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Texas Court of Appeals issues revised AMC opinion addressing application of COGS deduction

The Texas Court of Appeals for the Third Appellate District recently issued a substitute opinion to replace its opinion for American Multi-Cinema Inc. v. Hegar that it originally issued on April 30, 2015. In this case, the Court held that a movie theater was entitled to take a cost of goods sold (COGS) deduction in computing its margin for the Texas franchise tax. The substitute opinion reaches the same holding in favor of the movie theater, but it potentially narrows the scope of tangible personal property eligible for the COGS deduction. Also, the substitute opinion expands the scope of items that movie theaters may include in this deduction.