Are you familiar with the different rules for calculation of franchise tax under the mark-to-market rules?

If your trading entity is either a C-corporation, an S-corporation or a Limited Liability Company in the state of Texas, your income is subject to Texas franchise tax. Now that traders in securities or commodities can elect mark-to-market accounting for determination of ordinary income, an adjustment must be made for franchise tax calculations. Income is adjusted to eliminate the mark-to-market method. Congress instituted new rules that now force taxpayers to recognize gain on certain appreciated financial positions if the positions are constructively sold, even if the taxpayer has not closed those positions to realize gain. For Texas franchise tax reporting, these constructive sales would not have to be recognized until actually closed and the gains realized.