing as a trust for federal tax purposes,
corporation for federal tax purposes.” enter the amount from Form 1041 line 8 to the extent not
already included; the amount from Form 1040 Schedule C
Item 5. Royalties line 6, that has not already been included; the amount from
• For a taxable entity filing as a corporation for federal tax Form 1040 Schedule E line 32 and line 37; the amount from
purposes, enter the amount from Form 1120 line 7. Form 1040 Schedule F line 9 plus line 1b, or Form 1040
• For a taxable entity filing as an S corporation for federal tax Schedule F line 44; and any other and total revenue passed
purposes, enter the amount from Form 1120S Schedule from a lower tier entity under the tiered partnership election.
K line 6. • For a taxable entity that is a single member LLC filing as
• For a taxable entity filing as a partnership for federal tax a sole proprietorship for federal tax purposes, enter the
purposes, enter the amount from Form 1065 Schedule K ordinary income or loss from partnerships, S corporations,
line 7. estates and trusts from Form 1040 Schedule E, to the
• For a taxable entity filing as a trust for federal tax purposes, extent that it relates to the LLC; enter the amount from
enter the amount from Form 1040 Schedule E line 23b. line 9 plus line 1b, or Form 1040 Schedule F line 44, to
• For a taxable entity that is a single member LLC filing as the extent that it relates to the LLC; enter the amount from
a sole proprietorship for federal tax purposes, enter the Form 1040 Schedule C line 6, that has not already been
amount from Form 1040 Schedule E line 23b, to the extent included; and any total revenue passed from a lower tier
that it relates to the LLC. entity under the tiered partnership election.
• For a taxable entity filing a federal tax form other than those • For a taxable entity filing a federal tax form other than those
mentioned above, enter an amount that is substantially mentioned above, enter an amount that is substantially
equivalent to the amounts discussed in this section. equivalent to the amounts discussed in this section.
Item 6. Gains/losses Item 8. Total gross revenue
• For a taxable entity filing as a corporation for federal tax Total the amounts entered on Items 1 through 7.
purposes, enter the amounts from Form 1120 line 8 and
line 9. Item 9. Exclusions from gross revenue
• For a taxable entity filing as an S corporation for federal Only the following items may be excluded from gross
tax purposes, enter the amount from Form 1120S line 4 revenue. See Rule 3.587 for additional information.
and Form 1120S Schedule K lines 7, 8a and 9.
Bad Debt Expense
• For a taxable entity filing as a partnership for federal tax
• For a taxable entity filing as a corporation for federal tax
purposes, enter the amount from Form 1065 line 6 and
purposes, enter the amount from Form 1120 line 15.
Form 1065 Schedule K lines 8, 9a and 10.
• For a taxable entity filing as an S corporation for federal
• For a taxable entity filing as a trust for federal tax purposes,
tax purposes, enter the amount from Form 1120S line 10.
enter the amount associated with gains/losses from Form
• For a taxable entity filing as a partnership for federal tax
1041 lines 4 and 7.
purposes, enter the amount from Form 1065 line 12.
• For a taxable entity that is a single member LLC filing as
• For a taxable entity registered as a single member LLC
a sole proprietorship for federal tax purposes, enter the
and filing as a sole proprietorship for federal tax purposes,
amount from Form 1040 Schedule D, to the extent that it
enter the amount associated with bad debt expense from
relates to the LLC; and the amount from Form 4797 line
Form 1040 Schedule C line 27.
17, to the extent that it relates to the LLC.
• For a taxable entity filing as a trust for federal tax purposes,
• For a taxable entity filing a federal tax form other than those
enter the amount associated with bad debt expense from
mentioned above, enter an amount that is substantially
Form 1041 line 15a.
equivalent to the amounts discussed in this section.
• For a taxable entity filing a federal tax form other than those
Item 7. Other income mentioned above, enter an amount that is substantially
• For a taxable entity filing as a corporation for federal tax equivalent to the amounts discussed in this section.
purposes, enter the amount from Form 1120 Line 10 to the
extent not already included; and any total revenue passed

