EC, NET GENEIRAL 

~,~ June 16, 1967 

Honorable Robert S. Calvert 

Comptroller of Public Accounts “, 

State Capitol 

Austin, Texas 78711 

Opinion No. M- 92 

Re: Whether the value of an indebtedness secured by mortgages against 

real estate located in Canada and 

held by a resident decedent of 

this State should’be included in 

computing the amount of inheritDear Mr. Calvert: ance taxes due. 

You have requested the 

above captioned question. We 

from your letter, .of request: 

opinion of this Office on the 

quote the following excerpt 

‘!We desire the opinion of your office 

with respect to the inclusion of mortgages 

against real estate located in Canada for 

inheritance tax,purposes held by a resident 

of the State of Texas. 

,I 

e 0 D 

dent 

[The Decedent7 died testate a resi1965, 

of Harris County, Texas, on November’g, 

and among the assets of his estate were 

mortgages on real estate located in Canada 

and payable in Canada in the amount of 

$22,581.00, These,mortgages were omitted 

from the State Inheritance Tax Return by 

. . . . the attorney for the estate, because he 

stated that Texas did not have jurisdiction 

under Texas Inheritance Tax Laws over a mortgage on real property situated in Canada, to 

which this Department does not agree. 

“It has been the rule of the Department 

for many years to include for inheritance tax 

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. . 

Honorable Robert S. Calvert, page 2 (M-52) 

purposes intangibles owned by a resident of 

the State of Texas regardless of whether such 

intangibles are located within or without the 

State of Texas. This rule also covered intangibles subject to foreign jurisdiction. 

“Please advise this Department whether 

our rule is correct.” 

A mortgage is merely security for the payment of a 

debt 0 39 Tex.Jur.2d 12, Mortgages and Trust Deeds, Sec. 4, 

and authorities cited therein. We are therefore rephrasing 

your question to read as follows: 

“Whether the value of an indebtedness 

secured by mortgages against real estate 

located in Canada and held by a resident 

decedent of this State should be included 

in computing the amount of inheritance taxes 

due.’ 

Article 14.01, Chapter 14, Title 122A, Taxation-General 

20A, Vernon”s Civil Statutes, provides for the inheritance tax, 

in part, as follows: 

“All property within the jurisdiction of 

this State, . .., regardless of whether such 

property is located within or without this 

State, ‘.., shall, upon passing to or for the 

use of any person, ..-# be subject to a tax *.=’ 

The attorney for the estate has written us with regard 

to the matter under consideration, putting forth his contention 

that Article II(c) of the 1961 treaty between the United States 

and Canada (13 U.S.T. 382), in providing that debts shall be 

deemed to be situated at the place where the debtor was ordinarily resident, would, in the instant case, preclude the State 

of Texas from including in the estate the indebtedness, and 

mortgage securing the payment thereof. 

Article I .of such treaty, in part, provides as follows: 

“1 ‘ The taxes referred to in this Convention 

are: 

(a) for the United States of America: 

the Federal estate tax; 

(b) for Canada; the est,ate tax imposed 

by t,he Government of Canada.” 

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Honorable Robert S. Calvert, page 3 (M-92) 

Such limitation excludes from coverage by the treaty 

t,he inheritance tax levied by the State of Texas or any other 

tax levied by any state and, therefore, such treaty has no 

bearing upon any such tax. 

By Opinion No. o-6122 (1944), this Office upon aythorities cited therein, expressed the opinion that the legal ownership of int,angibles by one in Texas gives such intangibles a 

business situs in Texas and makes them "property within the 

jurisdiction of this Stat,e." The inclusion of such int,angibles 

owned by Texas residents has been the administrative policy of 

the Comptrollerqs office since the date of such opinion and we 

have no basis for overturning such opinion or the administrative 

policy in conformity therewith. Therefore, it is the opinion of 

this Office that the value of the indebtedness secured by the 

mort,gages should be included in the estate when computing the 

amount of inheritance taxes due. 

SUMMARY 

The value of an indebtedness secured by 

mort.gages against real estate located in Canada 

and held by a resident decedent of this State 

should be included in the estate when computing 

the amount of inheritance taxes due, 

Y&s very truly, 

MMF:ms 

Prepared by Marietta McGregor Payne 

Assist-ant Attorney General 

APPROVED: 

OPINZON COMMITTEE 

Hawthorne Phillips, Chairman 

W. V, Geppert, Co-Chairman 

Harold Kennedy 

Mario G, Obledo 

Louis Berry 

Robert Flowers 

STAFF LEGAL ASSISTANT: 

A, J. Carubbi, Jr, 

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