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 Tax Act., concerning inclueion of 

certain eales under “grose 

receipts from buelnear done 

in Texas,” and effeot upon 

Attorney Oeneralta Opinion 

Dear Mr. 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, 

aa amended In 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 

and sold 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 

Texae under 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 made to points within this State,” 

Article 12.02, es amended in 1969, reads In Its pertinent 

part a8 follows: 

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

“(1) (‘e) Each corporation liable for payment 

of 8 frenchlee tax shell detennlne the portion 

of its entire texeble capital taxable by the 

State of Texas by multiplying same by en 

sllocstion percentege which shell be thee percentage 

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 

when the property Is delivered or shipped 

to e purchaser 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) now provides that receipts from 

sales of tangible personal property ere Included where dellve 

IS made to e purchseer within this state regardless of d 

it Th ti h 

meum ~r%%s”~hl~~~d 

I h th 

i.z.i. 

d 11 h been mMle 01 

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 a purchaser 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, no longer applies to Article 12.02, since that 

statute as emended clearly 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 made 1~ 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 amended statute 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 made in Interstate dommerce. 

Therefore, the reaaonln or basis of Attorney Oeneral 

Opinion No. ww-1503 (1922) 1 a 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 by Wardlow Lane 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Teylor, Chairman 

W. E. Allen, Co-Chalrmsn 

S. J. Aronaon 

Ivan Wllllama 

John Reese 

James Mabry 

KEADE F. GRIFFIN 

Staff Lagal Assistant 

ALFRED WALKER 

Executive Assistant 

-4019-