**. ‘** **::. OFFICE**  **OF ‘** **THE GENERAL,**  **OF TEXAS** 

**.~ ’**  **,AUSTXN**

Honorable ‘comptroller of ‘.,

# &l8tin,

Taaa : .~.Doai Siri

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oritlea **upon**whioh**we ~.**  **;** llevs it may‘be helpful ubaoription warrantam. -I o bs wnrraata lseued by a

etto atoak etidoaa- .!

. Artlalo 15, R; B. S ROE. Se88.r ioh your request is ahated, was .i AOL A aomparleon Of the pertinent ,, ro rtwenu~ m3afwe8. f5eom8 roquielta. Thus0 ,!

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.. *Art. 7047111. Stools trausror en4 saXerrtax- -I:‘~ ’ Tax irqoaa4~ afrixlng atampa; mamorandum **0r** sale ‘. .~ ~aSeotlOn 1.. Thoro I8 hereby imposed an4 levied i * a tax’ a8 herelaaftar **provided** on all tsal+m, agreomeata ;j. to oell, or nionoraa6a of salefi sad all~~4ellverle8 or ’ ~.tnaoSoro or. **&area,** Orar~tdoates of **atoak,** .or: ~’._ - j i

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.’ ~’ oertiti oaten 0 fatao for rlghta to’etook:, or owtirldopooit rapresentla~ an intarest la or reprooeatlag oortltloates kado taxable under thla Sootioa ln any doneof or 

### r0r0ir4aesoolatlon, oozpany, or aorporatloa, or aertlrloateo 0r lnteroot la any bueiaeoo oonduotod by truoteo or truatoeo made aftorthe 

### 0rrOOtivd.9 Cat0.horoor, whether UT&Iupon or shown by th.3 **books**or the . ~aoeoalation, donpeny, aorporatlon, or trustee, or by any asolgamcmt la bl’enk or by ‘any do1.ivez-y 

### or **any** pagoro or egreomnt .or 

### m0oorana0t3 or **other .** **.** srldonae 

### or sale or transfer or order ror or agreemnt to buy, whethor iatermadiata or rinal, and wbethar lnvsotlng the holdor.uith the beneflolal late&A la or legal titleto ouob atook or other oortifioate taxable horeundor, or wlth tho posses- .‘.. : olon or ~86 thsroot ror any purpose, or to oooura the rOm0. payment oi ~onoy or tbs ruture txwnotar of any ouah otock,, or aertiriaato, oa each :**.. ‘.,: ~ hun4rs4 4ollaro of faoa~.valua or traatlon thereof, ~;;. ‘tbrss.(S) oonto, ercrept **in** cases **where**tho shares or oartfffaatao ar6 loauo4 wfthcut dealgnats moaatary voluo, ln wblah aaoe the tax, shall be at .tho ., :, - **$Fate ff**  **thrqe (J)**  oonto **to?** eaoh and, avery.ahme. * . .IChapter 50 Civil ‘IA&JUowYork. 8ubjeOt to Tax- provldos ati iOliOw8: *Tranofero

“SOO.270. Amountof tax - 1. There la hereby ,” impose4 au4 shall Sxae4latoly accrue an4 be aolleatod a **tax,** a8 herein provided, oa ~811sale8 or s&room.i#o ” to ~311, or me8ioranda

### 0r oale‘e an8 all .dellv~rieo or : tranofero OS shares or a0rtlilosteo ot otoak, or oortlrloateo oi rlghta to atook, or aertlfloatoo of intorest ia property or aooumulatlons, or aortiiioatss 0r depoolt reprooontlng aertlfloateo taxable under tblo artlolo, in any 4omaotio or foreign neeoolation, oo~~ptnyor oorporatloa, or **oortlfloatoo** 0r interest la buaincoa oooduote6 by a trustee or trustees msde artor the ilrot day or ,..~ June, aiaotoea hundrad five, whether uado upoa or .ohownmby

the. bOOk8of theaaeeoalat~on, aozipany., apr- ,.. I;’ 1

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. poratlon or truotdo, or by any aoslfgumnt 1x1blank, or :. . . by any dellvory, or by say paper or a&reom+ator niouo-.:. ‘. .; raadum or 4thor ~vl4enoo or sale 

