R-642

’ - s;r OXWICE OF 

# THEATTORNEY 

# GENERAL

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

Bon. Samlee OpinionNo.v-315 CountyAttorney Braaoria County Re: Whether shares in a state Angleton, Texas bankare taxable for the year 1947, whenbank commences operations onJanDear Mr, L3e: uary 2, 1947.

Your letter request, relative to the above captioned matter reads, in part, as follows:

"STATEME3T

OFFACTS: TheLAKE JACKSOIV STATE BANK locatz nke Jackson, Texas in Brazorla County is a banking corporation. This bank is g state bank rather than anational bank. The charter was granted this corporation September 23, 1946. Permit #1765 from the Banking Commlasioa gives January 2, 1947as the opening date for this bank. The bank aid, in fact, open onJanuary 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, 1947by
andthe capital of _thebankwas set upas well as a surplus was setcup ana an unaiviaea profit was also set upprior to January 1, 1947. Moneywas 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 upbefore January 1, 1947.
"LAKEJACKSON

STATRRANK

is the agent for the payment of all taxes that might be due on shares of stock for the share htilclera. TheLAKE

JACKSON

STATERANK

ownsno real estate. The corporation rents the building It is in; however, it does ownthe furniture

## 84Hon. SamLeed
, Page 2, V-315

ana fixtures which were bought out of the undivided profits as set uponJanuary 1, 1947..

“QUESTION

: In view of ‘the fact that the capital, surplus and undivided profits were in being prior to January 1, 1947and someof the monies andthe 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 BRnklngCommission’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”
Thefollowing 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 1andApril 30 of each year, whenrequired by the assessor, with reference to the quantity held or ownedon 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 maybe hereinafter expressly exempted, is subject to taxation, andthe same shall be rendered as listed as herein prescribed. ”
Art. 7147, V. C. 3.:

“Personal property, for the purposes of taxation, shall be construed to include all goods, chattels andeffe,cts, and all moneys, credits, bonds andother evidences of debt ownedby citizens of this State, whether the samebe In or out of the State; all ships, boats andvessels belonging to inhabitants of this State, If registered in this State, whether at homeor abroad, andall capital investedEon. SamLee, Page3, V-315

therein; all moneys at interest, either within or without the State, duethe pBrsoa, to be taxed over andabove whathe pays interest for, andall other debts due such person over andabove his indebtedness; all public stock and securities; all stock in turnpike I rallroads, canals andother corporations except national banks) **out** of the State, ownedby inhabitants of this State; all personal estate of moneyedcorporations, 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 anybank organized or that may be organized under the laws of the Unlted States; all Improvements madeby 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 modeand 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 mannerrequired of individuals. At the time of makingsuch rendition the president or someother officer of said bank shall file with said assessor a sworn statement showing the numberand amountof the shares of sald bank, the nameand residence of each shareholder, andthe numberand amountof shares ownedbyhim. Every shareholder.~of' said bank shall, in the city or townwhere said bank is located, render at their actual value to the tax assessor all shares ownedbyhim 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 ac**tual** cash **value** and the proportionate amount per share at which its real estate is assessed. Thetaxes due uponthe shares of banking corporations shall be a lien thereon, and nobanking

### 86 Hon. SamLee, Page 4, V-315

corporation shall pay any dividend to any shareholder whois In default ln the payment of taxes due onhis 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 uponthe 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 moneyedcapital la the hands of lndlvldllals."
Youwill note that said Article 7166provides that the shares in abank shall be taxed on the basis of the value of the personal property ownedby 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; andthe value of the capital, surplus, andundlvlded 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 andUndivided 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
1000shares divided into $140,000.00 equals $140.00 value of each share for taxation purposes.

These bankshares under the express provisions of Article 7145, V. C. S., above quoted are subject to taxation. or mixed." They are 'property; real, personal

Theywere in existence onJanuary 1st and the fact that the bank itself did not open its doors for business until January 2 Is Immaterial.

TheSupremeCourt of Texas in the case of Childress Countyvs. State, 127Tex. 343, 92 3. W. (28) 1011, in construing Art. 7151 used the following language:Hon. SamLee, Page5, V-315

"Theforegoing article makes It clear that all property ownedby persons on the first of Januafy **must** be listed for taxation,

. . . . The ownership of property on the first day of January of anyyear creates a llablllty on the part of the owner for taxes levied uponsuch property for that year. Winters, et al, vs. Independent School Dlstrict of Bvant, 2089. W. 574; Rillaman vs. Faison, 57 3. W. 921; Rhombergvs. McIaren, 21 3. W. 571.

Weappreciate your well prepared brief which .accompanled your request.
SUMMARY
Thecapital, surplus, and undivided profits of a bank are not taxable. Rowever, the shares of the bankare tsxea on the basis of the personal property of the bank. Theamount 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 Countyvs. State, 127Tex. 343, 92 S. W. (26) 1011.
Yours very truly,
ATTORNEX

GENEXAL

OFTEXAS

W.V. Geppert Assistant

WVG:mrj ATTORNEY GFSERAL