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Multistate Tax Alert: Texas Dist. Court Rules, Certain Costs Related to Real Property Services are Eligible for COGS Deduction


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A Texas District Court recently ruled that a taxpayer was entitled to a refund of Texas franchise tax (commonly referred to as the Texas Margin Tax or “TMT”) attributable to a deduction as COGS of costs related to real property services. While the ruling did not elaborate on the rationale, taxpayers providing real property services should consider whether labor and materials associated with real property construction, improvement, remodeling, repair or industrial maintenance qualify for the Texas COGS deduction.

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