15
Foreign Dividends and Foreign Royalties fees paid to another attorney not within the same
Enter the amount of foreign royalties and foreign dividends, taxable entity;
including amounts reported under Section 78 or Sections - reimbursement of case expenses; and
951-964, Internal Revenue Code, to the extent included in - $500 per case for providing pro bono legal services.
gross revenue. • A taxable entity may exclude the tax basis of securities and
loans sold as determined under the Internal Revenue Code.
Net Distributive Income • A taxable entity that is a pharmacy cooperative may
A taxable entity’s pro rata share of net distributive income exclude flow-through funds from rebates from pharmacy
from another taxable entity treated as a partnership or wholesalers that are distributed to the pharmacy
as an S corporation for federal income tax purposes. Net cooperative’s shareholders.
distributive income for the calculation of total revenue is the
net amount of income, gain, deduction or loss of the pass- Dividends and Interest from Federal Obligations
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 is added obligations to the extent included in gross revenue. See
in computing total revenue.) Rule 3.587(b).
A taxable entity that owns an interest in a passive entity Other Exclusions
must not enter an amount on this item to deduct the taxable • A taxable entity that qualifies as a lending institution may
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 to the extent included in gross revenue.
revenue of another taxable entity. See Rule 3.587. • A taxable entity that is a professional employer organization
may enter an amount equal to payments received from
Note: For an upper tier entity using the tiered partnership election,
the total revenue passed by the lower tier entity to the upper
a client for wages, payroll taxes, employee benefits
tier entity cannot be deducted as net distributive income. and workers’ compensation benefits for the covered
employees. A professional employer organization cannot
Schedule C Dividends Received exclude payments received from a client for payments
For a taxable entity reporting a Schedule C dividends made to independent contractors assigned to the client
received deduction, enter the amount reported on Form and reportable on Internal Revenue Service Form 1099.
1120 line 29b to the extent the relating dividend income is • A taxable entity that is a health care provider may enter
included in gross revenue. 100% of revenues (including copayments, deductibles and
coinsurance) from Medicaid, Medicare, CHIP, workers’
Revenue from Disregarded Entities
compensation claims and TRICARE, to the extent included
A taxable entity may exclude, to the extent included in
in gross revenue, and actual costs for uncompensated
gross revenue (Items 1-7 above), its share of income
care. Healthcare institutions may enter only 50% of these
directly attributable to another entity that is treated as
exclusions. See Texas Tax Code Section 171.1011(p)(2)
disregarded for federal income tax purposes but that is
for the definition of a healthcare institution. To calculate
not treated as disregarded in a combined group report for
the cost of uncompensated care, see Rule 3.587(b)(1).
franchise tax purposes. A taxable entity cannot exclude its
• A taxable entity that is a management company may enter
share of income directly attributable to another entity that
an amount equal to reimbursements of specified costs
is treated as disregarded for federal income tax purposes
incurred in its conduct of the active trade or business of a
and is treated as disregarded in a combined group report
managed entity.
for franchise tax reporting purposes.
• A taxable entity may enter amounts received that are
Flow-through Funds directly derived from the operation of a facility that is
To the extent included in gross revenue: located on property owned or leased by the federal
• A taxable entity may exclude an amount for flow-through government and managed or operated primarily to house
funds mandated by: (1) law, (2) fiduciary duty or (3) contract members of the armed forces of the United States to the
or subcontract (limited to sales commissions to non- extent included in gross revenue.
employees, the tax basis of securities underwritten, and a • A taxable entity that is a qualified live event promotion
taxable entity’s flow-through payments to subcontractors company may exclude from revenue a payment made
to provide services, labor or materials in connection with to an artist in connection with the provision of a live
the design, construction, remodeling, remediation or entertainment event or live event promotion services to
repair of improvements on real property or the location of the extent included in gross revenue.
boundaries to real property); • A taxable entity that is a qualified destination management
• A taxable entity that provides legal services may exclude company may exclude from revenue payments made to
an amount equal to the: other persons to provide services, labor, or materials in
- damages due the claimant; connection with the provision of destination management
- funds subject to a lien or other contractual obligation services to the extent included in gross revenue.
arising out of the representation, other than fees owed • A taxable entity that provides a pharmacy network
to the attorney; may exclude reimbursements, pursuant to contractual
- funds subject to a subrogation interest or other third-party agreements, for payments to pharmacies in the pharmacy
contractual claim; network to the extent included in gross revenue.
16
• A taxable entity that is primarily engaged in the business Item 10. Total revenue
of transporting aggregates may exclude subcontracting Item 8 minus Item 9. If less than zero, enter zero. If the
payments made by the taxable entity to independent annualized total revenue is less than or equal to $2,470,000,
contractors for delivery services performed on behalf of and the entity is not an upper or lower tier entity making the
the taxable entity to the extent included in gross revenue. tiered partnership election, stop here, you are not required
• A taxable entity primarily engaged in the business to file a franchise tax report. However, you are required to
of transporting barite may exclude subcontracting file a Public Information Report (Form 05-102) or Ownership
payments made by the taxable entity to nonemployee Information Report (Form 05-167). If the annualized total
agents for transportation services performed on behalf revenue is $20 million or less, the entity may choose to file
of the taxable entity to the extent included in gross using the EZ Computation (Form 05-169).
revenue.
Note: The tiered partnership election is not allowed if the lower
• A taxable entity primarily engaged in the business of tier entity, before passing total revenue to the upper tier
performing landman services may exclude subcontracting entities, owes no tax. An upper or lower tier entity making
payments made by the taxable entity to nonemployees a tiered partnership election qualifies to use the EZ
for the performance of landman services on behalf of the computation only if the lower tier entity would have qualified
taxable entity to the extent included in gross revenue. for the EZ computation before passing total revenue to the
• A taxable entity may exclude the actual cost paid by the upper tier entities.
taxable entity for a vaccine.
Item 11. Cost of goods sold (COGS)
• A taxable entity primarily engaged in the business of
A taxable entity has eligible COGS ONLY if the taxable
transporting goods by waterways that does not subtract
entity sells real or tangible personal property in the ordinary
the cost of goods sold in computing its taxable margin may
course of business OR if the taxable entity has qualifying
exclude direct costs of providing transportation services by
COGS under any one of the exceptions noted in Texas
intrastate or interstate waterways to the same extent that a
Tax Code Section 171.1012 or Rule 3.588. Enter ONLY
taxable entity that sells in the ordinary course of business
qualifying COGS to compute margin.
real or tangible personal property would be authorized by
Texas Tax Code Section 171.1012 to subtract those costs Note: Any expense paid using proceeds from a qualifying loan or
as COGS in computing its taxable margin, notwithstanding grant under the CARES Act or related legislation is includable
Texas Tax Code Section 171.1012(e)(3). as cost of goods sold, if otherwise allowed under the statute,
• A taxable entity that is registered as a motor carrier under even though the proceeds are not included in the taxable
entity’s total revenue. Additionally, any expense paid using
Transportation Code, Chapter 643 may exclude flow-
proceeds from qualifying grants for broadband deployment
through revenue derived from taxes and fees to the extent in Texas is includable as cost of goods sold, if otherwise
included in gross revenue. allowed under the statute, even though the proceeds are
• A taxable entity primarily engaged in the business of not included in the taxable entity’s total revenue.
providing services as an agricultural aircraft operation may
exclude the cost of labor, equipment, fuel and materials “Goods” are defined as real or tangible personal property sold
used in providing those services. in the ordinary course of business. Tangible personal property
• A taxable entity may exclude from total revenue, to the includes computer programs as well as films, sound recordings,
extent included, revenue received from a qualified low videotapes, live and prerecorded television and radio programs,
producing oil or gas well. books and other similar property. Tangible personal property
• A taxable entity that is a Performing Rights Society does not include intangible property or services.
may exclude from total revenue, to the extent included, Generally, a taxable entity in the service industry does
payments made to the public performance rights holder not have qualifying COGS as they do not sell tangible
and the copyright owner for whom the taxable entity personal property or real property in the ordinary course
licenses the public performances. of business. However, if a transaction contains elements
• A taxable entity may exclude from total revenue, to the of both a sale of tangible personal property and a service,
extent included, qualifying loan or grant proceeds received a taxable entity may subtract as COGS the cost otherwise
under the Coronavirus Aid, Relief, and Economic Security allowed by Texas Tax Code Section 171.1012 in relation to
Act or similar legislation that were not included in the the tangible personal property sold. The labor costs related
taxable entity’s federal tax gross income. to the services performed are not eligible COGS.
• A taxable entity may exclude from total revenue, to the
extent included, qualifying grants related to broadband A taxable entity may make a subtraction in relation to the
deployment in Texas. COGS only if that entity owns the goods. A taxable entity that
is a member of a combined group may subtract allowable
Intercompany eliminations – combined reports costs as COGS if the goods for which the costs are incurred
To the extent included in total revenue, subtract items of total are owned by another member of the combined group. A
revenue received from members of the combined group. payment made to an affiliated entity that is not a member of
the combined group may only be included in COGS if the
Tiered partnership election
transaction is made at arm’s length.
For a lower tier entity that makes the tiered partnership election,
enter the total revenue passed to the upper tier entities.

