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17. Are the Texas Franchise Tax and Texas Margin Tax deductible for Maine corporate income tax purposes?

The Texas Franchise Tax was changed and the revisions generally apply to tax returns due on or after January 1, 2008. Under the previous Texas Franchise Tax, taxpayers paid a tax on capital plus a surtax based on federal taxable income. The tax amount paid on capital is deductible for Maine corporate income tax purposes to the extent deducted for federal corporate income tax purposes. The portion based on income must be added back to the extent it is deducted from federal taxable income.

The new Texas Franchise Tax, based on a computed "margin," is really a gross receipts tax. As such, the tax is deductible for Maine corporate income tax purposes to the extent deducted for federal corporate income tax purposes.

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