OFFICE OFTHE A'l-fORNEY GENERALOFTEXAS 

AUSTIN 

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Xonorablo Worgo H. Sheppard 

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Comptroller ot Pub110 Aaoount8 

AulrtiIl, !hXaS 

Dear Sir: 

1040, in Rhloh 

a8 to the appl 

the r0ilowfng 

lottor of Ootober 11, 

on of thle departmnt 

horitanoo Tax law to 

all of ths ooamunlty 

death of tim survivor thr propueathed to tke aurvltln5 helm 

Mm. Thomas, one-half to desoend 

hire and’the other hali to Pam to 

his heirs. The question now arises in the 

olosing of this eatate for inheritanoe tsx 

purposes, as to whether or not the property 

or m. Thoraas, who died Sirat ,. paeeed t0 hle 

heira at that tinn or rhetlnr or not akl Of 

the sstate paseed at the death of tb l UrVf*ur, 

one-half to the heira of Mr. Thomas aob the 
13 

Honorable George A. Sheppard, Page E 

other half to tha heirs OS l&a. Thoma8." 

Artiole 711'7, Varnonla Annotated Civil Statutes, 

reads a8 followat 

"All property within the jurisdlotlon 

of this Stata, real or personal, oorporate 

or lnoorporate, and any Interest therein, 

lnoludlng promrty paaalng under a general 

powar of appointment exerolaed by the deoedent by will, lnoludlng the prooaeda oi 

life lnauranoe to tha extant OS tha amount 

reosloable by the ereoutor or adminlatrator 

as lnsurenoe under poliolea taken out by 

the deoedent upon hla own lite, and to the 

Wtent of the axoeaa over Forty Thounend 

Dollar8 ($40,000) or the amount reoelveble 

by all other banaflolerlea 88 insursnoe under pollolea taken out by the deoedent upon 

hla own life, whether belonging to lnbsbitents of this Stete or to paraona who era 

not Inhabitanta, regardleaa of whetbrr auoh 

proprty la looatad within or without tibia 

State, whloh ahall pa88 ebaolutaly or in 

trust by will or by the law8 of deaoant or >~ 

dlatrlbutlon of thin or any other Steto, 

or by deed, grant, sale, or gift made or 

lutendea to take efteot Ia possasalon or 

enjoymant altar the daeth of the grantor 

or donor, aball, upon paaalng to or for the 

UEO of any person, oorporatlon, or eraooletlon, be aubjeot to a tax for the bsnetlt 

of the Statala General Revenue Fund in eooordanoe wlth the following olaaalS~oatlon. 

Any tranafar made by e grantor, vendor, or 

donor, whether by deed, grant, aale, or 

gift, shall, unless shown to the oontrary, 

be deene& to have been msde in oontemplatlon or death end subject to the aam tar 

as herein provided it euoh transter Is 

msda within two (21 years prior to tha 

death of the grantor, vendor, or donor, CC 

a material part of his satate, or if the 

transfer made within euch pewlod ia in the 

nature of a f lnal distribution of property 

end without adrqusta valuable oonaideration. 

AOt8 1925, 2nd C.B., p. 03; Aots 1929, 41at 
1 

gonorable Caorge R. Sheppard, Page 3. 

Leg., lat c.3.. 9. 108, ch. So h 1; Aota 

1839, 46th Leg., Ii. B. # 990, b 1.” 

Artiole 7123, Vernon’s Annotated Civil Statutes, 

reads as follows: 

“If the property paeslng aa etorseald 

ahall be divided into two or mora estates, 

aa an estate ior gears or i’or life and a 

remainder, the tax ahell be leviad on eaoh 

eatate or interest separately, eooordlng 

to the velua of’ the asme at the death of 

the deoedant . The value of eatataa for 

yeera, eetatee for life, remalndara and 

annuities, shall be determined by the *Aotuariss Ooablnad Experlenoe Tables, * et 

rour per cent oompound intareat.w 

Under the above quoted ertiolaa unqueatiohably 

the lnharltenoe tax 1s due on the husbend’a ahre of tha 

oonmunity a&ate which ha reeves at his daath end is payable by hia heir8 on their raapeotiva intereets or eatatea 

in such decedent*8 praperty. The tax lo due et l uoh fiu 

end 1s to be paid by the rerious eeteter or lntereata in 

proportion to the value of eaoh lnteraat in the property. 