17
A taxable entity that is subject to Internal Revenue Code, material, including property taxes paid on building and
263A, 460 or 471 may choose to expense or capitalize equipment, and taxes paid in relation to services that are
allowable costs associated with the goods purchased or a direct cost of production;
produced. All other taxable entities will expense allowable • the cost of producing or acquiring electricity sold; and
costs associated with the goods purchased or produced. • a contribution to a partnership in which the taxable entity
owns an interest that is used to fund activities, the costs
Expensing COGS - An entity that elects to expense allowable of which would otherwise be treated as COGS of the
costs will have no beginning or ending inventory. The entity partnership, but only to the extent that those costs are
should include all allowable costs as described below for related to goods distributed to the contributing taxable
the accounting period on which the report is based. entity as goods-in-kind in the ordinary course of production
Capitalized COGS - If the entity elects to capitalize COGS, activities rather than being sold by the partnership.
the calculation will include those allowable costs that were in In addition to the items previously listed, COGS includes
inventory at the beginning of the period upon which the tax is the following costs in relation to the taxable entity’s goods:
based plus allowable costs capitalized during the period minus • deterioration of the goods;
allowable costs in ending inventory at the end of the period. • obsolescence of the goods;
The election to expense or capitalize allowable costs is • spoilage and abandonment, including the costs of rework,
made by filing the franchise tax report using one method or reclamation and scrap (does NOT include impairment
the other. The election is for the entire period on which the costs/expenses);
report is based and may not be changed after the due date • if the property is held for future production, preproduction
or the date the report is filed, whichever is later. direct costs allocable to the property, including storage
and handling costs, unless specifically excluded below;
Note: Generally COGS for Texas franchise tax reporting purposes • postproduction direct costs allocable to the property,
will not equal the amount used for federal income tax
including storage and handling costs, unless specifically
reporting purposes or for financial accounting purposes.
Typically, this amount cannot be found on a federal income
excluded below;
tax report or on an income statement. It is a calculated • the cost of insurance on a plant or a facility, machinery,
amount specific to Texas franchise tax. equipment or materials directly used in the production of
the goods;
Cost of goods sold includes all direct costs of acquiring or • the cost of insurance on the produced goods;
producing the goods, including: • the cost of utilities, including electricity, gas and water,
• labor costs including W-2 wages, IRS Form 1099 wages, directly used in the production of the goods;
temporary labor, payroll taxes and benefits; • the costs of quality control, including replacement of
• cost of materials that are an integral part of specific defective components pursuant to standard warranty
property produced; policies, inspection directly allocable to the production of
• cost of materials that are consumed in the course of the goods and repairs and maintenance of goods; and
performing production activities; • licensing or franchise costs, including fees incurred in
• handling costs, including costs attributable to processing, securing the contractual right to use a trademark, corporate
assembling, repackaging and inbound transportation; plan, manufacturing procedure, special recipe or other
• storage costs (except for the rental of a storage facility), similar right directly associated with the goods produced.
including the costs of carrying, storing or warehousing property;
• depreciation, depletion and amortization reported on Cost of goods sold does not include:
the federal income tax return on which the report under • any amounts excluded from revenue;
this chapter is based, to the extent associated with and • officers’ compensation;
necessary for the production of goods, including recovery • the cost of renting or leasing equipment, facilities or real
described by, Sec. 197, Internal Revenue Code, and property that is not used for the production of the goods;
property described in Sec. 179, Internal Revenue Code; • selling costs, including employee expenses related to sales
• the cost of renting or leasing equipment, facilities or real and credit card fees;
property used for the production of the goods, including • distribution costs, including outbound transportation costs;
pollution control equipment and intangible drilling and dry • advertising costs;
hole costs (does NOT include impairment costs/ expenses); • idle facility expense;
• the cost of repairing and maintaining equipment, facilities or • rehandling costs;
real property directly used for the production of the goods, • bidding costs, which are the costs incurred in the solicitation
including pollution control devices; of contracts ultimately awarded to the taxable entity;
• costs attributable to research, experimental, engineering • unsuccessful bidding costs, which are the costs incurred in
and design activities directly related to the production of the the solicitation of contracts not awarded to the taxable entity;
goods, including all research or experimental expenditures • interest, including interest on debt incurred or continued
described by Sec. 174, Internal Revenue Code; during the production period to finance the production of
• geological and geophysical costs incurred to identify and the goods;
locate property that has the potential to produce minerals; • income taxes, including local, state, federal and foreign
• taxes paid in relation to acquiring or producing any income taxes, and franchise taxes that are assessed on
the taxable entity based on income;
18
• strike expenses, including costs associated with hiring • net distributive income reported to a natural person from
employees to replace striking personnel; however, COGS a limited liability company treated as a sole proprietor for
does include the wages of the replacement personnel, federal income tax purposes, regardless of whether it is a
costs of security and legal fees associated with settling positive or negative amount;
strikes; and • net distributive income reported to natural persons
• costs of operating a facility that is located on property from partnerships, trusts and limited liability companies
owned or leased by the federal government and managed treated as partnerships for federal income tax purposes,
or operated primarily to house members of the armed regardless of whether it is a positive or negative amount;
forces of the United States. • net distributive income reported to natural persons from
limited liability companies and corporations treated as S
Item 12. Indirect or administrative overhead costs corporations for federal income tax purposes, regardless
A taxable entity may subtract, as part of COGS, indirect/ of whether it is a positive or negative amount; and
administrative overhead costs, including all mixed service • stock awards and stock options deducted for federal
costs, such as security services, legal services, data income tax purposes.
processing services, accounting services, personnel
operations and general financial planning and financial Note: Any compensation paid using proceeds from a qualifying
management costs, that it can demonstrate are allocable loan or grant under the CARES Act or related legislation is
to the acquisition or production of goods. This amount is includable as compensation, if otherwise allowed under the
statute, even though the proceeds are not included in the
limited to 4% of total indirect/administrative overhead costs.
taxable entity’s total revenue. Additionally, any compensation
Any costs specifically excluded from the computation of paid using proceeds from qualifying grants for broadband
COGS may not be included in indirect or administrative deployment in Texas is includable as compensation if otherwise
overhead costs. allowed under the statute, even though the proceeds are not
included in the taxable entity’s total revenue.
Item 13. Other
The only allowable amounts to be entered on this line If an employee, officer, director, etc. is paid by more than
are related to undocumented worker compensation, one member of the combined group, that individual’s
compensation of active duty personnel, and aerospace compensation is capped at $450,000, per 12-month period
costs. These amounts will offset one another. The result can upon which the tax is based.
be either a negative (undocumented worker compensation)
or a positive number (active duty personnel compensation Net distributive income for the calculation of compensation
and aerospace costs). is the amount of income, gain, deduction and loss relating
to a pass-through entity or disregarded entity reportable to
Undocumented Worker Compensation the owner for the tax year of the entity regardless of whether
A taxable entity must exclude from COGS any compensation an actual distribution was made.
for undocumented workers for the period upon which the tax
is based. “Undocumented worker” means a person who is If net distributive income is a negative number, it must
present and employed in the United States but is not lawfully be included in the computation of compensation as
entitled to be present and employed in the United States. a negative number. There is no cap or limitation on
“negative” compensation.
Compensation of Active Duty Personnel
A taxable entity may include, as an additional cost, the To compute Net Distributive Income from a partnership:
wages and cash compensation paid during the period upon From IRS Form 1065 K-1, add boxes 1, 2, 3, 4, 5, 6a, 7, 8,
which the report is based to an individual for the period the 9a, 10 and 11. Subtract from that result Box 12, the Box 13
individual is serving on active duty as a member of the armed amounts that represent deductions and Box 21 (Foreign taxes).
forces of the United States if the individual is a resident of To compute Net Distributive Income from an S corporation:
this state at the time the individual is ordered to active duty, From IRS Form 1120S K-1, add boxes 1, 2, 3, 4, 5a, 6,
plus the cost of training a replacement for the individual. 7, 8a, 9 and 10. Subtract from that result Box 11, the Box
Aerospace Costs 12 amounts that represent deductions, and Code F Box 16
A qualified entity in the aerospace industry may subtract (Foreign taxes).
100 percent of costs properly allocated and incurred under Note: A single member LLC treated as a sole proprietorship for federal
the Federal Acquisition Regulation for the sale of goods or tax purposes may include in compensation the net distributive
services to the federal government that the taxable entity income to the single member that is a natural person.
has not already subtracted as cost of goods sold. See
Texas Tax Code Section 171.101(e) and (f). Wages and cash compensation DOES NOT include:
• payments on IRS Forms 1099;
Item 15. Wages and cash compensation • amounts excluded from gross revenue;
“Wages and cash compensation” means the following • an employer’s share of employment taxes;
amounts paid to officers, directors, owners, partners and • amounts paid to an employee whose primary employment
employees for the accounting period, limited to $450,000 per is directly associated with the operation of a facility that
person, prorated for the period upon which the tax is based: is located on property owned or leased by the federal
• Medicare wages and tips on Form W-2; government and managed or operated primarily to house
members of the armed forces of the United States.
19
Professional Employer Organization Compensation of Active Duty Personnel
A professional employer organization may only include A taxable entity may include, as an additional cost, the
wages and cash compensation paid to the entity’s own wages and cash compensation paid during the period upon
employees, and may not include wages, benefits, workers’ which the report is based to an individual for the period the
compensation benefits or payroll taxes of covered individual is serving on active duty as a member of the armed
employees. A taxable entity that is a client that contracts forces of the United States if the individual is a resident of
with a professional employer organization (or a temporary this state at the time the individual is ordered to active duty,
employment service as that term is defined by Sec. plus the cost of training a replacement for the individual.
93.001 Labor Code) may include amounts paid to the
professional employer organization relating to the covered Aerospace Costs
employees for wages as defined by Item 15 (Wages & A qualified entity in the aerospace industry may subtract
Cash Compensation) and Item 17 (Other – Compensation 100 percent of costs properly allocated and incurred under
of Active Duty Personnel), and may include amounts paid the Federal Acquisition Regulation for the sale of goods or
for employee benefits including workers’ compensation services to the federal government that the taxable entity
benefits, as defined by Item 16 (Employee Benefits). The has not already subtracted as compensation. See Texas
client may not include any administrative fee, payroll taxes Tax Code Section 171.101(e) and (f).
or other amounts related to the covered employees. In
addition, the client may not include as compensation any
Form 05-158-B
amounts reported on IRS Forms 1099. On request of the Texas Franchise Tax Report – Page 2
client company, the professional employer organization is Item 19. 70% of revenue
required to provide Form 05-176 (Revised Texas Franchise Multiply Item 10 times 70%. If less than zero, enter zero.
Tax Professional Employer Organization Report; Temporary
Service Report). This form contains information a client Item 20. Revenue less COGS
company needs to calculate their compensation deduction. Item 10 minus Item 14 – COGS. If less than zero, enter zero.
The form should not be sent to the Comptroller’s office but Item 21. Revenue less compensation
should be kept with the franchise tax report work papers. Item 10 minus Item 18 – Compensation. If less than zero,
Management Company enter zero.
A management company may not include as wages or cash Item 22. Revenue less $1 million
compensation any amounts reimbursed by a managed Item 10 minus $1 million. If less than zero, enter zero.
entity. A managed entity includes as compensation
reimbursements made to the management company for Item 23. Margin
wages and compensation as if the reimbursed amounts Enter the lowest amount from Items 19, 20, 21, or 22. If the
had been paid to employees of the managed entity. amount is less than zero, enter zero.

