Texas Franchise Tax: CGG Veritas Services (U.S.), Inc., an Oil & Gas Seismic Company, is Entitled to COGS Deduction

Mar 11, 2016, 10:11 ET from Martens, Todd, Leonard, Taylor & Ahlrich

AUSTIN, Texas, March 11, 2016 /PRNewswire/ -- In Hegar v. CGG Veritas Services (U.S.), Inc., a Texas court of appeals held that CGG was entitled to claim a Cost of Goods Sold deduction for the costs that it incurred in acquiring seismic data and processing that data into seismic images, which it then sold to its customers. Jimmy Martens, Lacy Leonard, Danielle Ahlrich and Amanda Taylor with Martens, Todd, Leonard, Taylor & Ahlrich, handled CGG's state court trial and resulting appeal.

CGG's customers are generally oil & gas exploration and production companies.  CGG sells and licenses seismic images to them so that they may efficiently explore and drill for oil & gas.  At trial, CGG presented evidence that its services and products were an integral, essential, and direct component of the oil & gas drilling process.

CGG qualified for the Cost of Goods Sold deduction because it sent employees and materials (dynamite, geophones, air guns, marine vessels, and vibroseis trucks) to prospective oilfield sites.  The court ruled that this activity was sufficient to allow CGG to claim the Cost of Goods Sold deduction on its Texas franchise tax reports.

About Martens, Todd, Leonard, Taylor & Ahlrich

Martens, Todd, Leonard, Taylor & Ahlrich is a tax litigation and appellate law firm headquartered in Austin, Texas.  The firm's state tax practice focuses on the Texas franchise and the Texas sales & use tax.  The firm's attorneys have handled cases all the way through the Texas Supreme Court and the U.S. Supreme Court.  The firm's attorneys speak and write frequently on a variety of tax topics, and have published articles in publications such as The Journal of State Taxation, the Texas Bar Journal, the Texas Lawyer, and the Texas Tech Administrative Law Journal.  For more information, contact Jimmy Martens, Lacy Leonard, Danielle Ahlrich, or Amanda Taylor with Martens, Todd, Leonard, Taylor & Ahlrich, the law firm that handled CGG's state court trial and resulting appeal, at (512) 542-9898 or visit http://www.textaxlaw.com

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SOURCE Martens, Todd, Leonard, Taylor & Ahlrich



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