There la no provlalon for the postponement of the payment 

o? the tax until the property 1s aotually reoeived by the 

ramindarmen. The Aurtfx Court of ~Cfvil Appaala, in the 

oeae of Bethae v. Sheppard, (en yet unreported), stated en 

followa : 

Wenifestly tha atatutaa do not euthorlze the postponaxant of the tax to 

await suoh oontlngenoy or oonditlona rubsequent, end these ooaoluaiona aaawer all 

elternatira oonteatlone of appellant that 

only portions of the value of the oorgua 

or prlnolpnl were taxable. our above oonolualona alao deny the oontantion of appallant tbst the tax ahould bo poetpouad to 

datemine whet eventually might happen during tha sight yeer period &tar the daeth 

0s grantor or aettlor. Xotblng, In the stetute authorizer such postponaxant of the tax; 

but to the oontrery it shows that tha Legialature intended that the tax beooma due and 
116 

flonorable George R. i:heppard, Fag4 4. 

payable l~~d!a~ely after the death of 

erentor, . 

The question in the specific oaae which you preaent 

is whether or not the property belonging to the one half cammunltp interest of J. 7:. Thomss which hsa now paesed to his 

raaalndarman or helm wsead under the terms of his will et 

the time of hi8 death at whioh tlma lt wea taxable or dld It 

pas upon the death of his wife, the survivor. It 1s our 

opinion thst the rormer Is the correot analysis oi the altuation. Under the will 0. Thorns8 left his share of tha community estate to his wife for her life with the power to aiapose or the same but provlded that if eny of the mama wna 

latt et the death of his wire that it should go to his heira. 

It Is our opinion that when heirs so take the remslnlng proparty nt the death of Hr. Thomas * aurvl~lng wife they era taking the same under the will of Mr. Thomas and whatever lntarast or eetate~thay had in the property wan taxable at the tlma 

of I&r. Thomas* death and would not be taxable et tha time of 

the death of the euld.ving wife. 

In Opialon No. 04551 this department construed a 

rill in which a husband left &la property to hfs wlfa for lire 

with power to dispose of aama but provided that if any of it 

was left at the time of her death the ramalnder should go to 

his daughter. :Qe ruled in eeid o,oinioa that upon the hueband's 

death both the wife and the daughter had an latereet or estete 

in the property whloh interest or estate should be taxed and 

valued in acoordanoa with the rhlue of the aama et the time of 

the husband*8 death. This sama rule oi law was aMOunOad by 

the 3uprame Court of Wleconaln in the ease of State v. Merrill, 

24s N. W. 909. The court atatee as follows; 

*The statutory provisiona above atated 

disolosa a oomplete mhema ror the valuing of 

interests in eetetea ~ivsn by will and for the 

imposing oi the tax upon such interests tranaierred a8 of the date of the death of the tsatator, end for the payment of the tax upon its 

impoeltloa, whether the sotual enjoyment of 

the interest transferred be present or future. 

The tax ie lmpoaed upon the right to reoeive 

end ie ffZed by the value of that right. State 

ex rel. Kempsmith v. Wldule, 161 Vile. 3@9, 154 

N. 6. 695. The state 18 entitled to an lnherltance tax measured by tha market value of the 

interest.transfarred ana the value for texlng 
1lW 

Bonorablr George 8. Sheppard, Pago 5. 

purporea oannot be reduoed by dividing it 

into term ortates and lnmainders. Estate 

oi Stephenson, 171 F!ls. 452, 468, 459, 177 

A. W. 579. Thus the oereral lntersstfi 

transferred by the will in suit were subject to valuatfog tt the time or the testatar’s death. .” 

The United States Board of Tax Appeal0 pamad on 

a question very rlmilar to the ona you present in the oam 

of Carrie L. Jones v. Commlsaioner, deoided May 29, 1940. 

Ln that oaae a testator bequeathed hi4 property to his die 

ror life with remainder to their daughter. By the teama af 

the will the widow we8 given the power to dispose of the 

property including the right to detlm, mortgage or sol1 the 

?%d 

During her liietlme the widow made a transfer in truer, 

aeduritlea reoelred under the will of her husband dlrecting that nhe should raorire the lnoome therefrom for llia 

ml that umn her d6ath the entire trust estate should bo 

paid to her daughter. The widow dlod. The daughter wrot@ 

the trustm that she alooted to take the seouritire under 

the ~$11 of her rather. Tim oourt hold that the daughter 

did take the fseourlties undrr the will of her father an6 

that their value et the tlmo of the wldow*a death 18 not 

included in her 

State@ Board of 4 

rots8 estate. 8% believe that the United 

ax Appeal6 bae laid down the oormot ruin 

to be applied in mxoh a cam. 

You are therefore advised that the huCrband’8 hair 

of the oonmunlty property whiOh now pansea to hlr holrr upon 

the 6eath of his aurvivlng wife was taxable in aooordanoe 

wlth its value at the tfnm of the humband’s death and is not 

taxable under the Texas Inheritanoa Tax laws at the tlaa or 

the death OS the eurrlvlng wife as part of her eatate. 

Tours rery truly 

ATTORagP GElWIAL CF TBras 

BGSRS 

APPZ:"' 

ATTORNEY GENSRAL OF TEXAS