R-642 

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s;r 

OXWICE OF 

THE ATTORNEY GENERAL 

PRICE DANIEL 

*mo*xFx GI:XERAI. July 26, 1947 

Bon. Sam lee Opinion No. v-315 

County Attorney 

Braaoria County Re: Whether shares in a state 

Angleton, Texas bank are taxable for the 

year 1947, when bank commences operations on JanDear Mr, L3e: uary 2, 1947. 

Your letter request, relative to the above 

captioned matter reads, in part, as follows: 

"STATEME3T OF FACTS: The LAKE JACKSOIV 

STATE BANK locatz nke Jackson, Texas in 

Brazorla County is a banking corporation. 

This bank is g state bank rather than a national bank. The charter was granted this 

corporation September 23, 1946. Permit #1765 

from the Banking Commlasioa gives January 2, 

1947 as the opening date for this bank. The 

bank aid, in fact, open on January 2, 1947 

and started doing business as a bank of that 

date performing the usual functions as a bank. 

'The capital stock was subscribed to 

the stook holders prior to January 1, 1947 

by 

and the capital of _the bank was set up as well 

as a surplus was setcup ana an unaiviaea profit was also set up prior to January 1, 1947. 

Money was used out of this undivided profit 

for the purpose of buying furniture and fixtures for the bank. All of this was done 

prior to January 1, 1947 and, as previously 

stated, the capital, surplus and undivided 

profits were likewise set up before January 

1, 1947. 

"LAKE JACKSON STATR RANK is the agent 

for the payment of all taxes that might be 

due on shares of stock for the share htilclera. 

The LAKE JACKSON STATE RANK owns no real estate. The corporation rents the building It 

is in; however, it does own the furniture 
84 Hon. Sam Leed , Page 2, V-315 

ana fixtures which were bought out of the 

undivided profits as set up on January 1, 

1947.. 

“QUESTION : In view of ‘the fact that 

the capital, surplus and undivided profits 

were in being prior to January 1, 1947 and 

some of the monies and the profits were 

used prior to January 1, 1947, is this capital the surplus and undivided profits tsxable property for the year 1947 even though 

the State BRnklng Commission’s permit gives 

the opening date as January 2, 1947 ana the 

bank In fact started operating as a bank as 

of January 2, 19471” 

The following quoted statutes are relevant to 

the question under consideration, to wit: 

Art. 7151, Vernon’s Civil Statutes: 

‘All property shall be listed for taxation between January 1 and April 30 of each 

year, when required by the assessor, with 

reference to the quantity held or owned on 

the first day of January In the gear for 

which the propertynls required to be listed 

or rendered . . . 

Art. 7145, V. C. S.: 

‘All property, real personal or mixed, except such as may be hereinafter expressly exempted, is subject to taxation, and the same 

shall be rendered as listed as herein prescribed. ” 

Art. 7147, V. C. 3.: 

“Personal property, for the purposes of 

taxat ion, shall be construed to include all 

goods, chattels and effe,cts, and all moneys, 

credits, bonds and other evidences of debt 

owned by citizens of this State, whether the 

same be In or out of the State; all ships, 

boats and vessels belonging to inhabitants of 

this State, If registered in this State, whether at home or abroad, and all capital invested 
Eon. Sam Lee, Page 3, V-315 

therein; all moneys at interest, either within or without the State, due the pBrsoa, to 

be taxed over and above what he pays interest 

for, and all other debts due such person over 

and above his indebtedness; all public stock 

and securities; all stock in turnpike 

I 

rallroads, canals and other corporations except 

national banks) out of the State, owned by inhabitants of this State; all personal estate 

of moneyed corporations, whether the owners 

thereof reside in or out o? this State, and 

the income of any annuity, unless the capital 

of such annuity be taxed within this State; 

all shares la any bank organized or that may 

be organized under the laws of the Unlted 

States; all Improvements made by persons upon 

lands held by them, the title to which 1s 

still vested in the State of Texas, or in 

any railroad company, or which have been exempted from taxation for the benefit of any 

'railroad company, or any other corporation 

whose property is not subject to the same 

mode and rule of taxation as other property." 

