Texas Comptroller Proposes Amendment to Rules on Cost of Goods Sold

The Texas Comptroller of Public Accounts proposed amendments to 34 TAC 1.3.588 concerning the calculation of cost of goods sold for franchise tax purposes. The proposed changes allow expenses paid with COVID-19 relief and broadband deployment grants to be included as cost of goods sold. The amendments also establish that beginning with the 2026 franchise tax report, taxable entities will use current federal tax law instead of the 2007 Internal Revenue Code when determining allowable depreciation, and permits a one-time net depreciation adjustment for qualifying assets on the 2026 report. [Tex. Comptroller of Public Accounts, Proposed Rule 34 TAC §3.588, ...