Item 16. Employee benefits Item 24. Gross receipts in Texas

Enter the cost of benefits provided to officers, directors, Texas gross receipts and gross receipts everywhere
owners, partners and employees, including workers’ should be reported for the same accounting period used
compensation, health care and retirement benefits. The in the calculation of total revenue. Gross receipts means
deduction for employee benefits is not limited to $450,000 all revenues reportable by a taxable entity on its federal
per person but is only deductible to the extent deductible for tax return, without deduction for the COGS or other costs
federal income tax purposes. incurred unless otherwise provided for by law.

Item 17. Other “Gross receipts in Texas” means:

The only allowable amounts to be entered on this line • sales of tangible personal property when the property is
are related to undocumented worker compensation, delivered or shipped to a purchaser within Texas;
compensation of active duty personnel, and aerospace • sales of real property located in Texas, including royalties
costs. These amounts will offset one another. The result can from oil, gas or other mineral interests;
be either a negative (undocumented worker compensation) • receipts from services performed within Texas;
or a positive number (active duty personnel compensation • rentals of property situated in Texas;
and aerospace costs). • royalties from use of patents or copyrights within Texas;
• receipts from the use of trademarks, franchises or licenses
Undocumented Worker Compensation within Texas.
A taxable entity must exclude from compensation any wages • sales or licenses of computer software or programs if the
and cash compensation paid to undocumented workers for legal domicile of the payor is Texas;
the period upon which the tax is based. “Undocumented • the net gain from the Texas-sourced sale of a capital asset
worker” means a person who is present and employed in or investment (a net loss from the sale of a capital asset
the United States but not lawfully entitled to be present and or investment is not included. See Rule 3.591(e)(2)(A));
employed in the United States. • sales of intangible property if the legal domicile of the payor
is Texas;
• sales of securities if the legal domicile of the payor is Texas. If

20
 securities are sold through an exchange, and the buyer cannot • the net gain from the sale of a capital asset
be identified, then 8.7% of the revenue is a Texas receipt; or investment (a net loss from the sale of a capital asset
• membership or enrollment fees paid for access to benefits or investment is not included. See Rule 3.591(e)(2)(A)).
if the payor is legally domiciled in Texas;
Note: For Items 24 and 25, a capital asset is any asset which is
• receipts from servicing of loans secured by real property held for use in the production of income, and is subject to
if the real property is located in Texas; depreciation, depletion or amortization. An investment is any
• the pro rata share of net income from a passive entity if the non-cash asset that is not a capital asset or inventory.
passive entity’s principal place of business is in Texas; and
• receipts from Internet hosting as defined by Texas Tax Code Item 26. Apportionment factor
Section 151.108(a) if the customer to whom the service is If Texas gross receipts in Item 24 are zero, enter zero. If
provided is located in Texas. See Rule 3.591(e)(13). Item 24 and Item 25 are the same and greater than zero,
enter 1.0000. If Item 24 is more than Item 25 and both are
Any item of revenue that is excluded from total revenue greater than zero, enter 1.0000. Otherwise, divide Item 24
under Texas law or United States law is not included in Texas by Item 25 and round to 4 places past the decimal.
gross receipts or gross receipts everywhere. For example,
a taxable entity should not include in Texas gross receipts: Item 27. Apportioned margin
• income excluded because of IRC Sections 78 or 951- 964; Multiply Item 23 by Item 26.
• dividends and/or interest received from federal obligations; Item 28. Allowable deductions
or Each of the following deductions may be subtracted from
• dividends for which a deduction is allowed on Schedule apportioned margin:
C, Form 1120. • A taxable entity may deduct 10% of the amortized cost of
In addition, a taxable entity that is a combined group should a solar energy device if the device meets the criteria in
not include in Texas gross receipts any revenues generated Texas Tax Code Section 171.107(b). The deduction may not
by a member of the group that is organized outside of Texas reduce apportioned margin below zero, and no carryover
and that does not have nexus in Texas. However, Texas of unused deductions is allowed.
gross receipts will include certain sales of tangible personal • A taxable entity may deduct 10% of the amortized cost of
property made to third party purchasers if the tangible equipment used in a clean coal project if the equipment
personal property is ultimately delivered to a purchaser in meets the criteria in Texas Tax Code Section 171.108(b).
Texas without substantial modification. For example, drop The deduction may not reduce apportioned margin below
shipments made by a member of a combined group from a zero, and no carryover of unused deductions is allowed.
Texas location to a Texas purchaser would be included in • A taxable entity may deduct relocation costs incurred in
Texas receipts based on the amount billed to the third party relocating the taxable entity’s main office or other principal
purchaser if the seller is also a member of the combined place of business to this state from another state if the
group and the seller does not have nexus. business meets the criteria in Texas Tax Code Section
171.109(b). The taxable entity must take the deduction on
Banking Corporations and Savings & Loan Associations: the entity’s first annual report described by Rule 3.584(c) (2).
Dividends and interest received by a banking corporation or The deduction may not reduce apportioned margin below
savings and loan association are Texas receipts if they are zero, and no carryover of unused deduction is allowed.
paid by a corporation incorporated in Texas or if they are
paid by an entity or person legally domiciled in Texas. A Item 29. Taxable margin
banking corporation should exclude from its Texas receipts Item 27 minus Item 28.
interest earned on federal funds and interest earned on Item 30. Tax rate
securities sold under an agreement to repurchase that are Enter the appropriate tax rate:
held in a correspondent bank domiciled in Texas. • 0.0075 (0.75%) for most entities
Note: If an entity has margin from the sale of management, • 0.00375 (0.375%) for qualifying wholesalers and retailers
distribution or administration services to or on behalf of a
Note: If the SIC code on Form 05-158-A does not fit the definition
regulated investment company or margin from the sale of
of qualifying retailers and wholesalers on page 4, the
management, administration, or investment service to an
0.375% tax rate will be denied when the report is processed.
employee retirement plan see Texas Tax Code 171.106.