### or traaorer, whetheq :“.

‘.. , . ‘. : ” .lntamrodlate or final., ‘end ahether lnve6ting .I

. .‘.. .i ’ .tha holder wlth the bannefioial Intereat la or : . .*. leeal’tit& to said otook, or other oortlSloetos tarable hefaun&er, or merely orith tho poe6e66lon. or me thoreOS for any purpose, or to Beauro the **Suture paynen~**  or **money ’** **, or**  t&e **Sututa tranator**  of any such stock, or oort~tioatea.~

. Weobeervo that the longuagd.os the tuo hots. doscribing the tranoaotiono taxable seeagpbroood in exactly tho ’ #armuord6, though not arranead. In tbe eaaio oontlnulty. 9io ’ ;Seif.to rind exgreas laLan(;uap in either of tbmo statutes attrmptlne to. levy a tar upon Ytlfihtn to aubecribe to stock.* : SUma tho United States Xnternnl iiovenuo Aot, Title . **26, pqrqraph**  lf302b, U. S. C. A.. had Its lnaeption prior to **the** p66aee of the Toxaa **statute,** we nust **grasumo** that the :eglslatura bad ouoh Aot before It at .the **tlma It**  **adopted thm**  **. Row**  **York statute**  **as the**  model for lts‘aSSort6. The exprers 16nguage of f

’ pert of the Federal **Aot** i0 a9 follows; ,, .- -(b) Sales and tranofoars. Onall mlea, or agreemeat to aell,, or monrorando 0S eslos or. delivarlee or, or trapsfort of leg61 tltl@ to any ~0S tho~rbfnw **or oert$Slaatas**  mcntlonad or **described** id euboootlon (e), oc to xkhta to subsdribe for ’

. .: or reoeloo’suoh ahares or oartlSlcate6~ whether m6tYe upon or shown by the. book0 of the oorporatlon
, : or .othpr: Organl68tlOn, or by’anp 6t36lgUi~~nt in . bleak, or by any delivery,, Or by any paper or agree- ’ : ’ . meat or memorandum or other evldenaa of tran6SOr or : .~ : sale (whether ontitling the holder ia any uonnor to ,,’ .: s the bobeflt oS suoh ahaT oertlfioate, interest Or . rlehti, or **not),** on eoob &lob of per or faoo ,oalu6 : :

or Sreotion thereof of the aertifloats6 OS suah oorcoratlon or other or&ealzatlon (or OS the 6haroe : wbero no’oertifioatoa were iesueb) . . .*' :

In ~o&Hzulng a etatute, **the** .gurpo~e **lo to.**  eeaertaln **the** lo&lative intent end from **ou,r** oboorvatlon of the ex~resa rcvi~ions oS the tbres revenue maasure6, we Sind that mnse +-ST--- ‘IfIr ta to subsaribe to etoOk* though InelUded in the Podoral **et?Auto in**  onritted Sran the **fiat York**  **and** Tours **statutes and**  **we** muet keep tb~tinotlon oloarly in dad in soeking to tletor; tin0 the intention

or tho Lei3lalatUrO~

### 167 :.. ~0s. Coorgo 8. Shoppard, Page 4

The Texas law being oS rOOat orluln, ha6 not been ;ntorprett?d by Our OOUrt6,sad for that FeaBon, we mot turn to NowYork dooIsion6 and ruleo and rogulotlano of Ite tax suthoritiee for a oomtruotlon of the quoatlon herein pro6entThe60, or oour60, aro not'conolu6Ive **but are**  **pOr6U6aIVO** :% rhoulb bo 61vea @oat woI&ht.

**Conmon** panotloe **end prooeaure**  of aorporatlons doing **busineos** tbroueh the NewYork **Etook** Pxchan(~euni!er nsthodr approved **by** the NewYork Tax Co~~~~lsslon**should** be oonsldercd **Ja** doterdnlne **~ranseotione** taxable and tranoaotlona not taxable unbar NowYork furlsprudonoe. Oboarvlng the rU1tl6 68 inter**protod**by ParagraFhh8 600000,60-300, InolusIre, the Corporation TaxServlae, C. 0. Ii., 11. Y. 1; paragraph8 41004l34, Inoluei+e, Corporatloa Servloe,. Yrentioe-Hall, Vol. 1; 

### kna **Chrl6ty** &XoLoaa, Tbo Tranofer of **Stook,** 2ntl Ed.; we observe thotr

I. Subaorlptlon **werrant** 16 a oertISloato ~srld~nolag tha right 

### to aubeoribe to stook and Is' . .. t Issued by the oorporatlon to the titookholder ontitled * to the prlvllege of subscrIbIng to the stock to be la*- rutid. I”oragraFh 4108 and I’sragraph 4205, Premtlao-, Hall Corp.Serv., **Vol.** 1. . ‘XL ;.

