OFFICE OFTHEAnORNEY GENERALOFTEXAS AUSTIN

-‘m c. MANN *-” .s*-

HonorablePorn L. Eaauahamp Gaoretary 0: State **Austin, Texas** 
**Dear sir:**  Attwition:

in whfoh ym **reqneat** the tw rquowing iaots and ona&h 10, 19s9, a dommtio oharter

**o&d b;r

the **rartgagor insWlments.**  Iour letter
ressntlngthe amendaenote r, the atfldatlt~aooonpanramendmnt reolte~s

that tu **.Twmrs** fiotel

Oom@sny he8 **title** to the **aroreaald** propdty, wh.io3.1 pro; pertp Is of the oash ~al.ua of @350,&30 over and above the flxet mmtgage loan or #SEA5

( 0.00. This affidavftfurther reoltie thst the $25O,OOQvaluationisiIonorable Tom L. Beauchamp,Pa*- 2

carried on the corporation's books as ~150,000to the capitol stq..ak a,ocount of 9100,000creditedto th'ii ln$etment account or ourplus of such oompany. This office required the paymente of a riling fee of $190 for filing the amendment to the charter,and in aadition thereto required the payme t rranohise

taxes oovering the pe i of lad from May 4, 19259,

through April Jo, 19&O, based upon the capitol st6ok of. 150,000BL~ 1 P. she rurther amount of 525.000 e fhmoed by the note outat&uU&+igalnat the corporatepropsrw- 'The

only questionwhloh has arisen relates to our charge at this tlPur ot thm addltlonal amount ot tranoblae tax baaed upon mtetemant,oontalnad In t&~ iimendmont

to th, oharteruhloh wan $hie.daytiled.* The iollowlngquestionsdareeubmlttsdfor oar determination: "1. Under the oimmwtanoei outlined above Is the Ssorotary of State authorized to ~requlra the oorporation to pay a supplemanta tranohlse tax ooverlnathe rraotloaalwrtlen or the ~erfr~ May 4; 1939, t&rou~,Aprll

. "2. In event the above question 1s answered in the afflrmatlve, upon what portion of the oar oration's oaplto1 assets of $575,000 7**repreaentsd** by Its authorizedand paid In oapltol stook of 8150,000,its eurplus as stated in its oharter amendment of $100,000, and the amount of $325,000 represented by the remainingvalue of the property subdeot to the note ereoutsdby Ollff Tower8 Corporationin said amount of $925,000)are we entitled to use as a basis for determiningthe amount of taxXonorubluTolo L. Eesuchnmp,Page 3

tiue by it? “3. In the event question number one is answered in the negative,and assuming there is no further ohange in the Zinanoial status o? the corporation's aapitol **stock,** then upoo what portion o? said $375,000 should the tar due I&y 1, 1940, be based?"
You lndlaate that the taxpayerhas paid the tax under protest as provided in Artlole 7057-b and the loonay is being held in suspense awaiting the detsna%nationo? these questlone.

Artiole 7084, Revised Civil **Statutes, 1925,**  **pro** vldea in part as hollows:

**“ (A)**  Fzoept as herrin provided, every domastio and foreign oorporationhereto?Ore or hereaiter ahartsred or orccanl%od to do business ii l'e

roii0ang
. . Artlale 7086, Revised Cltll~Statutes, 1925, provldee as iollowei

nNhenaver a private domsstio oorporation is ohartered in this state,
. . . suah oorporatlon shall **be** cequlired to.pay in advanoe to the Seoretary o? State, as it8 rranohlse tax rmpl that tIma down **to** and inoludlngthe 50th **day** o? April next rollo~ing, only suoh proportionate part or Its annual iranohlsetax, as hereinabove prescribed,as the period o? tlaxe between the date or its riling of its artloles of lnoorporation

. . . and on the first **day of**  **May** iollowing, **bears** to a oalendaryear," Artials 7089. Revised Civil Statutes, 1925, aontains the ?ollowlng provisionsiHonorableTom LL Baauolmmp,Paga 4

