My colleague, Matthew Roberts, recently posted an article regarding choice-of-entity, “Starting a Business in Texas: Choice of Entity.” The article provided a summary of the tax and non-tax implications of each potential entity type.
We will discuss “passive entities” under Texas law. Please note the definition of a passive entity under Texas law is not the same as the definition under the Internal Revenue Code. Depending on the business being conducted in Texas, a certain type of entity may be more beneficial to reduce or eliminate your Texas Margin Tax (the “Margin Tax”).
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