,’ Affirmed by ~Brenham Production Credit Assn., v., Zeiss Tex. Sup. Ct. 264 SW2d 95
&ion.Robeit S. Calvert Gomptrsller of Public Accounts Austin. Texas Opinfm No. **V-886**
Rc: The liability ofpzoduction credit corpbrotieas for t&e payment of advalorem tax,
Dear Mr. C8lvert:

You **rcquelit** the opinion ofthis office upon the question prcranted in your letter ofAugu6t 3, 1949. which is as foliows:

“This Department has received aninquiry from the Tax iisseasor-Collector of Zavala County, Texas for in6tructions as towhether the ‘Ninter Garden I-roduction Credit Association’ Co-op Bnnkis subject to the advalorem tax in thatcounty. Before advising the tax collector, this Department desires your opinion on **the following**  question:

**“ 16**  a production credit cdrporation or association 6ubjoet to advalorcm tax?
“%%06e rs6ociations h6ve never rendered their rtsck Co?taxe6 a6 have other banks. Originally the 

### goverpnwnt**through** theIntermediate Credit B.xnkof Heu6tdh furnished the entire capital structure for these production credit asaociation6, butat present most of there credit production associations have paid off all ~Cftunent indebttdnesr for the original capital stock and **art** nowowned 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 Bnnkfor Cooperatives. andthe Pro- &aaiioa **Credit** Corporation6, Predixtion Credit Associrtion6. **and** Banks for Cooperatives, organiced under thl6 chapter. andtheir obligations. shall be deemed to be in6trumentaWier ofthe United State6, and as such, **any oM1**  **&&I twtaa,**  **debenturer,** bonds, and other suchHon. Robt. S. Calvert, page 2 (11-886)

obligations issued by 6UChbanks, a6sociation.s. or corporations shall be exempt botha6te principal andinterest from all taxation (except surtaxes. estate, inheritance, andgift taxes) now or hereafter imposed by the United States or by any State, Territorial, or local **tax** ing authority. Such **banks.** associations, andcorporations, their property, their franchises. capital, reserves, 6urplus. andother 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 thatany real property and anytangible 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 notapply 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 init by the Uni)ed States has been retired, June **16,** 1933, c. Sg, sec. 63. 46 Stat. 267.”
You state, “but atpresent most ofthese credit production associations have paid off all government indebtedness for the original capital stock andare nowowned 100% by their members.” **As** to such corporations the limited exemption provided in theforegoing **F&era1** statute cda6es to~.tre applicable:under the expres~s terms ofthe statute. However, where this conditibnnioes net obtain, $#Ialimited exemption provided **in** the statute is applicable butapplies only to intangible personal property such as notes, debentures, bonds **and** other such obligations issued **by** such banks, associatieu or cer**porations,** both as toprincipal aad Merest.

Itis further observed thatthe statute provide6 that “axy real property andanytangible personal property of such basks, a6- sociations, andcorporations shall be &abject to .,. , St&e m
. . and local taxation to the same extent as other similar property i6 **turd ”** **;** thu6subjecting real property andtangible personal **property to**  **ad valorom**  tu6tien at all time6.

Inbrief, 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 advalorem ta.res tothe 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 andother such obligations issued by such banks, associations or,corporationa, both as to principal andinterest, is exdmpt.
SUMMARY

The real estate andtaqible personal property of Production Credit Corporations are subject to ad **valorem** turtion, but intangible personal property, such a8 tiotep,debentures, bonds andother 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&ndingany ofthe stock of such corporations ownedby the Production Credit Corporation or the United States. When this stock is retired, however, such intangibla personal property as herein enumerated becomes subject to advalorem taxation to thesame extent as is applicable toother corporations azkd their property under the laws of this State. Very truly **yours**
ATTORNEYGENERALOFTEXAS



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L. P, Lollrr Assistant

ATTORNEYGENEML *