🧪 TEST MODE ACTIVE Use test card: 4242 4242 4242 4242
Ezel / Tax Rulings / TX
TX 9907783L Franchise Tax (PRIOR TO 01/01/2008) 1999-07-09

Did receiving financial assistance from a development corporation qualify a business for the former Texas enterprise-zone deductions?

Short answer: No. Section 171.1015 required both designation as an enterprise project by the Texas Department of Economic Development and qualifying investment in an approved enterprise zone. Receiving financial assistance from a corporation organized under the Development Corporation Act did not itself establish eligibility for the deductions.

Apply this to your situation

This page answers the general question as of 1999. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1999
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. STAR's discovery title mentions project designation before and after September 1, 2001, but this 1999 body contains no such date comparison; the public subject and summary follow only the body. The deduction belonged to the pre-2008 franchise tax; confirm current incentive law. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Development-corporation financial assistance did not qualify a business for the enterprise-zone deductions without formal enterprise-project designation and qualifying investment.

Section 171.1015 provided tax-base deductions for corporations that:

  1. were designated as enterprise projects by the Texas Department of Economic Development; and
  2. made qualifying investments in approved enterprise zones.

The taxpayer's described receipt of financial assistance from a corporation organized under the Development Corporation Act did not establish either required eligibility element.

The source title mentions a before-and-after September 1, 2001 issue, but the ruling body does not discuss that date. This page does not invent a holding about it.

Currency note: This deduction arose under the former franchise tax. Confirm current enterprise-zone or successor incentive law.

What this means for you

Businesses receiving local development financing

Financial support from a development corporation was not a substitute for state enterprise-project designation.

Tax professionals

Verify both formal designation and the qualifying investment in an approved zone before claiming the historical deduction.

Common questions

Q: Was development-corporation assistance enough?
A: No.

Q: What designation was required?
A: Enterprise-project designation by the Texas Department of Economic Development.

Q: Did the body decide a September 1, 2001 transition issue?
A: No. That date appears only in discovery metadata, not the ruling text.

Citations and references

  • Texas Tax Code Sec. 171.1015
  • 34 Tex. Admin. Code Sec. 3.561

Source

Original ruling text

July 9, 1999

Dear **:

This is in response to your inquiry concerning the franchise tax deductions for
enterprise zone projects. Sec. 171.1015 of the Texas Tax Code provides
specific tax base deductions for corporations that have been designated as
enterprise projects and have made qualifying investments in approved enterprise
zones.

Therefore, in order to take these deductions on its franchise tax report, a
corporation must have been designated as an enterprise project by the Texas
Department of Economic Development. The situation you described (i.e.,
receiving financial assistance from a corporation organized under the
Development Corporation Act) does not establish eligibility for the enterprise
zone deductions.

If you are interested in the state's enterprise zone program, you can contact
the Texas Department of Economic Development, P.O. Box 12728, Austin, Texas
78711-2728. The Department's phone number is (512)936-0100. Its web site is
www.tded.state.tx.us.

You can access information regarding the franchise tax and other state taxes
through the Comptroller's Web Site. The URL for our home page is
www.window.state.tx.us. Once our page is displayed on your screen click on
"Getting Help."

To access You can access information regarding franchise tax and other state
taxes through the Comptroller's Web Site. The URL for our home page is
http://www.window.state.tx.us. Once our page is displayed on your screen click
on "Getting Help."

To access the franchise tax rules (such as Rule 3.561 which addresses
enterprise zones), you should then select "Current Tax Rules at the Texas
Secretary of State," "Tax Administration," and "Subchapter V. Franchise Tax."

If you have any additional franchise tax questions, my internet address is
[email protected], or you may call toll free at 1-800-531-5441,
extension 3-4496.

Sincerely,

Jerry Bobbitt
Tax Policy Division

Get today's answer for your situation

You just read a 1999 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.