so becauseIt Is proper~ for the. IncludedIn OpinionNo. c-519 Mr. R. E. Swift,Page 7 Opin10nNo; WW-935
asse66or or board to ConSider all element6which tend to augmentthe value of the etock In the hand6 of the lndlv%dual stockholder. The fact that the bank 18 requiredunder federallaw to set apart a reservefor bad debt6 does not changethe fact that 6uCh reserveconstitutesa segregatedportionOf its earned surplusand a part of Its personalproperty. Even though such reserve8cannotbe taxed againstthe bank, they are necessarilys'factorto.be conalderedIn arrivingat the irctualcaeh market value of the shares for the purposeof determiningthe tax liabllltyof 8hareholders. Since we have concludedthat a nationalbank's re6erve for bad debts may not be deductedbut must be treated88 part of the aseets in traluingIts shares,forad valoremtax pu oses, it is efrldentthat we could find no ba6i6 for allOWingb28 other than nationalbanks to deduct from their capitalaccounts 8 proportionate sum of their respectivetotal loans. SUMMARY The reservefor bad debts eet up by a NationalBank pursuantto Federalruling6 may not be deductedin arrivingat the value 0s the shareholder's 6haz.es for State and Countyad valoremtax purposes. Nor may a bank, other than a NationalBank, deduct a proportionatesum for bad debt6 In arriving at the value 0s the shareholder~6sharesfor State and Countyad.valoremtax purposes. Yours very truly, WILL WILSON AttorneyGeneralof Texas
AFFROVEU: OPIHIOICOMMITTEE: W. V. Geppert,Chairman Virgil Pulllam James P. Ryan Leon F. Pesek REVIEWEDFGR!CRE'A'H?GRHBYGERERAL By: LeonardPassmore