Court Opinion

ID: 4142323
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:20:39.506739+00
Date Added: 2024-06-11T14:31:18.090084
License: Public Domain

T~~~EA~~~RNEY              GENERAL
                           OF     TEXAS

Honorable George~H. Shepperd~
Comptrollerof Publio Aooomts
Aus tin, Texas
Dear   Sir;                    Opinion No. O-4030
                               Rer Does the stook transfer tax 1evLed
                                   by Article XV, House Bill 8, Acts,
                                   Regular Session 47th Legislature,
                                   accrue upon the delivery, in
                                   Texas, of shares ofstock or a
                                   foreign  corporation, to the
                                   legates under a will or to an heir
                                   under statutes of desoent end
                                   distribution, where the transfer
                                   of suoh stock upon the books of the
                                   corporation and all other trans-
                                   actions relating thereto, transpired
                                   beyond the lim;Ltsof the State of
                                   Texas?
Your letter of September.22, 1941 , submits for our opinion the
following questlon:
       WI would appreoiate your offlalal opinion OR the
       following question which has been raised by the
       National Assooiation of SeourLties Dealers, Inc.,
       nistriot Committee No. 6, pertaining to Artiole 15, of
       House Bill 8, this being the Stock Transfer Tax Law:
              "In oase of inheritanoe of stock in a foreign
              aorporation either by will or by the statute of
              descent and distribution, where the transfer is made
              outside the State of Texas, and the only thing done
              inside the State is the delivery of the stook
              certificate to the beneficiary, is the transaotion
              taxable?"
A mere delivery, within the State of Texas, of shares or
certificates of stock of a foreign or domestic corporation Is
a taxable transaction under the above-cited Stook Transfer
Tax Law, even though all other inoidents of the transfer,
that~is, the agreement to sell, the sale and the transfer
upon the stock book reaords of the corporation, all transpire
extrastate. This was our holding in our Opinions No, O-3594
              h,
                                                    ~.

Hon. George h. Sheppard - Page 2 O-4030

and O-3713, based upon the plain text of Section 1 of the Act,
providing that "there is hereby imposed and levied a tax as
hereinafter provided on all sales. agreements to sell. OF
memoranda of sales, and all deliveries or transfers of shares,
or certificates of stocks" etc.

The Act expressly provides and we have heretofore held there-
from, in our OPinion No. O-4028 to you, that the delivery only
in Texas, unaccompanied by any of the other incidents of a
stock transfer, of the mere legal or naked title to shares of
stock, or certificates therefor, in a foreign corporation, as
distinguished from the actual or benefioial ownership thereof,
is a taxable event or transaction. This is established, without
further argument, by the plain terms of Section 1 of the above-
cited Stock Transfer Tax Law, reading as follows:
    "Section 1. There is hereby imposed and levied a tax as
    hereinafter provided on all sales, agreements to sell.
    or memoranda-of sales, and all deiiveries or transfers of
    shares, or certificates of stock. or certificates for
    rights-to stock, or certificates-of deposit representing
    an interest in or representing certificates made taxable
    under this Section in any domestic or foreign association,
    comoanv. or coruoration. or certificates of interest in
    any business conducted by trustee or trustees made after
    the effective date hereof, whether made upon or shown by
    the books of the association, company, corporation, or
    trustee, or by any assignment %n 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, and whether investing the
    holder with the beneficial interest in or legal title to
    such stock or other certifioate taxable hereunder, or wfth
    the Dossession or use thereof for any purpose, or to
    secure the future payment of money or the future transfer
    of any such stock, or certificate, on each hundred
    dollars of face value or fraction thereof, three (3)
    cents, ...'Ietc. (Underlining ours)
The transfer or'delivery of stock by an executor or executrix,
to a legatee receiving such stock under a last will and testa-
ment, or by a duly qualified and acting administrator to a
distributee or heir in instances where the stock is inherited
under statutes of descent and distribution, is, in either
contingency, the transfer or delivery of the le al title to
                                             Ahe
such stock or certificate, as contradistinguis e
beneficial interest therein or actual ownership thereof, so as
to be brought squarely within the Incidence of the above tax
levy, as indicated by the underlined portions thereof.
Although our conclusion that thedslivery in Texas of the shares
or certificates of stock of a foreign corporation, under the
conditions and circumstances stated in your letter, is a tax
Honorable George H. Sheppard - Page 3       O-4030

able transaction, may be amply sustained by the bare text
of our Stock Transfer Tax Law, it is not amiss to refer to
the persuasive construction placed upon substantially
identical tax measures of the Federal govement   and the
State of New York, by rules and regulations duly promulgated
by the administrative offioials of these respeative sovereign-
ties.
Article 34, Subdivision (n) of Regulations 71 of the United
States Treasury Department regarding sales and transfers of
stock (and similar interest) provides, in part, as follows:
          "The following are examples of transactions subject
          to the tax:
          'I....
          a(n) The transfer of stook by an administrator or an
          executor to the legatee or distributee."
AFtiGle XVI (16) of the Information Relating-to the Stock
Transfer Tax Law issued by the Stock Transfer Tax Bureau of
the State of New York, gives, as an example of a taxable
transaction, "the transfer of stock by an executor or
administrator, whether to trustees, legatees or for other
persons".
g;e,';,zheabove considerations, it is our opinion that the
            within .theState of Texas of shares or certificates
of stoc%'of a foreign corporation, l;y an executor or executrix
to a legates   taking such shares under a will and testament,
or by an administrator to an heir or distributee, inheriting
such stock under the laws of descent and distribution, would
constitute and be a taxable event or tranaaotion, even though
such deliver of stoak was the only act or thin done within
this State, 9noident or pertaining to the tram Ber of such
shares or oertifioates.

Trusting the foregoing fully answers your inquiry, we are,
                                         Yours very truly,
                                    ATTORNEY GENERAL OF TEXAS
                                    s/ Pat M. Neff, Jr.

                                    BY
PMN:FS/ag                                    Pat M. Neff, Jr.
                                                    Assistant
APPROVED DEC. 19, 1941
s/ Grover Sellers
FIRST ASSISTANT
ATTORNEY GENERAL       APPROVED OPINION COMMITTEE, By BWB,
                                                   Chairman