Item 25. Gross receipts everywhere Item 31. Tax due

Any item of revenue excluded from total revenue (Item 10) Item 29 multiplied by Item 30.
must not be included in computing gross receipts everywhere. Item 32. Tax credits
Gross receipts everywhere include: Carry the amount of allowable tax credits forward from the
• all sales of tangible personal property; Credit Summary Schedule (Form 05-160).
• all rentals; Item 33. Tax due before discount
• all services; Item 31 minus Item 32. If less than zero, enter zero.
• all royalties;
• all other business receipts; Item 34. Discount
• all dividends and interest; and Discounts do not apply to reports due after Dec. 31, 2009.
21
Item 35. Total tax due Item 5. Investment credit available
Must equal the amount of tax due in Item 33 since discounts Leave blank. Not applicable to reports due after Dec. 31, 2016.
do not apply to reports due after Dec. 31, 2009.
Item 6. Job creation credit carried forward to this year
If this amount is less than $1,000, you owe no tax, but you must from prior years.
submit this report along with the Public Information Report Leave blank. Not applicable to reports due after Dec. 31, 2016.
(Form 05-102) and/or the Ownership Information Report
(Form 05-167). See note for tiered partnership exceptions. Item 7. Research credit carried forward from prior years
Enter the amount of unused repealed Subchapter O
Options for entities paying electronically include credit card, research and development credit carried forward to this
electronic check (Web EFT) or TEXNET (enrollment required). year for credits established on a report originally due prior
If paying by check, complete the franchise tax Payment to Jan. 1, 2008. (Repealed Subchapter O credit may be
Form (Form 05-170). Make the check payable to the Texas carried forward until the earlier of the expiration of the
Comptroller. Submit both pages of this report (Forms 05- unused credit or Dec. 31, 2027.)
158-A and 05-158-B), all appropriate schedules, the Public
Information Report (Form 05-102) and/or the Ownership Item 8. Unused Temporary credit for Business Loss
Information Report (Form 05-167), and if applicable, the Carryforward (BLC) from prior years
franchise tax payment form and your payment. Unused temporary credit for BLC carried over to this year
from prior years.
Note: If the tiered partnership election is made and total revenue
is passed, both the upper and lower tier entities owe any Note: This is not the total preserved amount of BLC reported to our
amount in Item 35, even if the amount is less than $1,000. office before filing the 2008 report. The amount reported on
this line is for the unused temporary credit from prior years.
Signature Block: Report may be signed by an officer,
director or other authorized person. This includes a paid Item 9. R & D Activities Credit Available
preparer authorized to sign the report. Enter the amount of R & D activities credit available which
includes the R & D activities credit and the carryforward
Form 05-160 from prior years as reported on Form 05-178, Item 14.
Texas Franchise Tax Credits Summary Schedule Item 10. Eligible historic structure credit
A taxable entity that is claiming or carrying forward any Enter the total amount of historic structure credit the entity
credits must file this schedule. established, purchased, or was assigned or allocated since
the prior year’s report, adjusted for any sale, assignment or
Additional Reporting Requirement for Combined Groups
allocation of the credits.
with Temporary Credit
The reporting entity of a combined group with a temporary Item 11. Historic structure credit carried forward from
credit for business loss carryforward preserved for itself and/ prior years
or its affiliates must submit common owner information using Enter the amount of historic structure credit carried forward
Webfile or by filing the Common Owner Information Report from prior years adjusted by any carryforward amount that has
(Form 05-177). This information must be submitted to satisfy been sold, assigned or allocated since the prior year’s report.
franchise tax filing requirements, even if the combined group
is not claiming the credit on the current year’s report. Submit Item 12. Historic structure credit available
the common owner information before or with your franchise Add Item 10 and Item 11 for total available historic structure
tax report to prevent processing delays. If you submit the credit amount which can be taken in the current year.
common owner information after you file your report, it will Item 13. 1992 Temporary credit
NOT immediately process to your account. If the combined Leave blank. Not applicable to reports due after Dec. 31, 2012.
group’s annualized total revenue is $2,470,000 or less, the
combined group is not required to file the Common Owner Part C – Credits Claimed
Information Report for that year. Item 14. Investment credit claimed
Not applicable to reports due after Dec. 31, 2016
PART A – Credit Limit
Item 1. Tax due before credits Item 15. Jobs creation credit claimed
Enter the amount of tax due before credits as reported on Not applicable to reports due after Dec. 31, 2016
Form 05-158-B, Item 31.
Item 16. Research credit claimed
Item 2. Credit Limit Claimed research credit carried forward to this year from
Item 1 multiplied by 0.50 (50%). a repealed Subchapter O credit established on a report
originally due prior to Jan. 1, 2008. Cannot be greater than
PART B – Credits Available Item 2 or Item 7.
Item 3. Investment credit installment from prior years
Leave blank. Not applicable to reports due after Dec. 31, 2016. Item 17. Temporary credit for BLC from this year only
A qualifying taxable entity must have preserved its right to
Item 4. Investment credit carried forward from prior years take this credit on or before the due date of its 2008 report.
Leave blank. Not applicable to reports due after Dec. 31, 2016. Enter the result of the following calculation in Item 17:

22
• preserved amount of business loss carryforwards (Item 2 Item 21. 1992 Temporary credit less additional tax due
of Form 05-172 filed in 2008) Leave blank. Not applicable to reports due after Dec. 31, 2012.
• multiplied by 7.75% (0.0775)
• multiplied by 4.5% (0.045). Item 22. Other
Leave blank. Not applicable to reports due after Dec. 31, 2012.
The unused carryover from a previous report should be
Note: Extension payments or prior payments should not be entered
reported in Item 18. in this item. Enter extension and prior payments on franchise
If the taxable entity is a combined group, each qualifying tax Form 05-170, Item 2.
member of the group should have made a separate Item 23. Total credits claimed
preservation of the business loss carryforwards. Use Add Items 14, 15, 16, 17, 18, 19, 20 and 22. Enter this
the cumulative amount of the preserved business loss amount on Item 32 of the tax report, Form 05-158-B.
carryforwards in the calculation of the credit.
Note: If a combined group member leaves the combined group Form 05-164
during a tax period, the combined group may claim the Texas Franchise Tax Extension Request
departing member’s yearly credit and the member’s available Filing Requirements: Any entity (including a combined
credit carryover for the report year. For subsequent reports, the group) that cannot file its annual (including the first
departed member’s yearly credit is no longer available to the annual) or final report by the original due date may request
combined group, and the combined group’s credit carryover
an extension of time to file on or before the due date. A
must be adjusted to remove the portion of carryover related to
the departed member. Additionally, the credit and any unused combined group must also file an Extension Affiliate List
credit carryover does not follow the departed member to a (Form 05-165) with the extension request.
separately filed report or another combined group report.
An extension for an annual, non-EFT (electronic funds
Item 18. Unused Temporary credit for BLC from prior transfer) payor will be through Nov. 15, 2024. When
years claimed submitting the extension request, the taxable entity must
Claimed temporary credit for BLC carried forward to this remit at least 90% of the tax that will be due with this year’s
year from prior years. Cannot exceed Item 8. report or 100% of the tax reported as due for the previous
calendar year (provided that the report due in the previous
Carryover of 2008 temporary credit for business loss calendar year was filed on or before May 14, 2024) for the
carryforwards extension to be valid.
Enter the amount of credit that exceeded the amount of
tax due on the 2008 or subsequent reports that has not A taxable entity that became subject to the franchise tax
already been used. If the EZ computation was used on a during 2023, filing its first annual report, may not use the
prior report, there is no carryover amount from that year. 100% extension option.

