!["The hardest thing in the world to understand is the income tax." -- Albert Einstein ,[object Object],[object Object],[object Object]](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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Revised Franchise Tax Presentation
- 1. The Revised Texas Franchise Tax: What is it? How am I affected? What are the changes? David W. McKinney, CPA
- 13. What Are the Revised Franchise Tax Rates? Entities with $10 million or less in total revenue calculated through the E-Z computation 0.575% (.00575) Retail/Wholesale Trades 0.5% (.005) All entities, except… 1.0% (.01) Who is Affected? Tax Rate
- 15. Are There Discounts on the Franchise Tax? A taxable entity is entitled to a discount against the tax if its total revenue is less than $900,000, as follows: Discount Total Revenue Amount 40% Tax Due $500,000.00 - $699,999.99 60% Tax Due $400,000.00 - $499,999.99 20% Tax Due $700,000.00 - $899,999.99 80% Tax Due $300,000.01 - $399,999.99
- 23. How Do I Calculate the Franchise Tax Using Cost of Goods Sold? Cost of Goods Sold Calculation Total Revenue $899,000 ($500,000) Cost of Goods Sold Taxable Margin Tax Rate* Tax Due Before Discount Discount Rate Discount Allowed Net Tax Due $399,000 x .01 $3,990 x .20 ($798) $3,192 *.005 Tax Rate for Retail/Wholesale Entities
- 24. How Do I Calculate the Franchise Tax Using Compensation? Compensation Calculation Total Revenue $899,000 ($400,000) Compensation Taxable Margin Tax Rate* Tax Due Before Discount Discount Rate Discount Allowed Net Tax Due $499,000 x .01 $4,990 x .20 ($998) $3,992 *.005 Tax Rate for Retail/Wholesale Entities
- 25. How Do I Calculate the Franchise Tax Using the Alternative Method? Alternative Method Calculation Total Revenue $899,000 ($269,700) Alternative Method Taxable Margin Tax Rate* Tax Due Before Discount Discount Rate Discount Allowed Net Tax Due $629,300 x .01 $6,293 x .20 ($1,259) $5,034 *.005 Tax Rate for Retail/Wholesale Entities
- 26. How Do I Calculate the Franchise Tax Using the E-Z Calculation? E-Z Calculation Total Revenue $899,000 Tax Rate* Tax Due Before Discount Discount Rate Discount Allowed Net Tax Due x .00575 $5,169 x .20 ($1,034) $4,135 *.005 Tax Rate for Retail/Wholesale Entities