A Texas two-step on franchise tax: Lessons from NuStar and American Airlines

A Texas two-step on franchise tax: Lessons from NuStar and American Airlines

April 28, 2026

United States
United States
United States
In this episode of the SALT Shaker Podcast, Partners Jeremy Gove and Chelsea Marmor break down two noteworthy Texas franchise tax decisions that provide important guidance on sourcing and federal preemption.

The hosts first discuss NuStar Energy LP v. Hancock, a Texas Supreme Court decision addressing how receipts from the sale of tangible personal property are sourced for franchise tax purposes. The court held that receipts are sourced to Texas based on where the property is delivered to the buyer, rejecting an “ultimate use” or consumption-based approach, even where the property (bunker fuel) could not legally be used in Texas.

They then turn to Hancock v. American Airlines, where a Texas appellate court concluded that the federal Anti Head Tax Act preempts application of the Texas franchise tax to certain airline revenue streams. The court determined that, despite being styled as a margin tax, the franchise tax functions as a tax on gross receipts from air transportation, bringing it within the scope of federal preemption.

The episode wraps up with an overrated/underrated debate on standing desks.

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Jeremy P. Gove

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