Honorable Robert S. Calve& Opinion No. M- 722 

Comptroller of Public Aocounte 

State Finance Building Re: Taxability of bank share8 

Austin, Texas of stock for ad valorem tax 

pprposes under Articles 7165 

or 7166, Vernon's Civil 

Statutes, where the bink 

Dear Mr. Calvert: 18 not doing business. 

The question presented in this requeet involves the taxability 

for the year 1970 of shares of 8tOok of a etate banking corporation 

which on January 1, 1970, wa8 not doing business in Texas. Wore 

epecifically the question atatesz 

"Whether shares of stock in a atate bank represented 

by instruments in writing issued on December 15, 1969, 

and contract8 forming an integral part thereof, are 

taxable for ad valorem tax purpose8 a8 shares of stook 

under Article8 7165,and 7166, Vernon Civil Statutes, 

Por the year 1970, when the bank wa8 not authorized 

to commence operations as a bank until (I) all conditions precedent of the State Department of Banking 

were met, and (ii) all agreement8 and contract8 among 

the principal organizer8 with ita conditional shareholder respeating whether the bank would commence 

were complied with, and whiqh bank in fact did not 

commence operation until January 3.9, 1970, such 

conditions to operate not being fully 8ati8i’ied 

until such date." 

The etatutea dealing with ad valorem taxation of bank8 and 

bank etock are Articles 7165 and 7166, Title 122, Taxation, 

Vernon'8 Civil Statutee, which read in part: 

Article 7165: 

"Every bank, whether of,lissue' or depoalt,...shall at the 

tima, fixed by this chapter for listing personal property, 

make out and furnish the a88e88or of taxes a sworn statement ehowing: 

-3493- 
Hon. Robert S. Calvert, page 2 (M-722) 

. . . 

"4. All other banka, (other than national banks)... 

shall render their list In the following manner: 

. . . 

'5. All other property belonging or appertaining 

to said bank or buslneaa, including both personal 

property and real eatate, shall be,,lleted a8 other 

personal property and real estate. 

in parenthesis oura) 

(language 

Article 7166: 

"Every banking corporation, State or national, doin 

brinesa In thl8 State ehall,...render its real + e8 ate 

the tax a88e8aor at the time and In the manner 

required of IndIvIduala. At .the time of making euah 

rendition the president or Borne other officer of said 

bank shall file with said a8Be88or a sworn statement 

showing the number and amount of the share8 of said 

bank,... Every shareholder of said bank shall,... 

render at their actual value to the tax asse88or 

all 8har8S owned by him in such bank;... Each ahare 

in 8UCh bank ahall be taxed only for the difference 

between Its actual cash value ahd the proportionate 

amount per share at which its reti estate 18 aSSe88ed...." 

(emphasis added). 

Each of these two statutes, on their face, would 8eem to 

require the rendition of real estate and personal property. This, 

however, la not the case a8 the Court in City of I Aar8hall v. State 

Bank of-Marshall. 127 S.W. 1083 (Tex.Civ.App. 1910, error refueedl, 

construed,these -itat&tes, taken together, %b m&an that Article 

7166, supra, operates: 

II . ..to except Incorporated state banks from 

the rovlslons of Article 5079, (now article 

71657 1 n 80 far a8 that article may be relied 

on a8 a ba8l8 Of a8Be8Si 

of such banka." "f 

the personal property 

(page 10 6) 

parenthesle ours). 

(language In 

-3494- 
Hon. Robert 9. Calvert, page 3,(&b 722) 

From the oonstruotion given to Artlole 7166, mpra, it i8 

evident that said Artlole must b8 looked to alone, In dQte?minlng 

the taxability of share8 of 8tOak of a banking aorporation, This 

Article Is limited In it8 applioation to oorpQratiOnS 

In Texar. The banking corporation desarlbed in thir 

not comence its buSine88 operations until January 19, 1970. On 

January 1,.1970, when the 1970 ad val,orem taxer Were a88e888da 

the banking corporation wa8 not doing bu8ineS8 in Texas; therefore, 

Its share8 of stook outstanding were not required to be rindered 

by the shareholders of said bank under A&iole 7166,, supra. 

Where the ahareholder Is not required to rendar for taxation 

It allo fOllOW8 that he oannot be compelled to pay taxe8 upon the 

authority of Artiole 7166, supra. City or MarShall'v. State Bank 

of Marshall, supra. The banking corporation is not Pequlred to 

render It8 issued and outstanding sharer and ie thezVfoPD not 

taxable on these sharea, The banking oor oration 18 not required 

to render such property under Artlale 716 % , rup~a, and thr taxatlon 0r Lts pereonal property i8 exoepted rr0m the provlrlon8 of 

Artiole 7165, supra. 

!l& request limit8 its lnquirg to the taxability of .the bank 

share8 of stock under only Articles 7165, and 7166, rrupra. 

SUMMARY 

Shares of 8toak of a banking oorporation 

are not taxable for ad valorem tax purposes 

under Artlole '7165, Title 122, Nxatlon,V.C.S.* 

nor are they taxable ror 1970 under Article 71k6 

of that Title where the corporation wan not 

doing buslners in TexaS_on January 1, 1970. 

C. MARTIN 

Oenwal 0r Texu 

-3495- 
Hon. Robert S. Calvert, page 4 (M- 722) 

Prepared by Wardlow Lane 

Aesistant Attorney Qeneral 

APPROVED: 

OPINION COIMITTEB 

Kerns Taylor, Chairman 

Bill Allen, Co-Chairnlan 

Harriet Burke 

Max :+Iamllt on 

Bob Flowers 

Jack Qoodman 

MEADE 8. QRIFFIN 

Staff I&gal b8i8tWlt 

ALFREDWALKER 

Executive k38iStSBt 

NOLA WHITE 

First ASeietant 

-3496-