TEE AT~,WNEY GENERAL 

OF TEXAS 

November 28, 1972 

Honorable Joe Reeweber 

County Attorney 

lfarrlr County Courthoure 

Houston, Texas 77002 

Honorable Fred P. Holub 

County Attorney 

Natagorda County Courthouee 

P. 0. Box 1527 

Bay City, Texae 77414 

Opinion No. PC 1271 

Re: Meaning of “primary occupation and eource of 

Income of the owner” 

when aeseeeing land 

used for agricultural 

purpoeee under Article 

VIII, Section l-d of 

the Texae Conetltutlon. 

Oentlemen : 

You have each eubmltted opinion requeete which involve an 

Interpretation of Article VIII, Sect$on l-d of the Texae Conetltutlon. Both requeete aek whether land may receive the “agricultural uee” deelgnatlon provided by Article VIII, Section l-d 

when the owner’8 Income from other eourcee’ exceeds the Income 

derived from agricultural use of the land. Section l-d of 

Article VIII reads ‘as followe: 

“$1-d. Aeeeeement of land deelgnated for agricultural uee 

Sec. l-d. (a) All land owned by natural pereone 

which 18 deelgnated for agricultural uae in accordance 

with the provision8 of thle Section shall be aeeeeeed 

for all tax purpoees on the consideration of only 

those factors relatlve to such agricultural we. *Agrlcultural use* mean8 the raielng of llveetock or growlng of crope, rrult, flowera, and other products of 

the roll under natural condition8 as a buelness venture 

for profit, which business Is the primary occupation 

and source of income of the owner. 

(b) For each assessment year the owner wishes 

to qualify his land under provision8 of thir Section 

a8 deeignated for agrleultural iwe he shall file with 

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. ,. . . 
Honorable Joe Reetieber, et al, page 2 (M-1271) 

the local tax aeeeeeor a sworn etatement in writing 

deecrlblng the uee to which the land Is devoted. 

(c) Upon receipt of the eworn statement in 

writing the local tax asseseor shall determine 

whether or not such land qualifies for the deelgnation ae to agricultural use as defined herein 

and in the event it so qualifies he shall deelgnate such land as being for agricultural uee and 

aeeeee the land accordingly. 

(d) Such local tax assessor may inspect the 

land and require such evidence of use and source of 

income a8 may be neceeeary or useful In determining 

whether or not the agricultural uee provlelon of 

this article applies. 

(el No land may qualify for the designation 

provided for In this Act unless for at least three 

(3) successive years lnunedlately~precedlng the 

aeeesement date the land hae been devoted excluelvely for agricultural uee, or unleee the land 

ha8 been continuously developed for agriculture 

during euch time. 

(f) Each year during which the land Is designated for agricultural use, the local tax assessor 

shall note on his records the valuation which would 

have been made had the land not qualified for such 

designation under this Section. If designated land 

18 rubeequently diverted to a purpoee other than 

that of agricultural use, or is eold, the land 

shall be eubject to an additional tax. The addltlonal tax ehall equal the difference between 

taxes paid or payable, hereunder, and the amount 

of tax payable for the preceding three years had 

the land,been otherwlee aeseseed. Until paid, 

there shall be a~lien for additional taxes and 

interest on land.aeseered under the provisions of 

thie Section. 

(g) The valuation and asseesment of any 

minerals or subsurface rights to minerals shall 

not coma +thin the provisions of this Section.” 

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\ 
Honorable Joe Reeweber, et al, page 3 (M-1271) 

The request submitted by Honorable Joe Reeweber suggests 

that Article VIII, Section l-d(a) Is violative of both the equal 

protection and due procees clauses of the Conetltutlon of the 

United States. In the brlef furnished in connection with this 

request, the writer adatunes that where revenue from a sale Of 

agricultural land exceeds the profit reeultlng from agricultural 

use of the balance of the land, the right to the deelgnatlon of 

agricultural use Is lost. Taking this result ae a premise, it 

Is submitted that Article VIII, Section l-d(a) 18 vlolatlve of 

the equal protection fnd due process clauses of the Conetltutlon 

of the United Statee. 

The recent decision of Klltgaard v. Calnes, 479 S.W.2d 765 

(Tex.Clv.App. 1972, error re? 

overruled November 1, 1972)) 

LM tion for Rehearing 

&?.~r~~f’the”premlae on which the 

question of conetltutlonallty 1s predicated. Klltpaard holds 

that sporadic sales and other transactions there Involved which 

resulted In Income in excess of that derived from agricultural 

use of the land did not affect the owner’s right to agricultural 

use designation where such use conetltuted the bualnese and prlmary occupation and source of income of the owner. 

I In reaching this conclusion, the writer recognizes that, 

generally speaking, there Is nothing In the Federal Conetltutlon 

which requires that State taxation be equal, uniform or just 

(citing Shaffer v. Carter, (1920) 252 U.S. 27, 40 S.Ct. 221) if 

the practical operation of the tax beare a relation to opportunities, protection or benefits conferred by the State (citing 

State of Wisconsin v. J. C. Penney Co., (1941) 61 S.Ct. 246, 311 

s 4351 Nevertheless, th due proceee and equal protection 

cia&ses aiford protection agzlnst discriminatory taxation (cltl 

Morton Salt Co. v. City of South Hutchlnson, (1947) 159 F.2d 898 

within an otherwise reasonable classlflcatlon for tax purposes 

citing Phllllps Chemical Co. v. Dumas Independent School Dlat., 

1960) 85 S Ct 474 361 u s j-f-6) E th h numerous cases 

recognize the power’of the-State t; trzi: agz%ltural land dlfferently from non-agricultural land , a taxing scheme which lmposes a greater tax upon a taxpayer simply because he Is better 

able to bear Its burden amounts to an abusive and unreasonable 

discrimination within the class (cftlng Brosiley v. McCaughn, 

(Dlst. Ct. Penna., 1928) 26 F.2d 380). 