"Exxcept

as heralnprodded, all oorporationsnow required to pay an annual franchisetax shall, betweenJanuary 1 and ikroh $5 of each year, make a aworn report to the Seoreterpof State, on blanks furnishedby that oftloer, ehowlng the aozdltlonof such oorporatlonon the last day or its praoadingtiaoal year. The SeoretaryOf Statemay iOr **good** oause shown by any oorporatlonsitend suoh tlzse to any date up to Mshp 1

. . .* Artlole 7092 provides In part es follows: "The Seontary of State ahsll, durlag tha mnth 0r Uey or eaoh year, 00ti.ry eaoh, domastloand ?oraIga aarporatlon whloh smy be or baooma aubjaot to a ?ranOhlaa tax under any law of this stats,whloh has failed to pay auoh franohlsatax an or bafore the rlrst day 0r my, that unleb~ suoh overdue tax tog&thar with aaid penalty **thera** O? shall be paid on or berora the first dq of July next followIng,'the right of atioh oorporatlonto do buslnaaa In this state will be torfaltadwithout judlolalaseertalment~. :.

-." The above atatuteaolaarly establish that when Oli?? Towers Hotel Cornpang was lnaorpomtod on Maroh lQ, 1939, ltwe8 then due a rranohfsetax for the period from Maroh lo., 1939, to April 30, 1939, on its oepitol atook and anoh tax was dua upon the filing of its ohm-tar- The ~rranohlae tax for the.yaar 1940 was **due** and payable on May 1st of 1939, based upon its outstandingoapitolatoolc, surplus,eta, prior to aEay

1, 1939. The next franohiae tax due by tMs oorporatlon

will be based upon Is outstandingoapltol atook, surplus,eta., on the last day of Its risoal year next praoedlngMsy 1, 1940, ani till be payable in advanoa on the last me@loned date ror the franohiaetax year 194%;

Although the oharter amendmentwas filed on Nay 4, 1939, during the franohlsetax year~l94.0, the rranohlw taxes for suah year were alreadydue and payable based upon theiionorablc Tom L. Beeuchamp,Tase 5

capitol structureprior to Xay 1st and the filing of the amendment would not affect the rmount of tax due for that year.

Prior to 1930, Artlole 7091) ii. C. S., 1925, provided 68 follov:s:
"In the event of increase in the authorized capitol stook of any domestio or foreign corporation, it shall also pay in advance a supplemental franchise tax thereon for the remainderof the year down to and Inoludlngthe 3Qth day or April next thereafter, the amount of whioh shall be **doter mined**  a.8ie provided In the third artlole OS this ohapter in oaae of the firat iraaohlse tax payment to be made by a domestic oorporation whIoh may be hereafterauthorizedto do **buainses nithln**  this state," This statutewae repealedby Aots, lOSO, 4lrt Leglslature, 5th 0. S., page 220, Ch. 68, Seo. 1.

. **W-a**hive been.unableto'rlnd any rurther atatutoa authoriai+gthe oolleotionof a eupplementaltranohleetax. upon filing a oharter amendment,**and** by the reppal of the above quoted statute it was evidentlyth8 intentionot the legIcllature

that :ampplemental franchisetax ehould no longer be paid under these olroumetanoea.

We, therefore,,answer your first queetlon in the negative.Having anaweredyour first question In the negative, your seoond questiondoes not require an answer.

As pointed out above tha iranohiaetax due on May 1, 194C, In advance for the year 1941 will be based upon the oorporate atruotureas of the last day of the flsoal year next preoedingMay 1, 1940. This being true its present oapltol attruoture ~511 not in any way beocme a raotor in oaloulatfngthe amunt of tax due for the year 1941 and your third questlon may not materialize. We reoognlzethat in submittingyour third questionyou might have also had in mind oorporatlone similarlysituatedwith reapeot to-this year's tax and a present answer Is desired. If this is true we reepeotfullylionorableTorn L. B8aUChmp, Page 0

request that you resubmit your third question and we shall be glad to give it our further consideration.
Yours very truly ATl!OE..Y

GEIERAL OF T%X&3

BY Aaalstant

cccrn

APPRiX'liD~ 24, 1939

ATTOBWBY .GliXItML

OF !mxAs