Art. 7166, V. C. 9. 

'Every banking corporation, State or ~natioqel, doing business in this State shall, In 

the city or town in which it is located, render Its real estate to the tax assessor at the 

time and In the manner required of individuals. 

At the time of making such rendition the president or some other officer of said bank shall 

file with said assessor a sworn statement showing the number and amount of the shares of sald 

bank, the name and residence of each shareholder, 

and the number and amount of shares owned by him. 

Every shareholder.~of' said bank shall, in the city 

or town where said bank is located, render at 

their actual value to the tax assessor all shares 

owned by him in such bank; and in case of his 

failure so to do, the assessor shall assess 

such unrendered shares as other unrendered 

property. Each share in such bank shall be 

taxed only for the difference between its actual cash value and the proportionate amount 

per share at which its real estate is assessed. 

The taxes due upon the shares of banking corporations shall be a lien thereon, and no banking 
86 Hon. Sam Lee, Page 4, V-315 

corporation shall pay any dividend to any 

shareholder who is In default ln the payment 

of taxes due on his shares; nor shall any 

banking corporation permit the transfer upon its books of any share, the owner of 

which is in default in the payment of his 

taxes upon the same. Nothing herein shall 

be so construed as to tax national or State 

banks, or the shareholders thereof, at a 

greater rate than is assessed against other moneyed capital la the hands of lndlvldllals." 

You will note that said Article 7166 provides 

that the shares in a bank shall be taxed on the basis 

of the value of the personal property owned by the bank 

and that the personal property itself is not taxed. In 

other words, the capital, surplus, and undivided profits are not taxed. But the shares in the bank are 

taxed; and the value of the capital, surplus, and undlvlded profits (being personal property ) is used as a 

basis for determining the value of the shares for taxation purposes. To illustrate: 

Capital Stock 

Iess debentures 

$"OO*~~~.~~ 

75. 

$125,000:00 

Plus Surplus and Undivided 

profits 20,000.00 

Other personal property 5.000.00 

$150,000.00 

Less value of real estate 10.000.00 

Value of personal property 9140,OOO.OO 

1000 shares divided into $140,000.00 equals 

$140.00 value of each share for taxation purposes. 

These bank shares under the express provisions of Article 7145, V. C. S., above quoted are subject to taxation. 

or mixed." 

They are 'property; real, personal 

They were in existence on January 1st and 

the fact that the bank itself did not open its doors 

for business until January 2 Is Immaterial. 

The Supreme Court of Texas in the case of 

Childress County vs. State, 127 Tex. 343, 92 3. W. 

(28) 1011, in construing Art. 7151 used the following 

language: 
Hon. Sam Lee, Page 5, V-315 

"The foregoing article makes It clear 

that all property owned by persons on the 

first of Januafy must be listed for taxation, . . . . 

The ownership of property on the first day 

of January of any year creates a llablllty on the part 

of the owner for taxes levied upon such property for 

that year. Winters, et al, vs. Independent School Dlstrict of Bvant, 208 9. W. 574; Rillaman vs. Faison, 57 

3. W. 921; Rhomberg vs. McIaren, 21 3. W. 571. 

We appreciate your well prepared brief which 

.accompanled your request. 

SUMMARY 

The capital, surplus, and undivided profits of a bank are not taxable. Rowever, the 

shares of the bank are tsxea on the basis of 

the personal property of the bank. The amount 

of the capital, surplus, and undivided profits 

of a bank, together with other personal property less the value of the real estate and 

debentures, determines the value of the shares. 

Arts. 7151, 7145, 7146, and 7166, V. C. 3. 

Chlldress County vs. State, 127 Tex. 343, 92 

S. W. (26) 1011. 

Yours very truly, 

ATTORNEX GENEXAL OF TEXAS 

W. V. Geppert 

Assistant 

WVG:mrj ATTORNEY GFSERAL