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Texas revises policies on temporary credit for business loss carryforwards

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The Texas Comptroller of Public Accounts has revised two policies governing the Texas Franchise Tax treatment of the temporary credit on taxable margin that allows for business loss carryforwards. The first policy revision is that the election to claim the credit, once made on a timely filed report due on or after Jan. 1, 2008, will no longer be subsequently required to be made on timely-filed reports for later years.

The second policy revision is that a combined group may claim the entire amount of available credit of a departing member for the accounting year of departure, with prospective adjustments in the amount of the annual credit and carryforward allowable to the rest of the continuing combined group. Both policy changes are contained in a letter from the director of the Comptroller’s Tax Policy Division to the director of the Comptroller’s Audit Division. They are effective for the current and prospective privilege periods, and prior privilege periods within the statute of limitations.