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## 243 

## THEA~TORNEY GENERAL

~IFTEXA~ Aven~. TEXAR pRIa.xs DANl -ìm--= August 5, 1948

Hon. Geo. H. Sheppard ‘~ Opinion No. V-648 Comptroller of Public Accounts Austin, Texas Re: Taxable ata@~~of certain types of stock transfers to andfrom ‘Szustodians.’ Dear Mr, Sheppard:

. . You-r~qu@?ur.opinion as tpwhat+ th?,stock t+~sfer tax levied under **.Article** 15,ofH. B. N6. 8; 47th L~gislatnrq, -as amended by S. 8.. 141; SOtkLigislaturc, would acckne in the fqU.owing types’of transfers: ,: .:. ~.

.%. From ihe ~iarneof-an owner tqthe name~,of a i&nine~ of a ‘custodian.

“2. From ,thgaame.of a nomin+ of a custqdian !back to the name of w owner +r whom.tba -nomixiTeb+d held the sba+vzs.

. .‘~ .’ .~~.Z. .t$. ~From.tbe +me.of one’nominee ef..a cust+ dian to the x+me of another nominq 

### ofthe name custodian.

“4.. From ihe~name of a nominee of a curtpdi~~~ :tom the name’ .&f

a,nominee oJa~7 cw t&an .foctha sauiq~gtier,m

‘The Texas-Stqck Transfer Tax~Act is eodvisd’rs Article 7047xi and ieads,.:in past, as ‘f~llonsr

., .,T~.,. %+ctlon L ,,8Thereis hj?reby,ixn&sed and~l&ied a tak as .hereilufter provided. eonall,sal+j agreoriqbts to sell1 or ti6moranda of sales: and all deliveriis im

. transfers of 

### sharesior.certificates of stock; or certificates:for.i$jlhts to atock; or certificates of deposit

. rsprssenting +x8 iatetcst ia ar reprisen%ing~~crtJficat~s made taxable uixd+r this~sectio~ in any dauytic or foreign.issociation, Citipany, or corporatfon; or’cartiffcates of interest in any~basiaass:conducted by trustee or trustees made ‘after the affective date hereof,‘whethcr made upon or shown by the books of the association, company. corporation, or trustee, or by any assignment

## 244 Hon. Ceo. H. Sheppard, Page 2 (v-648)

in 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, andwhether investing the holder with the beneficial interest in or legal title to such stock or other certificate taxable hereunder, or with the possession or use thereof for any purpose, or to secure the future payment ofmoney or thefuture transfer ofany such stock, or certificate, on each hundred dollars~of face value or fraction thereof. Three (3) Cents; except in cases’ where the shares or certificates are issued without dcsignated monetary value, inwhich case the tax shall be at the rate of Three (3) Cents for each and every share..

. . It is not intended by this Article~to impose a tax uponan agreement evidencing the deposit of certificates as collateral security for money loaned thereon, which certificates are not actually sold, nor upon such certificates so deposited, nor upon transfers of such certificates to the lender or to a nominee of the lender or from one nominee of the lender to another, provided the same continue tobe held by such lender or nominee or nominees as collateral security as aforesaid: nor upon the retransfer of such certificates to the borrower; nor upontransfers of certificates from a fiduciary to a nominee of such fiduciary, or from one nominee of such fiduciary to another, provided the same COPtinue to be held by such nominee or nominees for the same purpose for which they would be held if retained by such fiduciary, or from the.nominee to such fiduciary; nor uponmere loans of stock or certificates, or the return thereof; nor upon deliver&s or transfers to a broker for sale; nor upondeliveries or transfer by a broker to a customer for whom and uponwhose order he has purchased the same. but transfers to the lender, or to a nominee or nominees as aforesaid, or retransfers to the borrower or fiduciary: and deliveries or transfers to a broker for sale, or by a broker to a customer for whom and uponwhose order he has purchased the same shall be accompanied by a certificate setting forth the fact; nor upontransfers or deliveries made pursuant to an order of the Federal Securities and Exchaage Commission which specifies and itemizes the securities ordered by it tobe delivered or transferred (provided that this exemption shall not apply to such transfers or deliveries made before the passage of this Act)) nor upon record transfers following suchHon. Geo. H. Sheppard. Page 1, (v-648) 

## 245

transfers or deliveries; nor in respect to share.6 **or certificates**  of stock or **certificates** of rights to stocks, **or certificates**  of depos.it representing **certificates** of **the character**  taxcd.by this Article, in any domestic association, company, or corpora**tion. if**  **neither the**  **sale, nor**  **the order.**  for. **nor a**  greement to buy, nor the,agreement to sell, asar the memorandum of sale. nor the delivery is made in this state andwhen no act necessary to effect the sale or transfer is done in this .state..

. .* Construing the entire act’as a whole, itsseems clear to us that a tax is not imposed upon a transfer which does not involve a change of title or ownership, either legal or equitable. This taxing act is similar to the stock transfer tax acts of New York and Pennsylvania. ‘Both the New York and Pennsylvania acts have been construed to impose a tax only on tho~setranskrs which involve~a change of title. either legal or equitable. Iu prior Opinion No. O-3765 of this office we held:

‘We therefore submit that a taxable traasaction or eventuality is created, under the Stock Transfer Tax Act, by either a~‘sale. agreement to sell, delivery or transfer upon thc~ books and records, of shares or certificates of stock, or cartificates for rights to stock, or certificates of deposit representing au interest iu stock, whether vesting in the transferee merely the legal title, or merely the equitable .trtle or beneficial interest, or, as m t.+ Fsuat msstance, both the legal and eqm ble right, title and interest.* WA‘nominee’ is syaoaymous with an agent

. . . and is one who represents and acts for his principal.” B. F. Avery &SOBSCo. v. Glenn. 16F. Supp. 544. It is therefore bur opinion. if neither the legal nor equitable title is transferred in the four types of traaskrs iuquired about by you, and the transferee in each instance continues to hold the shares or certificates for the same purpose for which they were held by the transferor, that such transfers are not taxable. SUMMARY

A transfer of shares or certificates from the name of an owner to the name of a custodian, or from the name of an ovmer to the name of a nominee of a custodian, or from the name of a nominee

## 246 Hon. Csob H. Sheppard, Page 4 (V-648)

ofa custodia%back ticthe name’ of ths owner **for** whom the ti&nineb had hgld the shuts, or from the aanie ojldniG&iiiea ofa custcidi+~ to tae’ name of (Laotb& ~-tie of tbti,s&6 custodian, or fr&m th&,

diti:.of tinominee of,a custodian te the.name’df,h~i&iiiioe ‘of a i+w ‘c%stpdian’foi+b& sami. oivaer‘ii’ p&:.$ax@l~ under thy Tees Stock Transfei Ta~~Aitf,~‘if‘&dt&ei tbq legal nor~eqoftable title,is transfii~dii and.th6 transferee in each’ini stance continues to,hold the shares or.certificates

. for the same purpose for wbi+ they war? “ld by t.h&tmasfqor: “: ’ ‘

.

.;: h’ ~Ycnus very truly ATTORNEY &NEIUL OF TEXAS

. BY W., V. Cieppert Assistant WVG/JCP

APPROVED

.

. .