Fresentatlon of warrant. (a) Tbo,warrant shall be preaeated to tho oorporatlon before tlio expiration date **shown on**  ,a. the SaOe of ouohwarrantaad upon suoh prO6Ont6- .: tlon the bearer nay 6ub6OrIbOto etook. ,fS full .“:. **payment**

I6 made IOr the **shares to**  .be iosued 6ub- .:.. 6oriber la delivered a reoeI$ OvIdenolng hi6 rI&ht to the otook, entItlIng him on a **spsoiflad datd~** **‘ to**  uortaln full share6 or Sraotloa6l 6heres Of atOOk, subroquentlp bolng **i66Ued OOrtlfiO6tO8**  **OS atook.**  F6ragraph 4208, Prontloo-Xall Corp. serv., **Vol.** 1. (b) .fn evant bearer eleots to **pay for**  **suoh** ~’ share6 llr Inetallmeats be IS laouod a negotfablo '. .MOelpt, ovIdonoIng hi6 right to the stoak, entitl- *.'. ing the holdor on a 6peaIsIed date t0 OertalXi full ohare or .sraotlonal eharos~ or atook, and upon : -bin61 pqwmt, at the **the** an&In **the mannor** **opeol-** : ‘Slad, &e ia iosuod, oortUloato8 of 6took. . 4 *.

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**son. Gaor~e**  **Ii., ShepDard,**  **Peg9 s** 

Upon the tranarer by sala or otherwise of subsorlptlon nrrants, datlnad in Paragraph I above, the Federal Tax rppller **and** 

### stampe

ara roqulrad to be arrlxed and oanoalled. ’ TbaUawYor&tax doae not apply to this’ transaotloa. Para**graph** 601lC9, C. .a.~X., B. Y. 1; ,Paragreph 4205 and pa80 4148, Praatl00-Hall 

### Corp. Sarv?, :Yol..l; 563, page 834. Ohrioty &UoLaan, Paraereph

Subsaquant to tha aot or subsoiibina to the atook by *.*a **bolder** oi a subscription warrant ,as described In Paragraph II. * (II) and (b) tbaraof, eny trensaotloa.involving the traoarar of the rl&ht- held by tha subsorlba~ **requires** the **arrlxln6** and oan- .oallatlon of Unltad Stotae Revenue Staops and New **York** Revenue stamps. : **Sohmar** v. Rarflaa, 1m-a; ParaCrapb 4205, Sea. 7, Prantloa-Ralf Corp. Serv., Vol. 1; and Pnragraph 60-301, ~The 

### .Qorporatlon

Tax 

### Servlo~,

0. 0. ?..X.-Y;1; .‘, ” : The State oi Naw York ‘TaxDepartment, Albanp;Naw York in 

# l ‘,la.tter to the NewYork Stook Exchange, dated Kay S, 1922,. r&t “Ey ‘CartlilOata **Of** Richtis **to Steak** * **IS meant**  o& sudh. oertlrloatas wbloh ontltla tha holder on ._ a apsoiri6d d&e to oartaln run **share8** op rrsatlolul share8 of atook. *Rights to oubacrlba’ to **stock do** **’ not**  **oozaa within**  **this mean**  idaare **n** the statute.W (Undarsoorlng **our5J Pursuant**  to a wzlttan request by the) wrltor tha State oi NewYork Dapartmant or .Taxetlon **and** Pinanaa answered by’latter .&to6 l!?ar0hl;-1944, advlsl& **u5** further +th refaronoa tb rubrorlptlon warrantethat 8 uah are not taxable under New )lOrk Law. Thepartlnont. part or auoh.latter reads as lollowsr

*The raderei rtook transrar tax law 40rititaly ‘. provides ior a tax on tranafers of laplal title to *rlp,hts to subeorlbe 

### ror* **atook.** The NewYork law. has no slaillar provision. It does tax trauerara or 1~’ * .*oartirloatea ‘or ~rlghts to steak’ but tha Tax Cornmla8l0n has held that a oortltioate **giVin6** tkP right ;;o~$?Ohaer atook 1s not T oartirloote or A6hts t

. ***I osmiot**  

### rerer you’**to any**  **oginlon. of**  our ,. 2ttfkney Caneral: **or** to any dooleion of our ooUrt8 ,., **on the**  quo&lo& :?y way or- r.aaeonlng it may **be.** ..’
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. (_ I. 3 i ...” pointed out that~ a right to subearlba So= stoak ..

