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:
e1would appreciate your official opini,onon 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 tostock,";'providedfor in such Act?

_

question which has been raised by theNational Association of Securities Dealers, Inc., District Committee No. 5, pertaining to Article 15, ofHouse Bill 8, thisbeing the Stock Transfer Tax Law. "'Theact 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 isnot evidenced by a 'certificate for rights to stock?' r
In our Opinion No. 

### o-ko26,directed toyou, this department held that thesale, agreement orcontract to sell,delivery or transfer upon thebooks 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 taxdoes not apply to the original issuance of stockby a corporation.
As recognized inyour inquiry, Section 1of the Stock Transfer Tax Act expressly levies and imposes a tax "on all sales, agreements tosell,,ormemoranda of sales, and all deliveriesHonorable George H. Sheppard, Page 2, O-4029

or transfers ofat-Z9 certificates for rights to stock." But you desire tobe advised if thetransfer of the right to subscribe to stock isa taxable transaction, where such right: isnot 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 theU.S. Treasury aepartment regarding sales andtransfers of stock .(andsimilar 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 sameRegulations set out in Subdivision (g),as a transaction subject to the tax, subscribe for stock, "the transfer of the right to whether ornot evidenced."
Article 15 (1)of the Information Relating to the 3tock Transfer ~TaxLaw issuedby the Stock Transfer TaxBureau of the State ofNew 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 ofFederal and State jurisdictions by the administrative officials, bureaus and departments charged with the enforcement of saidmeasures, and in existence at the time ofthe enactment of the Texas Stock Transfer Tax Law with similar provisions, must be deemed tohave been within theLegislative cognizance in the enactment of saidAct and is entitled to great weight in its interpretation. Moreover, aside from these considerations, we think thebare text of Section 1 of the Act impels our conclusion of the taxability of the instant transfer. We quote: "Section 1. There ishereby imposed and levied atax as hereinafter provided on all sales, agreements tosell, or memoranda of sales, and alldeliveries or transfers of shares, or certificates of stock, or certificates for rights to stock, or certificates ofdeposit 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 anybusiness conducted by trustee or trustees made after the effective date hereof, whether made upon or shownby thebooks 88the association, company, corporation, or trustee, ?k-21P."Honorable George R. Sheppard, Page 3, O-4029

It isreadily apparent from theforegoing that the legislative intent was to levy and impose an excise orprivilege tax upon the transfer, by sale orgift, of 'shares or certificates of stock or certificates forrights to stock,' or certificates of subscription orany rights to subscribe for stock or for a future transfer of stock, howsoever such right may be evidenced, andMhether 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 stockwhich is taxable rather than the mere evidence of such right. Weaccordingly 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