Non, C, H. Cavnaes Opinion No, V- 1114 State Auditor Au&in, Texas Re; The 

### barb for franchise taxee tuxler the submitted facts rel

### ative to the refinancing of an outstanding indebtedness. Dear Mr. Cavneee:

YOUhave requested our opiniqn with I ment of franchise taxes and submit the @owing

“A certala domestic corporation made the following borrowing8 from 8 comrnercial’bank, giving its noteP therefor:

Auguet %h, 1946 Oat&et 19th. 1946 s fgm~~;
Feb7 tsth, 1947 100:000:00 March 1 47 105,000.00

Total All of the above lndebtednese bore maturity dates ln excem of om year from the dates incurred, and was correctly reported for Fpanchiae Tax purpoaeo. “OnNwember 6u4 1947 the above notes were refinanced with an Insurance Company and an additional $195,000.00 was obtained, making a total indebtedness of $60@.@@0,00. The $195,000.00 reppesented new indebtednese at the time of refinancing,

‘The total hdebtednere 

### was incorporated in one note for $600,000.00 payable **in** monthly principal installments of $!i,OOO,OO, the first of which was paid on November 29&, 1947, leaving a balance outstanding at November 30th. 1947, the close of the corpo~ation%i firoal year, of $595,000,00,'

‘

. Based upon these frcta, your question is ‘whether the

payments should be prorated between the $405,000,00 indebtedness and the $195,000.00 lndebtednesr in the absence of any provisions in We contract tq the0effect, or whether the entire $595,- 000.00 was mabject to franchise tcucon Nwember 30% 1947.”Hon. C. Ii. 

### Camea*, Page 2 (V-1114)

Artkk 7064, V.C.S., thr 8t~trrk fanol~ed ia’i’ detarmin

### ation ef your queeth, prior fo its amendment bi 1949, provided in part2 

### ‘(a)Except as herein provided, wepry domeetic end forolga 

### corporation heretotom oe heree#er chertared or autlwized to do hei-es in Texae* or ddng bue4meee tn TexaP, shall, on ot before May 1st of eech year, pa in edvance to the $eeretiey of State a frawU*e tex 08 the par fdlowbg, heed w that

r proportion of a0 outetaadin and aadbidod prdtts, plue & capi+el *took, 

### l wplue e **amount** d o~tetaading boade, plue the amount of outeteWU8g blmde, We end debewoe, (outeN bonde, tie and d&estwee shall isclude all written evldeacer of indebtedneae wh4 ch bearl maturity dab at on (1) year or, more from date of iaeue, ud all l uch iutrume&e wh4ch bear a makrity date of leer than me,:‘(l) year from date of ieeue but wblch repre8snt indebtedneee which hae remained outetanding for a poaiod of one (1) year or more from date odiecept&oa, but which have been **renewed** or sxtemded, or refineneed by the ieeueme of other evtdeasoe d the **Wbtedaeee,** whatlertotheeemeorahipwUeeo ,.*

wowed It

l hwld be noted *at the flret two $lOO,OOO.OO loeu, hopw August 9.1946, er& **Odaber** 19.1946, reepectirely, were* at the the they wese alhawed a~ Novembes 6.1947, outetanding for a period af otm year or mope from the d#s of their 4ncepUom. The eeeond two obligatioae, wbioh amormB to $205,000.00, were not outetand4ng for one year 8t the tfme of tbetr zef4aewilog on November 6,1947. It ehould 

### ate&benotsd that all the indebtedneeeee in question bore a maturity date *of one (1) 

### yearor more from date of ieeue” at the time of their imceptioao The fiecel year of the corpopaflon involved 4s from December 1through November 30.

The $600,000.00 n#e, which Locludee $405,000,00 of old obligatlone and $195r000000 of new obligafione, 46payable in monthly inetallmente of $5rOO0.00 rr& M f4aet installment having been paid on November 29, 1947, pri& to M ilecal year in queetion. Thue, at the cloee of the corporet&m ’e f4ecal year on November 30, 1947, thexe wae outetanding a note repWeent4ng en Mebtedneee of $595,000.00, From the face of &e note it ie Weaalaed @at during the flecal year ha queetl- WI peyxne8te wfll be made, the rodocisg the amomrt of thenindebtedneee at Ih, end of tW fiecal 

### yeq In question to $541,000.- 00. Your quart&on cone8ene (Irs

### tuab4Mtyof the tea8monthly inetallmeate patd durin&%e flecal 

### year. If there 

### paymentsareto be applied to the 4ndebtedneee wb4sh 

### wae not wrtetredin more pr4or to the rwfixnaciag w to the new obliga %for me 

### yearor one, they shouldHon. C. H. Ciwnoer, 

### Pago 3 (V-1.114) ’

**not be**  included 4~tba UIloIIlltUM In a-r On the other hand, ii these peymente are **tiq the**  **franchise taxa**  be applied to the oldest obligations, **as** yw state PI State **Aud4br** ed the **Secretary** of Stek have doa8 4~ovary #sali caeo irr #N pert, the tote1 taxable amount would be $S95,000.00, tbo total emorurt of the obligation lees the one payment made ia the precedkeg flecal **year,**

11should Da mted also tit no a pl46atlon ol paymente is provided for im the sob ifeelf or, l o Rr as we kow. ia any othar mewer between Weedebior eorrpomtlor amI Us 

### ersditor insurance company, it 4e wel4ewttUid*at4ei the ebemi of amagrtethemdelve0, 0

mental interprebtiaa whiab you and #e **SecreQlry** of State have followed since the amwdmd of Aa%& TO84Ln1941to inelnde rep 24nanced obligations la In tmnpl4a~n ~4th l&e metfled law.

**It La,**  **thermfore, abr**  **eorcloa4~1 ybt**  **(k ha&n**  **for** dekrmiuing tb **amQwt** of tu llahluty of #a awpw8utm 4a qw*t&oa ia en amoont of $598,06o,QO~**T&** emt4reamowt of the $595,000.00 remain48g at the etert d lls(,iyacal **yWr** 48qwetloe is taxable ae 

### a written ev4dence d 4~bdlBene **kari~g** 

### *a**mcrbiw date**  **ol one**  (1) par w more loom **datn** e#ie8w00 eamep) **for** those 

### amaamb payable w4tb4n a yoaPaP, Tbnse 4etkr aRllOtULe# wm app44ed to the oldest 4tiebteduee, make the ad, in that ~UWQ& omewhch 

### reprelentm indebtedmae

w&h beam.a maCu4ty

dein of low thaa

one 0) r lr ~POW

dh of @~pcLoo~ lnrt WrLMW Lww naiuacod by thel 

### 8amO ef o&w ov4do~ea of da94ms+3&.ro, Wha(LcPto tie same o* other partion, o.*

### Hoe c. H. CwmoW* P8go 4 (V.1114)

c