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A passive entity is specifically defined for franchise tax purposes in Texas Tax Code Section 171.0003. If a limited liability company (LLC) converts to a limited partnership, can the entity qualify as passive if it meets the 90 percent passive income test?
- Taxable Entities
A single-member limited liability company filing as a sole...
- TAX CODE CHAPTER 171. FRANCHISE TAX
(e) A taxable entity that owns an interest in a passive...
- Taxable Entities
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An entity is a passive entity only if: (1) the entity is a general or limited partnership or a trust, other than a business trust; (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: (A)
(e) A taxable entity that owns an interest in a passive entity shall exclude from the taxable entity's total revenue the taxable entity's share of the net income of the passive entity, but only to the extent the net income of the passive entity was generated by the margin of any other taxable entity.
Current with legislation from the 2023 Regular and Special Sessions signed by the Governor as of November 21, 2023. Section 171.0003 - Definition of Passive Entity. (a) An entity is a passive entity only if: (1) the entity is a general or limited partnership or a trust, other than a business trust; (2) during the period on which margin is based ...
(a) An entity is a passive entity only if: (1) the entity is a general or limited partnership or a trust, other than a business trust; (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:
In this chapter: (1) "Affiliated group" means a group of one or more entities in which a controlling interest is owned by a common owner or owners, either corporate or noncorporate, or by one or more of the member entities.
Texas Tax Code 171.0003 – Definition of Passive Entity. Current as of: 2024 | Check for updates | Other versions. (a) An entity is a passive entity only if: (1) the entity is a general or limited partnership or a trust, other than a business trust;
