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Texas appellate court rules subcontractor payments for transportation services excluded from total revenue

The Texas Court of Appeals recently held that a company that subcontracted transportation services to deliver aggregate (a construction material) to construction sites could exclude payments to their subcontractors from total revenue, and therefore was entitled to receive a Revised Texas Franchise Tax refund. Reversing a lower court determination, the Court of Appeals determined that the company’s delivery services were “logically and reasonably” connected with the construction projects despite the fact that they were not “construction” services, and the services were not performed by a “construction” company. Upon this determination, the Court of Appeals declared that the subcontractor payments could be excluded from total revenue under Tex. Tax. Code Ann. Section 171.1011(g)(3).

 

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