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Texas Amends Guidance for Business Loss Carryforward Credit

The Texas Tax Policy Division has amended guidance for determining when an entity “changes combined groups” and loses its right to claim the temporary credit for business loss carryforward.

A taxable entity “changes combined groups,” and loses the right to claim the credit when:

  1. The entity leaves a combined group
  2. An entity joins an existing combined group
  3. An entity’s acquisition results in the creation of a new combined group

Under prior policy, the identity of the common owner of a combined group was used to determine whether an entity that was a member of a combined group had “changed combined groups” and lost the right to claim the credit. If the common owner changed, the comptroller took the position that a new combined group was created and all of the members of the combined group “changed combined groups.” Consequently, all of the members lost their credits, and the new combined group was not entitled to claim the credit going forward.

Questions on this amended guidance? Contact Doeren Mayhew’s Houston CPA firm.

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