Example: A taxable entity had a business loss credit of $2,000 An entity that was included as an affiliate on a 2023
that could be used on the 2023 franchise tax report. The entity combined group report may not use the 100% extension
had $1,200 tax due, so they used only $1,200 of the available option if filing as a separate entity in 2024.
business loss credit. They may carry over the remaining $800
Combined Report Extensions
to subsequent report years. On the 2024 franchise tax report,
If the extension request is being made on behalf of a
the $800 carryforward is reported in Item 8. The amount of the
combined group, the reporting entity must also submit
carryforward used to reduce the current year’s tax liability is
Texas Franchise Tax Extension Affiliate List and include the
reported in Item 18.
reporting entity as an affiliate on the list.
Item 19. R & D activities credit claimed Final Reports: A taxable entity may request a 45-day
Cannot be greater than Item 2 or Item 9. extension and must remit with the extension request at
least 90% of the tax that will be due with the final report.
Item 20. Historic structure credit claimed Electronic Funds Transfer (EFT): Conditions for
Cannot be greater than Item 12. requiring a taxable entity to pay via EFT are outlined
Note: To claim the historic structure credit, the following must in Rule 3.9 concerning electronic filing and electronic
be included: funds transfers. Information about the EFT requirements
• Texas Historic Structure Credit Supplement (Form 05-180) can be viewed at www.comptroller.texas.gov/programs/
• Texas Historic Structure Credit Certificate (Form 05-901) systems/docs/96-590.pdf.
for each historic structure credit claimed.
The extension rules for mandatory EFT payors are different
•If the credit is not established prior to filing the report, from that of other taxpayers. To extend the due date of the
in lieu of Form 05-901, include the following: report from May 15, 2024 to Aug. 15, 2024, a taxable entity
• Certificate of Eligibility issued by the Texas Historical that is required to pay by EFT must make their extension
Commission; payment electronically via TEXNET, using tax type Code
• Audited Cost Report; and 13080 (Franchise Tax Extension), or via Webfile. The
• Texas Historic Structure Credit Registration (Form AP-235). payment must be posted on or before May 15, 2024.
With the extension request, taxable entities must remit at

23
least 90% of the amount of tax that will be due with this enter the affiliate’s federal employer identification number
year’s report or 100% of the tax reported as due for the (FEIN). If the affiliate does not have an FEIN, leave blank.
previous calendar year on the report due in the previous
calendar year. If the taxable entity elects to pay 100% of Column 3 – Blacken this circle if affiliate does not
the tax reported as due for the previous calendar year, the have nexus in Texas
previous year’s report must be filed on or before May 14, Blacken the circle if the affiliate is not organized in Texas
2024 for the extension to be valid. and does not have nexus in Texas.

Combined groups that are mandatory EFT payors must

file the required Extension Affiliate List by mail unless the
extension request is submitted through Webfile.
An EFT payor may request a second extension through
Nov. 15, 2024 to file the report by paying electronically on
or before Aug. 15, 2024, the balance of the amount of tax
that will be reported as due on Nov. 15, 2024, using tax
type Code 13080 (Franchise Tax Extension), Webfile or
by submitting a paper Extension Request if the entity has
paid all of the tax due with its first extension. If an electronic
extension payment is made, then the taxpayer should not
submit a paper Extension Request.
A combined group should not resubmit an Extension
Affiliate List when requesting a second extension.
Note: See Form 96-590, TEXNET Payment Instruction Booklet,
for additional information concerning requirements for EFT
payments. TEXNET payments greater than $1,000,000 must
be transmitted by 8:00 PM Central Time the business day
prior to the due date to be considered timely. Payments of
$1,000,000 or less must be completed by 10:00 AM Central
Time on the due date to be considered timely.

Item 1. Extension payment

Enter the amount submitted with this request.
Signature Block: Report may be signed by an officer,
director or other authorized person. This includes a paid
preparer authorized to sign the report.

Form 05-165
Texas Franchise Tax Extension Affiliate List
Filing Requirements: A reporting entity filing an extension
request on behalf of a combined group, must file the
extension affiliate list along with the Extension Request
(Form 05-164). Remember to include the reporting entity
as an affiliate on the Extension Affiliate List. If the combined
group is required to pay using TEXNET and makes an
extension payment electronically, it is not required to file
Form 05-164, but must submit an Extension Affiliate List.
The filing of this list by itself does not constitute a valid
extension. Attach as many forms as necessary to report all
members of the combined group.
Column 1 – Legal name of affiliate
Enter the legal name of each affiliate in the combined
group. Affiliates can be any type of taxable entity including
corporations, LLCs, partnerships (general, limited and limited
liability), business trusts, professional associations, etc.
Column 2 – Affiliate’s Texas Taxpayer Number
Enter the assigned Texas taxpayer number of the affiliate. If
the affiliate does not have a taxpayer identification number,

24
Form 05-166
Texas Franchise Tax Affiliate Schedule
Filing Requirements: A reporting entity filing a combined report on behalf of an affiliated group engaged in a unitary
business must complete the required information for each member of the group, including the reporting entity, on this form
(Form 05-166). Attach as many forms as necessary.
Additional Reporting Requirement for Combined Groups with Temporary Credit – The reporting entity of a combined group
with a temporary credit for business loss carryforward preserved for itself and/or its affiliates must submit common owner
information using Webfile or by filing a Common Owner Information Report (Form 05-177). This information must be submitted
to satisfy franchise tax filing requirements, even if the combined group is not claiming the credit on the current year’s report.
Submit the common owner information before or with your franchise tax report to prevent processing delays. If you submit the
common owner information after you file your report, it will NOT immediately process to your account.
If the combined group’s annualized total revenue is $2,470,000 or less, the combined group is not required to file the Affiliate
Schedule or Common Owner Information Report for that year.

Item 2. Affiliate’s Texas taxpayer number

Enter the Texas taxpayer number that has been assigned to the Item 3. Affiliate NAICS code
affiliated entity by the Comptroller’s office. If the affiliate does not Enter the code that is appropriate for the affiliate. NAICS codes
have an assigned number, enter the federal employer identification can be found at www.census.gov/naics/.
number (FEIN). If the affiliate does not have a separate FEIN,
leave blank.
Item 6. Affiliate reporting Item 7. Affiliate reporting
begin date end date
Enter the begin date of the Enter the end date of
Item 4. Blacken circle if Item 5. Blacken circle if
affiliate’s accounting period that the affiliate’s accounting
disregarded for franchise tax this affiliate does NOT
is included in the combined period that is included
If this affiliate is a disregarded entity have NEXUS in Texas
report. See note under in the combined report.
for federal income tax reporting Blacken this circle if the
“Accounting Period of the See note under
purposes, the reporting entity may affiliate is not organized in
Combined Group” (page 8). “Accounting Period of
blacken this circle and treat the entity Texas and does not have
the Combined Group”
as disregarded for franchise tax nexus (i.e., physical presence
(page 8).
reporting purposes. Blackening this or economic nexus) in Texas.
circle means that the disregarded
entity will not unwind its
operations from its “parent” entity
and both entities are considered
to have nexus in Texas for
purposes of apportionment. If
circle is blackened, enter zero in
Items 8-11.

