Get Tx Ap-224 2017-2025

For the 2023 report year, an entity, including a combined group, can file using the EZ Computation if it has annualized total revenue of $20 million or less.

(a) An entity is a passive entity only if: (14396) (1) the entity is a general or limited partnership or a trust, other than a business trust; (14397) (2) during the period on which margin is based, the entity's federal gross income consists of at least 90 percent of the following income: (14398)

To qualify as a passive entity, the entity must be a partnership or trust, other than a business trust, for the entire accounting period on which the tax is based. The entity may not qualify as passive for the accounting period during which the conversion occurs even if it meets the 90 percent income test.

In order to qualify as a passive entity under Texas law, passive entities must have at least 90% of their gross income for federal income tax purposes from partnership allocations from downstream non-controlled flow-through entities, dividends, interest, royalties, or capital gains from the sale of real estate, ...

DISREGARDED ENTITIES An entity's treatment for federal income tax purposes does not determine its responsibility for Texas franchise tax. Therefore, partnerships, LLCs and other entities that are disregarded for federal income tax purposes, are considered separate legal entities for franchise tax reporting purposes.

Another helpful resource may be the comptroller's Texas Nexus Questionnaire (PDF), used by the comptroller to determine if a foreign entity is "doing business" in Texas for tax purposes.

certain grantor trusts, estates of natural persons and escrows; real estate mortgage investment conduits and certain qualified real estate investment trusts; a nonprofit self-insurance trust created under Insurance Code Chapter 2212; a trust qualified under Internal Revenue Code Section 401(a);