‘or a rjght to purchase stock is likely to be of’ .

The aoaaldaratlon whloh **must** be Id for thi subeorlption 

### or the purchase will n many oases, at least, represent as much as the : : stock 1s worth. It saama highly lnaquitabla~, tbaratora, to impose the 6ama tax on a transfer OSa stook purohasa warrant, (a oertlrlcate or a ..~~ rl&ht to rooaiva stook after paying **<or** It) as on

. a transrar 

### 0r a’ .~artSriaatd giving a right to, ra- . oalva stoak without paying snything norpossibly some small amount ror axpanaas as in the ease, r0r axsmpla, 

### or.a oorporata raorga;anlzatlon In whloh the holder of a bond is antltlad to receive stook. upon paying certain expans&s. It is believed

.’ that New,Pork never Intended to tax transtars OS tights to. aubecrlbe for stook and’ that the. Lmguaga oi the statute 80 lndloatas.~~ : i :

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. : Mtar amsidarlng all .ot the above, we **must** readily’ - ,.: aonolude that the transiar OS subsorlptlon warranta, though ” : taxed **under** l&a Federal **Act,** Is not tsxabla under .tha New.York **Aot,** Rowever, It follows .that subsequent to the aotlori or t@ . bearer OS suc& warrant ,ti subscrlblng Sor the stock that any **transactiOA** relating to the sale or other transfer oS.any OS the **rights.** or lntannedlata aartlSicatai avldanoing suoh rights is tqxs3le both ,undar; the Federal anil NWJ York lawsr :

Froi the “l&ant ‘or subsoriblng to’the stoak until **the aotual**  issuanoe OS certlPioatas OS stock; the transiar OS ,. **the**rights evidenced by lntarnediate oartlSlaatas is taxable. In NewYork, whether Sull payment is made at .the time oS sub- . :’ aorlblng or whether a .por$lon oS the payment fe deferred. The leading. oasa In New York. touahing’ this ~point ‘1~sSobmar vs; Herden, at.al, 216 N. Y1 ,728, ,111 N. R:llOO; reversing 165 Appellate Dlvfsf’on, 855, ..151 N. Y. Suppi i 346i The par. ouri* opinion oS the Court or .Appeals adopted .as ‘Its oplnSon the diseaatlng opinion oS the lower Oourt; thataxt OS which is ZaOitad in rull .ln OUTffpin+.to you, ~NoTi O-4026, ,: 

### IA ~tha s”hiaer’ oisa supra *be r&llPta+ cornani inE Oreased its oapitaf. stook and paa&ttad lts etockbo ders the p~lpiollage OS puro&asing his portion Or the stook at’9175 par ,. ahare tha payma@.a.be!%9 ~darorred~ .,The **.ogurt** aald,. in part, 66.$OhOWt” .., . .

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.‘, ~on.!,Oaorga 8.’ 

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_. .- II -. ”.* There were 51an8llmltatlons on the I..:..: holder; &*thtwe now aheros. They were not to .. hav0 ail 0r tba privllaga8 0r atoakholders until . .:

.’ “’ the tine1 payments, but ln the meentlxe they were pivea lntermodlata aortlfloatea, which satltled

.. . I‘:‘- them to reaeloe 7 par cent Interost upon the pertlon paid in, together with the right or making

. . ‘ the flnsl pnymoats and reoelvlng the rlnal certI-

. rioatba. **Theea lntennerdlate**  

### c0rtirio~m **were** etook 0ertlrIcatee; thoy were transrorabls, and : .( ‘2 .gave ~fo the holder the rights or a otoakholder - upon the porf~rsmnc~o or the oonditloao. The foot ~.* :. .. . ;.: , that they did not IrmadlatcQ invest tho holder with ’ . .; all of the grivileeeo 

