FTB Provides Guidance for California Treatment of the Revised Texas Franchise Tax
August 2009 - On July 20, 2009, we responded to the request for taxpayer guidance to determine the general eligibility for the Other State Tax Credit (OSTC) and the deductibility of the Revised Texas Franchise Tax (RTFT). In FTB Notice 2009-6, we describe the mechanics of the RTFTand set forth the relevant California case law and rules that taxpayers must analyze in light of their individual circumstances in order to determine whether the RTFT is a gross receipts tax, a gross income tax, or a net income tax. We outline methods and include a chart that summarizes which type of tax is eligible for the OSTC or deductible for California income and franchise tax purposes.
Due to the different types of taxpayers subject to the RTFT and the various types of "total revenue" (as defined by Texas law) subject to this tax, we cannot provide a definitive characterization of the different methods of the RTFT that applies to each and every taxpayer.