April 6, 1971

Honorable Robert S. Cslvert Opinion No. M-829 comptroller of Public Accounts State Finance Building Re: Construction of Article Austin, Texas 12.02(l)(b)(l), Texas Franchlw TaxAct., 

### concerning inclueion of certain eales under “grose receipts from buelnear done in Texas,” and effeot upon Attorney Oeneralta Opinion DearMr. Calvert: ~~-1503 (1962). In’ our recent opinion ,request you ask if Article 12.02 (l)(b)(lj, Title 122A,,Taxation-General, Vernon’s Civil Statutes, aaamendedIn 1969, changes the result .reached 

### In Attorney Oeneral Opinion NO.W-1503 

### (1962). In that opinion the question wait 

### whether kecelpts from sales of .petroleum products rafined in Texas andsold and shipped to out-of-state purchesers, with. passage of Title F.O.B. the loading points at Corpus Christ1 and Port Isabel, ,were receipts from business done in Texas. The conclusion was reached. that such reoeipts were not receipt8 from buelneee done In Texaeunder this Article 12.02 which 

### then read, in part, a8 followe:

“For the purpose of ihis Article, the term
‘gross receipts from Its business done in Texas” shal~l Include:

“(e) Seles of tangible personal property located within Texas at the time of the receipt of or’ approprlatlon to the orders where shipment is madeto points within this State,” Article 12.02, es amendedin 1969, reads In Its pertinent part a8follows:

-4017-Honorable Roljert 8. Celvert, page 2 (n- 829)

“(1) (‘e) Each corporation liable for payment of 8frenchlee tax shell detennlne the portion of its entire texeble capital taxable by the State of Texas by multiplying sameby en sllocstion percentege which shell be theepercentage reletlonshlp which the gross receipt8 from its bualness done In Texas bear to the total gross raoelpta of the corporstlon from Its entire business.

“(b) For the purpose of this Article, the term ‘gross receipts from Its business done In Texas’ shell Include:

“(I) sales of tanglb~le personal property whenthe property Is delivered or shipped to epurchaser within this State, regardless of the F.O.B. point or other conditions of the sale, reduced by the deduction, If applicable, allowable under,Subsectlon (c) of this Section (1);

. . .I’

. Article 12.02(1)(b)(I) nowprovides that receipts from sales of tangible personal property ere Included where dellve IS madeto e purchseer within this state regardless of d it Th ti h meum ~r%%s”~hl~~~d I hth i.z.i. d 11 h been mMle01 outside 6f Texas. Tied&‘;%t’to purchasers It IS the opinion of this office thet such products shipped F.O.B. shipping point do not constitute dellveq to apurchaser within this state under Article ‘12.02(l)(b)(l), as the provision clearly contemplates that the F.O.B. point shall not control and that the point where the purcheser actually takes poasesslon of the property shall be the place of dellverx t’or purposes of this statute. It should be here noted thet the reesonilig of Opinion No. W-1503, supra, nolonger applies to Article 12.02, since that statute as emendedclearly covers both lntra end Interstate business to the extent thereln provided. Sales of tangible personal property delivered in Texas are considered business done In Texas even though such sales ere made1~ Interstate commerce. Therefore, It Is the point of actual delivery rather than the point of origin that controls the question of whether the receipts from sales of tenglble personal property are considered receipts from business done in Texas.

-4018-Honoreble Robert S. Calvert, page 3 (M-829)
SUMMARY Petroleum products ahlpped to out of state purchasers from polnta within this State with F.O.B. loading points within Texes, do not constitute receipts from business done In Tejtas under Article 12.92, Title 122A, TaxatlonGeneral, V.C.S. because under the amendedstatute the physical possession, which Is the controlling factor, occurs outside Texas. However, ~seles of such tangible pro;erty delivered to Texas ere considered buslnaea done In Texes even though such sales ere madein Interstate dommerce. Therefore, the reaaonln or basis of Attorney Oeneral Opinion No. 

### ww-1503 (1922) 1a

### no longer valid or applicable although the result therein reached Is not changed. Yours very truly,

CRAWFORD

C. MARTIN Attorney General 

# ma>

First Assletent Prepared byWardlowLane Assistant Attorney General APPROVED: OPINION

COMMITTEE KernsTeylor, Chairman W. E. Allen, Co-Chalrmsn S. J. Aronaon Ivan Wllllama JohnReese JamesMabry KEADE F. GRIFFIN Staff Lagal Assistant ALFREDWALKER Executive Assistant

-4019-