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Honorable Joe Reeweber, et al, page 4 (M-1271) 

In Klit aard the taxpayera had lived on the land for many 

years an rb ,w he exception of a few monthe, had farmed and 

ranched it continuously during that time, pereonally supervising 

and laboring In ralslng crops and livestock. TNs operation was 

conducted at all times a8 a business venture for profit. During 

the taxable years In queetlon, the taxpayers received money from 

other sources, Including the following: principal and lntereet 

on occasional land sales; rental of commercial property acquired 

by inheritance; 011 and gas bonua and delay rental8 from certain 

mlneral leases on a ranch In another county, no production of 

minerals being involved. Three of the ealee involved were to 

irrevocable trusts created for the benefit of the taxpayers’ 

children, for which sales a note wae given, payable with Interest 

within five years. The trial court found these salse to be b6na 

fide at market price and a part of the taxpayera’ estate plan. 

Itfurther expreesly found such sale8 were not a business venture 

of the taxpayera. Addltlonal sale8 resulted in partial payment8 

being made in the taxable years, and a eale was aleo made of part 

of a ranch in another county which was operated a8 a unit with 

the land for WNah deelgnatlon was nought. 

In holding that the use of the land oonstituted “agrlcultural use”, the court emphasized the fact that taxpayers’ primary occupation and source of income.was their farming and 

ranchfng activities, and that the income received from the 

transactions above enumerated did not conetltute money received 

“in any buainese venture or occupation within the meaning of 

the amendment LArtL 1 se ti l-d J ” Tll t ax collecfor’e 

emphasis on fhat pa&Ton of*thecco%tut&al ;rovision which 

speaks of the “source of income of the ownera@ and hia position 

that agricultural use designation wan loet whenaver non-agricultural lncuae exceeded agricultural Income in any one year wae 

l peclflcally rejected. At pagee 769, 770, the court raid: 

“In applying hi8 dollar balancing teat by deter-- 

mining what Is agricultural and non-agricultural income, 

appellanta’ tax collector sometimes borrows from the 

doctrines of the Internal Revenue Service, but not 

‘necessarily’. On cross-examination Hr. Klltgaard, 

the tax collector, wae aeked about Ne guidelines in 

arriving at agricultural or non-agricultural income. 

Xl8 rather l ta r tllnreply g wae, ‘We really have no 

guidelines, slgnlfloant guldellnee reletlve to the 

-6244- 
Honorable Joe Reeweber, et al, page 5 (M-1271) 

law a8 written here, and there are many situation8 

that ariee that are very difficult tb get anewere 

to out of the law lteelf.' 

“An examination of the tax collectors’ determlnatlone as to non-agricultural Income eMm8 to 

bear out the accuracy of his statement. . . . 

“Ellglblllty for the benefits of the amendment 

18 not to be determined by the vagaries of nature or 

the market, nor by.fortultoue investment or lnherltante. But rather to qualify under the amendment one 

muet be engaged in a bona fide effort to eam,,a profit 

from the land by agricultural operationa. . . . 

Under the facts aubmltted by Honorable Joe Resweber, there 

sale of a portion of the land ‘formerly accorded 

uee deeignation, which sale dld.not affect aubeewas only one 

agricultural 

quent uee of 

the owner of 

\ designation. 

the balaice for farm purpoeee. Under Xlit aard 

the land 18 still entitled to agrlcultura -P- :uee 

The question submitted by Honorable Fred P. Holub Is couched 

In more general terme, and aeks whether agricultural use deelgnation must be denied in any case where income derived from any 

other eource is more than 50$ of the Income derived from agricultural use. We reviewed In detail the facts in Kilt aard and 

the court’8 application of the constitutional prov T+Ti&eto s on 

because that case furnishes guidelines for tax collector8 in such 

casee. In each case, the tax collector must conslder all pertlnent facts In the light of Kilt aard 

+ 

on the basis of which he 

muat conclude whether the a$r cu ural uee of the land in queetlon is In fact a “buelnese which “la the primary occupation 

and sour= nncome of the owner”. 

SUMMARY 

Where Income from agricultural use is exceeded 

by lnoome from other eourcee, an owner of land may 

still obtain agricultural uee deelgnation under 

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. 

. 

. 

Honorable Joe Reeweber, et al, Page 6 (M-1271) ’ 

Artlole VIII, Seotlon l-d of the Texa8 Constitution 

If the agrloultural uee of the land la in && e 

“bueineee” which 18 “the primary ocouprmon end 

eourae of Income of the owner’. 

RD C. MARTIN 

ey General of Texae 

Prepared by Herlotte McOrigor Fmyne 

Aeeiet*nt Attorney Oefyral 

APPROVED: 

0PIHIoN COMITTEE 

Kern8 Taylor, Chairman 

W. E. Allen, Co-Chalmmn 

lierriet Burke 

Jaok SpaNcn 

E;pm%dlln 

SAMUEL D. MCDANIEL 

Staff Legal Aeeletant 

ALFRED WALmR 

Executive Aeeletmnt 

NOLA WHITE 

Flret Ae$letant 

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