,’ 

Affirmed by 

~Brenham Production Credit 

Assn., v., Zeiss 

Tex. Sup. Ct. 

264 SW 2d 95 

&ion. Robeit S. Calvert 

Gomptrsller of Public Accounts 

Austin. Texas 

Opinfm No. V-886 

Rc: The liability of pzoduction 

credit corpbrotieas for t&e 

payment of ad valorem tax, 

Dear Mr. C8lvert: 

You rcquelit the opinion of this office upon the question 

prcranted in your letter of Augu6t 3, 1949. which is as foliows: 

“This Department has received an inquiry from 

the Tax iisseasor-Collector of Zavala County, Texas 

for in6tructions as to whether the ‘Ninter Garden I-roduction Credit Association’ Co-op Bnnk is subject to 

the ad valorem tax in that county. Before advising the 

tax collector, this Department desires your opinion on 

the following question: 

“16 a production credit cdrporation or association 

6ubjoet to ad valorcm tax? 

“%%06e rs6ociations h6ve never rendered their 

rtsck Co? taxe6 a6 have other banks. Originally the 

goverpnwnt through the Intermediate Credit B.xnk of 

Heu6tdh furnished the entire capital structure for these 

production credit asaociation6, but at present most of 

there credit production associations have paid off all 

~Cftunent indebttdnesr for the original capital stock 

and art now owned 100% by their members.” 

The an6ker to your question i6 found in Section 1138~. 

U.tj.C.&, WhiCh i&3 a6 fOl~OW6: 

“Tie~Centrsl Bnnk for Cooperatives. and the Pro- 

&aaiioa Credit Corporation6, Predixtion Credit Associrtion6. and Banks for Cooperatives, organiced under 

thl6 chapter. and their obligations. shall be deemed to 

be in6trumentaWier of the United State6, and as such, 

any oM1 &&I twtaa, debenturer, bonds, and other such 
Hon. Robt. S. Calvert, page 2 (11-886) 

obligations issued by 6UCh banks, a6sociation.s. or corporations shall be exempt both a6 te principal and interest from all taxation (except surtaxes. estate, inheritance, and gift taxes) now or hereafter imposed by the 

United States or by any State, Territorial, or local taxing authority. Such banks. associations, and corporations, their property, their franchises. capital, reserves, 

6urplus. and other funds, and their income shall be exempt from all taxation now or hereafter imposed by the 

United States or by any State, Territorial, or local taxing 

authority; except that any real property and any tangible personal property of such banks, associations, and 

corporations shall be subject to Federal, State, Territorial, and local taxation to the same extent as other 

similar property is taxed. The exemption provided herein shall not apply wfth respect to any Production Credit 

Association or its property or income after the stock 

held in it by the Production Credit Corporation has been 

retired, or with respect to the Central Bank for Cooperatives, or any Production Credit Corporation 6r Bank 

for Cooperatives or its property or income after the 

stock held in it by the Uni)ed States has been retired, 

June 16, 1933, c. Sg, sec. 63. 46 Stat. 267.” 

You state, “but at present most of these credit production associations have paid off all government indebtedness for the 

original capital stock and are now owned 100% by their members.” 

As to such corporations the limited exemption provided in the foregoing F&era1 statute cda6es to~.tre applicable:under the expres~s 

terms of the statute. However, where this conditibnnioes net obtain, 

$#Ia limited exemption provided in the statute is applicable but applies 

only to intangible personal property such as notes, debentures, bonds 

and other such obligations issued by such banks, associatieu or cerporations, both as to principal aad Merest. 

It is further observed that the statute provide6 that “axy 

real property and any tangible personal property of such basks, a6- 

sociations, and corporations shall be &abject to ., . , St&e m . . and 

local taxation to the same extent as other similar property i6 turd”; 

thu6 subjecting real property and tangible personal property to ad 

valorom tu6tien at all time6. 

In brief, after the stock held by the Production Credit 

Corporation or the United States has been retired, the intangible’ pcrtonal property theretofore exempt, such as notes, debentures, bsndr, 
L t 

Hon. Rabt. 5. Calvert. page 3 (V-886) 

and other such obligationa iseued by such banks, associrtionr or corporations, both as to principal and interest, are subject to ad valorem 

ta.res to the same extent as the property of any other corporation in 

this State. But even before this has bccurred. the real estate and 

tangible personal property of such corporations are subject to ad 

valorem taxes aa other property of corporations is taxed under the 

laws of this State, and only intangible personal property, such as 

notes, debentures, bonds and other such obligations issued by such 

banks, associations or, corporationa, both as to principal and interest, is exdmpt. 

SUMMARY 

The real estate and taqible personal property 

of Production Credit Corporations are subject to ad 

valorem turtion, but intangible personal property, 

such a8 tiotep, debentures, bonds and other such oblir 

gatienr iarued by such banks, associations or corpos 

rations, both a8 to principal and interest, is exempt 

so long as there is ouCst&nding any of the stock of such 

corporations owned by the Production Credit Corporation or the United States. When this stock is retired, 

however, such intangibla personal property as herein 

enumerated becomes subject to ad valorem taxation to 

the same extent as is applicable to other corporations 

azkd their property under the laws of this State. 

Very truly yours 

ATTORNEYGENERALOFTEXAS 

‘w lgG&d 

L. P, Lollrr 

Assistant 

ATTORNEYGENEML 

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