Honorable George H. Sheppard 

Comntroller of Public Accounts 

Ausiin, Texas 

ginion No.'O-4029 

: Is the transfer 

to subscribe to 

Dear Sir: 

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

following question which we quote therefrom: 

e1 would appreciate your official opini,on on the following 

of the right 

stock taxable 

under Article 15 of House Bill 

8i~~Acts, Regular Session, 

Forty-seventh Legislature, 

where such~~~right1B‘not 

evidenced by a,rrcertificate for 

rights to stock,";'provided for 

in such Act? _ 

question which has been raised by the National Association of 

Securities Dealers, Inc., District Committee No. 5, pertaining 

to Article 15, of House Bill 8, this being the Stock Transfer 

Tax Law. 

"'The act imposes a tax on sales of 'certificates for rights 

to stock.' Is the transfer of the right to'subscribe to stock 

taxable where such right is not evidenced by a 'certificate 

for rights to stock?' r 

In our Opinion No. o-ko26, directed to you, this department 

held that the sale, agreement or contract to sell, delivery or 

transfer upon the books of the corporation, of certificates 

of subscription or "certificates for rights to stock" or of 

the right, however manifested, of an original subscriber to 

receive original Issue stock, is a taxable transaction or 

transfer within the incidence of the stock transfer tax levied 

by Section d of the above cited Act, despite the fact that it 

had been theretofore held by this department that such tax does 

not apply to the original issuance of stock by a corporation. 

As recognized in your inquiry, Section 1 of the Stock Transfer 

Tax Act expressly levies and imposes a tax "on all sales, 

agreements to sell,, or memoranda of sales, and all deliveries 
Honorable George H. Sheppard, Page 2, O-4029 

or transfers of at -Z 9 certificates for rights to stock." 

But you desire to be advised if the transfer of the right to 

subscribe to stock is a taxable transaction, where such right: 

is not evidenced or supported by the usual formal "certificate 

for rights to stock," expressly named in the Act. 

Article 34, Subdivision (f) of %gulations 71 of the U.S. 

Treasury aepartment regarding sales and transfers of stock 

.(and similar interests) provides: 

"The followin 

tax: 3 jt * (f k 

are examples of transactions subject to the 

The transfer of the interest of a .subscriber ::- 

for stock, however such interest may be evidenced or conditioned upon further payments." 

The same Regulations set out in Subdivision (g), as a transaction subject to the tax, 

subscribe for stock, 

"the transfer of the right to 

whether or not evidenced." 

Article 15 (1) of the Information Relating to the 3tock 

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 shares of stocks whether or not 

represented by certificate." 

We think these established interpretations of substantially 

identical provisions of the Stock Transfer Tax Laws of Federal 

and State jurisdictions by the administrative officials, bureaus 

and departments charged with the enforcement of said measures, 

and in existence at the time of the enactment of the Texas 

Stock Transfer Tax Law with similar provisions, must be deemed 

to have been within the Legislative cognizance in the enactment 

of said Act and is entitled to great weight in its interpretation. 

Moreover, aside from these considerations, we think the bare 

text of Section 1 of the Act impels our conclusion of the taxability of the instant transfer. We quote: 

"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 deliveries 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, company, or cor,poratlon, 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 88 the association, company, corporation, 

or trustee, ?k -2 1P." 
Honorable George R. Sheppard, Page 3, O-4029 

It is readily apparent from the foregoing that the legislative 

intent was to levy and impose an excise or privilege tax upon 

the transfer, by sale or gift, of 'shares or certificates of 

stock or certificates for rights to stock,' or certificates of 

subscription or any rights to subscribe for stock or for a 

future transfer of stock, howsoever such right may be evidenced, 

and Mhether evidenced'or recorded by any instruments, agreements, 

stock certificate books or transfer records at all. In other 

words, it is the actual transfer of stock, or rights to 

subscribe for or receive stock which is taxable rather than the 

mere evidence of such right. We accordingly answer your 

question in the affirmative. 

Trusting the foregoing fully answers your inquiry, we are 

Yours very truly 

ATTORREY GENZRAL OF TEXAS 

s)'%t~M. Neff,. Jr. 

BY 

Pat M. Neff, Jr. 

Assistant 

PMN:ej/cg 

APPROVED NOV. 7, 1941 

s/ Grover Sellers 

FIRST ASSISTANT 

ATTORNEY GENERAL 

Approved opinion committee 

BY Bm, Chairman