Item 8. Gross receipts

subject to throwback in
Item 11. Cost of goods sold (COGS)
other states
or compensation Item 9. Gross receipts
Leave this field blank.
Item 10. Gross receipts in Texas The reporting entity makes an election everywhere
Previously, Texas Tax
The amount entered is the portion on behalf of the combined group to The amount entered
Code Section 171.103(c)
of gross receipts everywhere that compute margin using one of the should equal the gross
required that Texas gross
are attributable to Texas before following four calculations: revenue of the entity
receipts subject to throwback
intercompany eliminations but after • 70% of total revenue before intercompany
provisions in other states be
exclusions from revenue. See the • Total revenue minus COGS eliminations but after other
reported for each member of
instructions for Item 24 of Form • Total revenue minus exclusions from revenue.
the combined group. Texas
05-158-B and Rule 3.591 for more compensation To determine gross
Tax Code Section 171.103(c)
information on determining Texas receipts everywhere,
has been repealed. • Total Revenue minus $1 million
receipts. Not required for affiliates review the instructions for
that do not have nexus in Texas. Items 1-7 and Item 9 of
If the reporting entity elects the COGS
Form 05-158-A.
or compensation method, enter the
applicable amount for each member of
the combined group.
25
Form 05-167 Signature Block: Report may be signed by an officer,
Texas Franchise Tax Ownership Information director or other authorized person. This includes a paid
preparer authorized to sign the report.
Report
Filing Requirements: The Ownership Information Report
Form 05-169
(OIR) is to be filed for each taxable entity other than a
legally formed corporation, limited liability company, limited Texas Franchise Tax EZ Computation Report
partnership, professional association or financial institution. Filing Requirements: Any entity (including a combined
group) that has annualized total revenue of $20 million or
The OIR is due on the date the franchise tax report is due less is eligible to use the EZ computation to report their
and must be completed and signed by a partner, member, franchise tax. Upper and lower tier entities, when the tiered
owner, or other authorized person of the taxable entity. A partnership election has been made, qualify for the EZ
separate OIR is to be filed by each taxable entity that files computation only if the lower tier entity would have qualified
a separate franchise tax report or that is part of a combined for the EZ computation before total revenue is passed to the
group (unless the taxable entity is not organized in Texas upper tier entities. Taxable entities that elect this method to
and does not have nexus in Texas). file are not eligible to take any credits or deductions. When
using the EZ computation, the current year’s portion of the
Even if the franchise tax report is filed and all taxes paid, the temporary credit for business loss carryforwards may not
entity’s right to transact business may be forfeited for failure be used and may not be carried over to a future period. If a
to file the completed, signed OIR. The effects of forfeiture combined group elects to use the EZ computation method
may include the denial of the taxable entity’s right to sue or to report its franchise tax, the reporting entity is required to
defend in a Texas court, and each partner, member or owner provide the requested information on Texas Franchise Tax
may become personally liable for certain debts of the entity Affiliate Schedule (Form 05-166) for each member of the
(Texas Tax Code Sections 171.251, 171.252 and 171.255). combined group.
Address changes can be indicated by blackening the circle
Item 1. Gross receipts or sales
after the Taxpayer Name.
See instructions for Item 1 on Form 05-158-A (page 14).
Changes to the registered agent or registered office must be
Item 2. Dividends
filed directly with the Secretary of State, and cannot be made
See instructions for Item 2 on Form 05-158-A (page 14).
on this form. The changes can be made online or on forms
downloaded from their website at www.sos.texas.gov/. Item 3. Interest
See instructions for Item 3 on Form 05-158-A (page 14).
Section A:
Report the name, title and mailing address of each general Item 4. Rents
partner and each person or entity that owns an interest of See instructions for Item 4 on Form 05-158-A (page 14).
10% or more of the taxable entity as of the date that the
report is filed. Item 5. Royalties
See instructions for Item 5 on Form 05-158-A (page 15).
Trusts should report their trustee information and not check
any box (partner or other). Associations should report Item 6. Gains/losses
information for the individuals who have authority to sign See instructions for Item 6 on Form 05-158-A (page 15).
a contract on behalf of the association and not check any Item 7. Other income
box (partner or other). All other entities should report their See instructions for Item 7 on Form 05-158-A (page 15).
executive board members and check the other box. If
there is no federal employer identification number for the Item 8. Total gross revenue
owner(s), leave the field blank. (Do not enter any Social See instructions for Item 8 on Form 05-158-A (page 15).
Security numbers.)
Item 9. Exclusions from gross revenue
Section B: Do not enter COGS or compensation amounts as they
Registered Agent and Registered Office - This should include cannot be deducted if electing to use the EZ computation.
the entity’s registered agent or agent for service of process See instructions for Item 9 on Form 05-158-A (page 15).
in accordance with Texas Tax Code Section 171.354. Item 10. Total Revenue
Changes that occur after the report is filed should be See instructions for Item 10 on Form 05-158-A (page 17).
reported to the Comptroller on the next OIR the entity is
Item 11. Gross receipts in Texas
required to file. The Comptroller will not accept changes
See instructions for Item 24 on Form 05-158-B (page 20)
during the year, except as noted below.
and Rule 3.591 for more information on determining
An individual whose name was included on the report but Texas receipts.
who was not associated with the entity on the date the report Item 12. Gross receipts everywhere
was filed, may file a sworn statement to that effect with the See instructions for Item 25 on Form 05-158-B (page 21)
Comptroller. An entity that made an error on its OIR may and Rule 3.591 for information on determining gross
file an amended OIR with a cover letter explaining the error. receipts everywhere.
26
Item 13. Apportionment factor The $50 penalty is due in addition to any other penalties
See instructions for Item 26 on Form 05-158-B (page 21). assessed for the reporting period.
Item 14. Apportioned revenue If the taxable entity did not file an extension request on or
Multiply Item 10 by Item 13. before the due date, and the franchise tax payment is not
postmarked on or before the due date, then a penalty of 5%
Item 15. Tax due before discount of the tax reported as due is assessed (multiply Item 3 by
Multiply Item 14 by 0.331% (0.00331). 0.05). If the payment is more than 30 days delinquent, an
Item 16. Discount additional 5% penalty is assessed.
Discounts do not apply to reports due after Dec. 31, 2009. For the first annual and final franchise tax report, if the
Item 17. Total tax due timely extension payment was not at least 90% of the tax
Item 17 must equal Item 15. that is due, then penalty applies to any tax not paid by the
original due date.
If this amount is less than $1,000, you owe no tax, but you
must submit this report along with the Public Information If there is a timely filed extension request for an annual
Report (Form 05-102) and/or the Ownership Information report, and the extension payment was not at least 100%
Report (Form 05-167). of the tax reported as due for the previous calendar year
(on the report due in 2023, filed on or before May 14, 2024)
Options for entities paying electronically include credit or 90% of the tax that is due with the 2024 annual report,
card, electronic check (Web EFT) or TEXNET (enrollment then penalty applies to any part of the 90% not paid on or
required). If paying by check, complete the franchise tax before May 15, 2024, and any part of the 10% not paid on
Payment Form (05-170). Make the check payable to the or before Nov. 15, 2024.
Texas Comptroller. Submit this report, all appropriate
schedules, the Public Information Report and/or the For taxable entities required to pay their franchise tax by
Ownership Information Report, and if applicable, the EFT, see Rule 3.585 for penalty calculations.
franchise tax Payment Form 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
is passed, both the upper and lower tier entities owe any within 60 days of the original or extended due date, interest
amount in Item 17, even if the amount is less than $1,000 or will be assessed beginning on the 61st day.
annualized total revenue after the tiered partnership election
is $2,470,000 or less. For more information on interest calculations, see
www.comptroller.texas.gov/taxes/file-pay/interest.php.
Signature Block: Report may be signed by an officer,
director or other authorized person. This includes a paid Form 05-175
preparer authorized to sign the report.
Texas Franchise Tax Tiered Partnership Report
Filing requirements: This form must be completed by all
Form 05-170 upper and lower tier entities making the tiered partnership
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
electronically is required to submit the Payment Form Section 171.1015 is not mandatory; it is a filing option
with a check or money order made payable to the Texas for entities in a tiered partnership arrangement. A “tiered
Comptroller. Enter the entity’s Texas taxpayer number and partnership arrangement” means an ownership structure
the report year on the check. For a combined group report, in which any of the interests in one taxable entity treated
enter the reporting entity’s Texas taxpayer number and the as a partnership or an S corporation for federal income
report year on the check. tax purposes (a “lower tier entity”) are owned by one or
more other taxable entities (an “upper tier entity”). The
Item 1. Total tax due on this report tiered partnership election is not an alternative to combined
Enter the amount of tax due as reflected on Long Form reporting. Combined reporting is mandatory for taxable
Report (Form 05-158-B, Item 35), or EZ Computation entities that meet the ownership and unitary criteria.
Report (Form 05-169, Item 17). Therefore, the tiered partnership election is not allowed if
Item 2. Enter prior payment the lower tier entity is included in a combined group.
Enter prior payments, such as an extension payment. If the lower tier entity has $2,470,000 or less in annualized
Item 3. Net tax due total revenue or owes less than $1,000 in tax before
Item 1 minus Item 2. passing total revenue to the upper tier entities, this election
is not allowed. If the election is made and total revenue
Item 4. Penalty is passed, both the upper and lower tier entities owe any
A $50 late filing penalty is assessed if a franchise tax report amount of tax that is calculated as due even if the amount is
(Long Form or EZ Computation) is filed after the due date. less than $1,000 or annualized total revenue after the tiered
partnership election is $2,470,000 or less.
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Lower Tier Entities: negatively impact the reporting entity’s and affiliate’s
If the entity filing this report is a lower tier entity, then enter franchise tax account status with our office.
the requested information below for each upper tier entity
to which revenue was passed. Common Owner Identification
The common owner is the entity or individual that owns
Item 1. Enter the lower tier entity’s total revenue before more than 50 percent (directly or indirectly) of each
revenue is passed to upper tier entities. affiliate of the combined group. The reporting entity is not
necessarily the common owner. Enter only one common
Item 2. Enter the Texas taxpayer number or federal owner identification number.
employer identification number (FEIN) of the upper tier
entity to which the total revenue was passed. If the common owner is a business, enter the 11-digit Texas
taxpayer number or the federal employer identification 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 an individual, enter the 11-digit
Texas taxpayer number or Social Security number.
Item 4. Enter the legal name and address of the upper tier
entity to which the total revenue was passed. Common Owner Name
Enter the business name of the common owner or the first
Item 5. Enter the state of formation of the upper tier entity. name, middle initial and last name of the individual that
Item 6. Leave blank. is the common owner. The common owner identification
number and common owner name should be for the same
Item 7. Blacken this circle. entity or individual.
Upper Tier Entities: Dates
If the entity filing this report is an upper tier entity, then enter Enter the date this entity or individual became the common
the requested information below for each lower tier entity owner of the combined group. The start date is not the
that total revenue was passed from. same as the combined group accounting period date or
Item 1. Enter the lower tier entity’s total revenue before privilege period.
revenue is passed to upper tier entities. If applicable, enter the date this entity or individual ceased
Item 2. Enter the Texas taxpayer number or FEIN of the being the common owner of the combined group.
lower tier entity from which the total revenue was passed. Check the box if this entity or individual is still the common owner.
Item 3. Enter the amount of total revenue included by the
upper tier entity that was passed from the lower tier entity.
Form 05-178
Texas Franchise Tax Research and
Item 4. Enter the legal name and address of the lower tier Development Activities Credit Schedule
entity from which total revenue was passed. Subchapter M provides an option to receive a franchise
Item 5. Enter the state of formation of the lower tier entity. tax credit for certain research and development activities.
A taxable entity is not eligible for the franchise tax credit if
Item 6. Blacken this circle. the taxable entity, or any member of its combined group,
received a sales tax exemption under Texas Tax Code
Item 7. Leave blank.
Section 151.3182 during the period on which the franchise
Note: An upper tier entity may also be a lower tier entity if there are tax is based.
multiple tiers. If this is true for the upper tier entity filing this
report, then complete both upper and lower tier information Qualified research and qualified research expense, as
as requested above. defined by Section 41 of the Internal Revenue Code, are
limited to research conducted in Texas. An increased
Form 05-177 amount of credit is allowed for taxable entities that contract
Texas Franchise Tax Common Owner with public or private institutions of higher education for
Information Report the performance of qualified research and have qualified
Filing requirements: The reporting entity of a combined research expenses incurred in Texas under the contract
group with a temporary credit for business loss carryforward during the period on which the report is based. The credit
preserved for itself and/or its affiliates must submit common may be carried forward no more than 20 consecutive reports.
owner information by the due date of the report each year. The credit for any report equals 5.0 percent of the difference
This information must be submitted to satisfy franchise between qualified research expenses in Texas (QRET) and
tax filing requirements, even if the combined group is not 50 percent of the average amount of QRET incurred during
claiming the credit on the current year’s report. However, the three tax periods preceding the period on which the
if the combined group’s annualized total revenue is report is based. If the taxable entity contracts with one or
$2,470,000 or less, the combined group is not required more public or private institutions of higher education for
to file a Common Owner Information Report for that year. the performance of qualified research and the taxable entity
Failure to satisfy all franchise tax filing requirements will has QRET under contract during the period on which the

