OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

iionoratle Tom L. Asauaholnp 

:~.caratary or :Xata 

AUStin, Taxas 

Duu,LUrt 

, be oaken into 

to bu oomplite4 

Artlole 9034, RsvltmU Stnfateu lQQS, aa amen4eU kot6 1931, 

end Legisleture, 3. 441, Oh. ZQS, gea. 1, providsa that the 

Sranohlee tax of' corporntloes *b&U be baedd upon: 

t&et prepwtdon OS the aatntan4%ng aapitrl 

outetundlrig ba48, rmkrr aad 4obenti~o, other tkan tbe~s* 

smtttrlng in has than a year Srom Qatu af iunua . . .* 
The ;?urpose cf tf,c: Legisleture 12 addlu~ notes, bends 

mid debentures utturinp !n less thn Gne yWr from date or iSSue 

uss tc neucure the tax oc solie basis so as to include the aatual 

pentauent capital Or the cor?oratlon, vihlcb hsd prevloualy bean 

exclwled In some Instances because of its form. However, in deterlrin1n.g how this result isto be aacoepllshed we n;uct look to the 

body 0r the uct itself. 

By ita express language, Article 7084,as an;snilaA, sxoapta 

notes mmuing in loss than a raar rrom date or lsbue, the sob 

orikria 1s the Smturity date. Ho qualifioation 16 ma& for note8 

whloh mey be outatendlng and -paId after the maturity date or at 

the cloas oi,the corporate aooountlng year. 

Paper payable on dacand 18 due an4 aotlonablw isdiately 

afthout &uliaml. 6 Tu. Jur. p. 681, Sea. 96. Themrore, notam’: 

payable on asrnand rattare lee8 than a mar troa 64to 0r iuu8 ~*. 

oow rlthln the statutory uoeption. 

It was stated in Southam 'isalty Corporation v. l6&&& 

(ccr t$h, 1933) 66 Ired. (3) 934s ., .:~..r .a 

*The exoluslon or short-time loana, that le, thow 

ror l~sss than a year, is also not arbltraxy. Ii 6uoh .ara 

iotuelly repaid wlthln the Je8r, they have not bean ',:. 

oapltal employesl during the whole tai perlo& If roaeWi& 

thronghaut the year, they ay l arve to ptivlde workig' 

oapltal just a8 thou& origI5aI.4 ror 0 yeor, but in 

truth they are no penuanent oapltal, but the indul&egioe 

la at the rlll of the orvditor end generally Rmw 

by a high rate 0r interast. A 11~~ or slw+w s*~:;t~+~-', '(: 

proper to be made at some point, .Md one year, the ~period 

uhlob the tax is to oov6r. was not an unreqsonable pltioe 

t0 rix it.* 

filth rerem3oe to your 8eoon1Y tmestlon, we a6bumie that 

each instance there la a bona iids renewal or ertenalon of the 

paper SO as to nifituro short 0r n year rrom tho aats ~0r~mnslril. 

~rtiols 7084 makes no mention 0r rsnauala or sxtanaloaa. 

in 

'ho vlers lay be taken. Blrat, the original issue date 

may be taken as the *date of leaue* rcriarrea to In the statute, 

and lf extended so that the seoond period plus the original $erlod 

1s &Ore than ona year, the final natority date w0uld be mora than 

one year rrom the original *&at6 of lnsue*. ,On the other ha&, 

the posltlon lvay be taken that when the paper is extended or 

renewed, it la in raat end erroot a redssue or the paper ana when 
ROZ . Tox 1. Beauchamp, Irarch 29, 1939, Page 3 

ccuputlng the rreturlty 

actual "detc Z issue" referred tc in the statute. 

Bona fide reaewals cr extensions are no more ir: cmrlict 

wlth the express int?litlon of the L43gislatul-e find terrm or the Iict 

tban issuing 4eranQ notes rhicb the payee sufrers to run more than 

e year wlthout collection; issuing aotea Paturhg leas then a 

year rrcm date of issue but abloh are allowed to run for several 

yeara without renewal cr paymnt; notea), bonds azd debsotures 

which are oalled in end cancelled an6 new obligations aotually 

l#S?md. 

oro4oeor. 

In each lostanae the indu&enOe 1s at the ~111 of the 

Althollgh thl* POillt ru not. 8peolti8ally berore the 

oourt in the Southern R+eltty Corporatlom aaw quote6 above, the 

aot was ummlaad iram the 8taMpoiat af it8 validltq end we think the 

ruwnlng 0r the aourt 1s .sound when l pplle6 to the in6tuit 0880. 

m~Wxte ynothor bada for azmpuf+f$ the tu woul& be to 

. : 

90 U’O of the O&ion that uoh Of Joor QUO8tlone mhOUl6 

ba aMwon ln the Mgat.iV~.