Non Taxable Entities
Non-Taxable Entities (Texas Margin Tax)
Taxable Entities Under the New Texas Franchise (Margin) Law do NOT Include:
- Sole Proprietorships
- General Partnerships. General Partnerships are not taxable entities when the direct ownership is entirely composed of natural persons and the liability is not limited under a statute of this state or another state, including registration as a limited liability partnership
- Passive Entities
- Exempt Entities under subchapter B
- Grantor Trusts as defined by Sections 671 and 7701(a)(30)(E), Internal Revenue Code, all of the grantors and beneficiaries of which are natural persons or charitable entities as described in Section 501(c)(3), Internal Revenue Code, excluding a trust taxable as a business entity pursuant to Treasury Regulation Section 301.7701-4(b)
- An estate of a natural person as defined by Section 7701(a)(30)(D), Internal Revenue Code, excluding an estate taxable as a business entity pursuant to Treasury Regulation Section 301.7701-4(b)
- An Escrow
- Real Estate Investment Trust (REIT). As defined by Section 856, Internal Revenue Code, and its “qualified REIT subsidiary” entities as defined by Section 856(i)(2), Internal Revenue Code, provided that (a) a REIT with any amount of its assets in direct holdings of real estate, other than real estate it occupies for business purposes, as opposed to holding interests in limited partnerships or other entities that directly hold the real estate, is a taxable entity; and (b) a limited partnership or other entity that directly holds the real estate as described in Paragraph (A) is not exempt under this subdivision, without regard to whether a REIT holds an interest in it
- Real Estate Mortgage Investment Conduits (REMIC) as defined by Section 860D, Internal Revenue Code.
- Nonprofit Self-Insurance Trusts created under Chapter 2212 of the Insurance Code or a predecessor statute
- Qualified Pension, Profit-Sharing, and Stock Bonus Plans qualified under Section 401(a) of the Internal Revenue Code