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report is based, the credit for the report equals 6.25 percent Enter the amount of expenses reported in Item 4a that were
of the difference between all QRET incurred during the incurred in Texas under contract with one or more public or
period on which the report is based and 50 percent of the private institutions of higher education in the third preceding
average amount of all qualified research expenses incurred tax period.
during the three tax periods preceding the period on which
Note: If the entity has no qualifying expenses for research
the report is based. conducted in Texas for one or more of the three preceding
If the taxable entity has no QRET in one or more of the periods, skip to Item 10.
three tax periods preceding the period on which the report Item 5. Average QRET for preceding periods
is based, the credit for the period on which the report is Add Items 2a, 3a and 4a, then divide by 3.
based equals 2.5 percent of the QRET incurred during
that period. If the taxable entity contracts with one or more Item 6. Average QRET X 50%
public or private institutions of higher education for the Multiply Item 5 by 0.50.
performance of qualified research and the taxable entity
Item 7. QRET Difference
has QRET incurred under contract during the period on
Subtract Item 6 from Item 1a. If less than zero, enter zero.
which the report is based, but has no QRET in one or more
of the three tax periods preceding the period on which the Item 8. Credit
report is based, the credit for the period on which the report If the entity does not have any qualifying expenses for
is based equals 3.125 percent of all QRET incurred during research conducted in Texas under contracts with public
that period. or private institutions of higher education for the period
covered by the report (Item 1b), multiply Item 7 by 0.05.
Filing requirements: Any entity (including a combined
group) creating or claiming a Research and Development Item 9. Credit
(R&D) Activities credit must file this report. If the entity has expenses that were incurred in Texas
under contracts with public or private institutions of higher
Item 1a. Total QRET for the period covered by this report
education for the period covered by the report (Item 1b),
Enter the total amount of qualifying expenses for research
multiply Item 7 by 0.0625.
conducted in Texas for the period covered by the report.
Note: If the entity has 3 preceding periods of qualifying research
Item 1b. QRET under higher education contracts for expenses, skip to Item 12.
the period covered by this report
Enter the amount of expenses reported in Item 1a that were Item 10. Credit
incurred in Texas under contract with one or more public If the entity does not have any qualifying expenses for
or private institutions of higher education for the period research conducted in Texas under contracts with public
covered by the report. or private institutions of higher education for the period
covered by the report (Item 1b), multiply Item 1a by 0.025.
Item 2a. Total QRET in 1st preceding tax period
Enter the total amount of qualifying expenses for research Item 11. Credit
conducted in Texas in the first preceding tax period. If the entity has qualifying research expenses incurred in
Texas under contracts with public or private institutions of
Item 2b. QRET under higher education contracts for higher education for the period covered by the report and
the 1st preceding tax period Item 1b is greater than zero, multiply Item 1a by 0.03125.
Enter the amount of expenses reported in Item 2a that were
incurred in Texas under contract with one or more public or Item 12. R & D activities credit
private institutions of higher education in the first preceding Enter the amount reported in one of these items: Item 8, 9,
tax period. 10 or 11.

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

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