T~~~EA~~~RNEY GENERAL 

OF TEXAS 

Honorable George~H. Shepperd~ 

Comptrollerof Publio Aooomts 

Aus tin, Texas 

Dear Sir; Opinion No. O-4030 

Rer Does the stook transfer tax 1evLed 

by Article XV, House Bill 8, Acts, 

Regular Session 47th Legislature, 

accrue upon the delivery, in 

Texas, of shares ofstock or a 

foreign corporation, to the 

legates under a will or to an heir 

under statutes of desoent end 

distribution, where the transfer 

of suoh stock upon the books of the 

corporation and all other transactions relating thereto, transpired 

beyond the lim;Lts of the State of 

Texas? 

Your letter of September. 22, 1941 , submits for our opinion the 

following questlon: 

WI would appreoiate your offlalal opinion OR the 

following question which has been raised by the 

National Assooiation of SeourLties Dealers, Inc., 

nistriot Committee No. 6, pertaining to Artiole 15, of 

House Bill 8, this being the Stock Transfer Tax Law: 

"In oase of inheritanoe of stock in a foreign 

aorporation either by will or by the statute of 

descent and distribution, where the transfer is made 

outside the State of Texas, and the only thing done 

inside the State is the delivery of the stook 

certificate to the beneficiary, is the transaotion 

taxable?" 

A mere delivery, within the State of Texas, of shares or 

certificates of stock of a foreign or domestic corporation Is 

a taxable transaction under the above-cited Stook Transfer 

Tax Law, even though all other inoidents of the transfer, 

that~ is, the agreement to sell, the sale and the transfer 

upon the stock book reaords of the corporation, all transpire 

extrastate. This was our holding in our Opinions No, O-3594 
h, 

~. 

Hon. George h. Sheppard - Page 2 O-4030 

and O-3713, based upon the plain text of Section 1 of the Act, 

providing that "there is hereby imposed and levied a tax as 

hereinafter provided on all sales. agreements to sell. OF 

memoranda of sales, and all deliveries or transfers of shares, 

or certificates of stocks" etc. 

The Act expressly provides and we have heretofore held therefrom, in our OPinion No. O-4028 to you, that the delivery only 

in Texas, unaccompanied by any of the other incidents of a 

stock transfer, 

stock, 

of the mere legal or naked title to shares of 

or certificates therefor, in a foreign corporation, as 

distinguished from the actual or benefioial ownership thereof, 

is a taxable event or transaction. This is established, without 

further argument, by the plain terms of Section 1 of the abovecited Stock Transfer Tax Law, reading as follows: 

"Section 1. There is hereby imposed and levied a tax as 

hereinafter provided on all sales, agreements to sell. 

or memoranda-of sales, and all deiiveries or transfers of 

shares, or certificates of stock. or certificates for 

rights-to stock, or certificates-of deposit representing 

an interest in or representing certificates made taxable 

under this Section in any domestic or foreign association, 

comoanv. or coruoration. or certificates of interest in 

any business conducted by trustee or trustees made after 

the effective date hereof, whether made upon or shown by 

the books of the association, company, corporation, or 

trustee, or by any assignment %n blank or by any delivery 

of any papers or agreement or memorandum or other evidence 

of sale or transfer or order for or agreement to buy, 

whether intermediate or final, and whether investing the 

holder with the beneficial interest in or legal title to 

such stock or other certifioate taxable hereunder, or wfth 

the Dossession or use thereof for any purpose, or to 

secure the future payment of money or the future transfer 

of any such stock, or certificate, on each hundred 

dollars of face value or fraction thereof, three (3) 

cents, . ..'I etc. (Underlining ours) 

The transfer or'delivery of stock by an executor or executrix, 

to a legatee receiving such stock under a last will and testament, or by a duly qualified and acting administrator to a 

distributee or heir in instances where the stock is inherited 

under statutes of descent and distribution, is, in either 

contingency, the transfer or delivery of the le al title to 

such stock or certificate, as contradistinguis Ahe e 

beneficial interest therein or actual ownership thereof, so as 

to be brought squarely within the Incidence of the above tax 

levy, as indicated by the underlined portions thereof. 

Although our conclusion that thedslivery in Texas of the shares 

or certificates of stock of a foreign corporation, under the 

conditions and circumstances stated in your letter, is a tax 
Honorable George H. Sheppard - Page 3 O-4030 

able transaction, may be amply sustained by the bare text 

of our Stock Transfer Tax Law, it is not amiss to refer to 

the persuasive construction placed upon substantially 

identical tax measures of the Federal govement and the 

State of New York, by rules and regulations duly promulgated 

by the administrative offioials of these respeative sovereignties. 

Article 34, Subdivision (n) of Regulations 71 of the United 

States Treasury Department regarding sales and transfers of 

stock (and similar interest) provides, in part, as follows: 

"The following are examples of transactions subject 

to the tax: 

'I... . 

a(n) The transfer of stook by an administrator or an 

executor to the legatee or distributee." 

AFtiGle XVI (16) of the Information Relating-to the Stock 

Transfer Tax Law issued by the Stock Transfer Tax Bureau of 

the State of New York, gives, as an example of a taxable 

transaction, "the transfer of stock by an executor or 

administrator, whether to trustees, legatees or for other 

persons". 

g;e,';,zhe above considerations, it is our opinion that the 

%' 

within .the State of Texas of shares or certificates 

of stoc of a foreign corporation, l;y an executor or executrix 

to a legates taking such shares under a will and testament, 

or by an administrator to an heir or distributee, inheriting 

such stock under the laws of descent and distribution, would 

constitute and be a taxable event or tranaaotion, even though 

such deliver 

this State, 9 

of stoak was the only act or thin done within 

noident or pertaining to the tram B er of such 

shares or oertifioates. 

Trusting the foregoing fully answers your inquiry, we are, 

PMN:FS/ag 

APPROVED DEC. 19, 

s/ Grover Sellers 

FIRST ASSISTANT 

ATTORNEY GENERAL 

Yours very truly, 

ATTORNEY GENERAL OF TEXAS 

s/ Pat M. Neff, Jr. 

1941 

BY 

Pat M. Neff, Jr. 

Assistant 

APPROVED OPINION COMMITTEE, By BWB, 

Chairman