### GENERAL T~~~EA~~~RNEY

OF TEXAS

HonorableGeorge~H. Shepperd~ Comptrollerof Publio Aooomts Austin, Texas
Dear Sir; OpinionNo. 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 thebooks 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 followingquestionwhich has been raised by the NationalAssooiation of SeourLtiesDealers, Inc., nistriot CommitteeNo. 6, pertaining to Artiole 15, of House Bill 8, thisbeing the Stock Transfer Tax Law:
"In oase of inheritanoeof stock in a foreign aorporation either by will or by the statute of descent and distribution,where the transfer ismade outside the State of Texas, and the only thing done inside the State is thedelivery of the stook certificate to thebeneficiary, 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 stockbook reaords of the corporation, all transpire extrastate. This was ourholding in our OpinionsNo, O-3594h,

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

and O-3713,based upon the plain text of Section 1 of theAct, providing that "there ishereby imposedand levied a tax as hereinafter provided on all sales. agreements to sell. OF memoranda of sales, and all deliveries or transfers of shares, or certificatesof stocks" etc.
The Act expressly provides andwe have heretoforeheld therefrom, in our OPinion No. O-4028 to you, that the delivery only in Texas, unaccompaniedby any of the other incidentsof a stock transfer, stock, of the mere legal or naked title to shares of

or certificatestherefor, 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 ishereby imposed and levied a tax as hereinafter provided on all sales, agreements to sell. ormemoranda-of sales, and all deiiveriesor transfers of shares, or certificatesof stock. or certificates for rights-to stock, or certificates-ofdeposit representing an interest in or representing certificatesmade taxable under this Section in any domestic or foreign association, comoanv. or coruoration.or certificatesof interest in any business conductedby trustee or trusteesmade after the effective datehereof, whether made upon or shown by the books of the association, company, corporation,or trustee, or by any assignment %nblank 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 intermediateor final,and whether investing the holder with thebeneficial interest in or legal title to such stock or other certifioate taxablehereunder, 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,

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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 administratorto a distributee or heir in instanceswhere the stock is inherited under statutes of descent and distribution, is, in either contingency, the transfer or delivery of the le al title to Ahe such stock or certificate,as contradistinguise beneficial interest therein or actual ownership thereof, so as to be brought squarelywithin the Incidenceof the above tax levy, as indicatedby the underlinedportions thereof. Although our conclusion that thedslivery in Texas of the shares or certificatesof stock of a foreign corporation,under the conditionsand circumstances stated in your letter, is a taxHonorable George H. Sheppard - Page 3 O-4030

able transaction,may be amply sustainedby the bare text of our Stock Transfer Tax Law, it is not amiss torefer to the persuasive constructionplaced upon substantially identicaltax 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 regardingsales and transfersof stock (and similar interest)provides, in part, as follows: "The followingare examples of transactions subject to the tax:
'I...

. a(n) The transfer of stookby an administrator or an executor to the legatee or distributee."

AFtiGle XVI (16) of the InformationRelating-tothe Stock Transfer Tax Law issuedby 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 .theState of Texas of shares or certificates of stoc of a foreign corporation,l;yanexecutor 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 andbe a taxable event or tranaaotion,even though suchdeliver this State, 9 of stoakwas the only act or thin done within

noident or pertaining to the tram Ber 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