(a) Taxable entities that are part of an affiliated group engaged in a unitary business shall file a combined group report in lieu of individual reports based on the combined group’s business. The combined group may not include a taxable entity that conducts business outside the United States if 80 percent or more of the taxable entity’s property and payroll, as determined by factoring under Chapter 141, are assigned to locations outside the United States. In applying Chapter 141, if either the property factor or the payroll factor is zero, the denominator is one. The combined group may not include a taxable entity that conducts business outside the United States and has no property or payroll if 80 percent or more of the taxable entity’s gross receipts, as determined under Sections 171.103, 171.105, and 171.1055, are assigned to locations outside the United States.
(b) The combined group is a single taxable entity for purposes of the application of the tax imposed under this chapter, including § 171.002(d).

(c) For purposes of § 171.101, a combined group shall determine its total revenue by:
(1) determining the total revenue of each of its members as provided by § 171.1011 as if the member were an individual taxable entity;
(2) adding the total revenues of the members determined under Subdivision (1) together; and
(3) subtracting, to the extent included under § 171.1011(c)(1)(A), (c)(2)(A), or (c)(3), items of total revenue received from a member of the combined group.
(d) For purposes of § 171.101, a combined group shall make an election to subtract either cost of goods sold or compensation that applies to all of its members, or $1 million. Regardless of the election, the taxable margin of the combined group may not exceed the amount provided by § 171.101(a)(1)(A) for the combined group.
(d-1) A member of a combined group may claim as cost of goods sold those costs that qualify under § 171.1012 if the goods for which the costs are incurred are owned by another member of the combined group.
(e) For purposes of § 171.101, a combined group that elects to subtract costs of goods sold shall determine that amount by:
(1) determining the cost of goods sold for each of its members as provided by § 171.1012 as if the member were an individual taxable entity;
(2) adding the amounts of cost of goods sold determined under Subdivision (1) together; and
(3) subtracting from the amount determined under Subdivision (2) any cost of goods sold amounts paid from one member of the combined group to another member of the combined group, but only to the extent the corresponding item of total revenue was subtracted under Subsection (c)(3).
(f) For purposes of § 171.101, a combined group that elects to subtract compensation shall determine that amount by:
(1) determining the compensation for each of its members as provided by § 171.1013 as if each member were an individual taxable entity, subject to the limitation prescribed by § 171.1013(c);
(2) adding the amounts of compensation determined under Subdivision (1) together; and
(3) subtracting from the amount determined under Subdivision (2) any compensation amounts paid from one member of the combined group to another member of the combined group, but only to the extent the corresponding item of total revenue was subtracted under Subsection (c)(3).
(g) Repealed by Acts 2007, 80th Leg., R.S., Ch. 1282, Sec. 37(3), eff. January 1, 2008.
(h) Each taxable entity that is part of a combined group report shall, for purposes of determining margin and apportionment, include its activities for the same period used by the combined group.
(i) Each member of the combined group shall be jointly and severally liable for the tax of the combined group.
(j) Notwithstanding any other provision of this section, a taxable entity that provides retail or wholesale electric utilities may not be included as a member of a combined group that includes one or more taxable entities that do not provide retail or wholesale electric utilities if that combined group in the absence of this subsection:
(1) would not meet the requirements of § 171.002(c) solely because one or more members of the combined group provide retail or wholesale electric utilities; and
(2) would have less than five percent of the combined group’s total revenue derived from providing retail or wholesale electric utilities.