### or the old oortlCIoatea IS or no Iaportanoei oaoh or them ocrrtirlcatee ~.a:218 a ‘paper or a(2reemeAt oraoziormlum 

### or other evidence ‘. 0r odle or timmrer~ Iatarzimllate to the rlael~ oertliioatee, and It (POa designed Co saoure the Wuturo tramfor aJ’any ~t.ook,~ %hIchmipbt heve been soourod to,tho holdor thepaot. . i .* .. Tba 6soI6Ion ik thi S&mr COJB, cu&a.doa8~not **diaows** the **‘ queotlon**  herein **r&104, but**  **wo molto**  It aa oholaIn6 a distlnotioA between rights to otook evidenced **by** Inter- **‘ msdiste** **‘ oertifloatee**  Iaauod artor aubeorlotion, therein dlri

### ouased, ead ri&hts 

### ‘to aubsorlbe to ntook, **o~idenoed** by sub**rorlptlon** warnrnto Itmuod before subticrlntion.

**SlAOO** there haye bOaA A0 OOUrt dcolaloas or ruloe or re~ulatloas presorLbed by our taxing authorltles rolotlng to this subject, wo h8ve ttWAed to the rules and re&UlatiOAA Of the NowYork Tax AUthorItlea. and .lnterpretntIon8 .Orthe OOurtO in thet jurieprudance to datomlda tho aonetruotloa **plcroed** upoa : the provlalons of the NewYork Aot that wore rollowod as a model **tOr** the Texas rtatute.. **Alter** a **study** Of.the available authorl**the, the**  **ou8tcxaa and**  **owmon cueage**  **approved by**  the Kew York Tar **Dt?psrtceAt, ‘** **we** flad that the tMln?der Or oubecrlptlon y18rXfint8 la not taxable ia NewYork. It .hna long been the ouetomIn Texar to &vs the s:&me

ooaatruatlon **to on**  **Act that**  **it** roaelvsd in **tho** 8tats where 8UOh **Aat** has been conetrued. Kay V. Sahnsider, 2Sl **6, W.**  **680) ’**  18 **Corpus** Jurie **717, olting**  **owe0** 

### tram **22 rtatea.** 

w0 th0reror~ ad&e you that the trftneror or *sub- ” roriptloa wacraata*~Io **not taxable**  **under** Artlole 7047% **VerAotP8**

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IL .8bO~Paril,Patis ‘8 . ;. .

.. ¬ated Civil Statute& a’s again dsrlns ~suhaoriptloa

. ~rrantd* t0 be w6rraAta i6SUdd by a **oorporatlon to**  those matitled to oubaoribe **to** atook eoidoaolag their VI2hta to aubaOrib8 rOr atook.” .

Opfnlon No. O-4029; delivered’ to **you** on Novsuther 0, 1941, 

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as It la :n oonrllat horevrith, is heroby ovwnlled . In such opln~on rerereaoo was frequently made by ua to riqulatlona and Ioterpratatlona of the Unltod States

. Troaaury Department rsgardlne tranaaotlona taxable under the

. ~?eUeralAct. Since the Federal Act ooatalned express la-age 1levying a tax on rluhts to aubacrlbo to at-oak, and slaoe no auoh . express language la o~ta3Aea lo either tha Tetie or Now**York** , ~ .6tat~tea, we believe **Opinion** No. O-4029, ~Insorer an it oonatrusb the Aot to Qupoae a tax on the traaarer or subscription warranta, ta **haVe** been fn **arror.** In **OVQrrt?liw** Opinion No. 04029, wo **rest** ~, ’ upon the presumption tbat the le&latum had **before** It, at the ' .tiai, (d the adoption 4 the Texas a$t%tute, the’exprsas lmgtmgo. f : __ .oontainod In tho Unltod State6 Revenue ‘meamre and la the New .Yorkstatute and that it wari. aware of! the Iaterpreta~loa given ia $bo Nesw-

York jurIsdiotIoa, from whloh our atatutp lW6 takea, :anU that IB adOptb&~ .atmh &atUtO,, &j ++&a. alSO t0 OOgeOpt. . rpoh 0oa&ru0t10a. ~;I.. *’ .. ?.: >‘--... ; - :..:. .;’ *. .

:- . . . . Aiiiatant .