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Texas Appellate Court addresses potential application of COGS deduction to service providers and sellers of intangible property

The Texas Court of Appeals for the Third Appellate District recently upheld a trial court’s determination that a movie theater was entitled to take a cost of goods sold (COGS) deduction in computing its margin for the Revised Texas Franchise Tax. The ruling potentially expands the application of the COGS deduction to certain service providers that were not previously thought to be eligible to claim the COGS deduction.

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