Texas Tax Code
§ 171.0004 — DEFINITION OF CONDUCTING ACTIVE TRADE OR BUSINESS
TX § 171.0004Title 2. STATE TAXATION · Part F. FRANCHISE TAX; CREDITS · Ch. 171. FRANCHISE TAX · Art. A. DEFINITIONS; TAX IMPOSED
Statute text
View on source(a)The definition in this section applies only to Section 171.0003.
(b)An entity conducts an active trade or business if:
(1)the activities being carried on by the entity include one or more active operations that form a part of the process of earning income or profit; and
(2)the entity performs active management and operational functions.
(c)Activities performed by the entity include activities performed by persons outside the entity, including independent contractors, to the extent the persons perform services on behalf of the entity and those services constitute all or part of the entity's trade or business.
(d)An entity conducts an active trade or business if assets, including royalties, patents, trademarks, and other intangible assets, held by the entity are used in the active trade or business of one or more related entities.
…
Legislative history
Acts 2006, 79th Leg., 3rd C.S., Ch. 1 (H.B. 3), Sec. 2, eff. January 1, 2008. Acts 2007, 80th Leg., R.S., Ch. 1282 (H.B. 3928), Sec. 4, eff. January 1, 2008.