Court Opinion

ID: 4135174
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:59:12.319367+00
Date Added: 2024-06-11T14:01:36.260923
License: Public Domain

Honorable Robert S. Calvert               Opinion No. C-286
Comptroller of Public Accounts
Capitol Station                           Re: Exemption of
Austin, Texas                                 devise and be-
                                              quest to a
                                              charitable or-
                                              ganization un-
                                              der submitted
Dear Mr. Calvert:                             facts.
         The question you have submitted involves the fol-
lowing provisions of Article 14.06, 20-A, Tax.-Gen.,
Vernon's Civil Statutes, which read as follows:
               "If'passing to or for the use of
          the United States, to or for the use of
          any other person or rellgious,education-
          al or charitable organization or
          institution, or to any other person,
          corporation or association not Included
          in any of the classes mentioned In the
          preceding portions of the original Act
          known as Chapter 29 of the General
          Laws of the Second Called Session of
          the Thirty-eighth Legislature, the
          tax shall be:
                II
                 . . .
                "Provided, however, that this Art-
           icle shall not apply on property pass-
           ing to or for the use of the United
           States, or to or for the use of any
           religious, educational or charitable
           organization, incorporated, unincor-
           porated or In the form of a trust, when
           such bequest, devise or gift is to be
           used within this State.  The exemption
           from tax under the preceding provisions
           of this Article shall, without limit-
           ing its application under other appro-
           priate circumstances, apply to all or
           so much cf a?y bequest.,devise of
           gift to or for the use of the United

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Honorable Robert S. Calvert, Page 2 (Opinion No. C- 286)

          States, or a religious, educational
          or charitable organization, which is,
          in writing and prior to the payment
          of the tax, irrevocably committed
          for use exclusively within the State
          of Texas or transferred to a religious,
          educational or charitable organization
          for use exclusively within this State.
                "Provided, further, that if the
          property so passing is to or for the
          use of a religious,educational or
          charitable organization which conducts
          its operations on a regional basis,
          one such region of which includes the
          State of Texas, or any part thereof,
          then a bequest, devise or gift to be
          used within such region shall be deemed
          to be used within this State. For
          purposes of this paragraph a region
          shall comprise not more than five
          contiguous   states, either in whole
          or in part, one of which is the State
          of Texas. For purposes of this para-
          graph, a religious, educational or
          charitable organization shall include,
          but not be limited to, a youth pro-
          gram of physical fitness, character
          development, and citizenship training
          or like program.
             "Provided, further, that this Art-
          icle shall not apply to property pass-
          ing to or for the use of any religious,
          educational or charitable organization,
          incorporated, unincorporated or in the
          form of a trust, if (either at the time
          the property passes or at any time
          prior to the payment of the tax) the
          laws of the jurisdiction under which
          such organization is organized or is
          operating provide an exemption from
          death tax of any character with res-
          pect to property passing (1) to or
          for the use of such an organization
          or (2) to or for the use of such an
          organization organized or operating
                               .

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      ..

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           Honorable Robert S. Calvert, Page 3 (Opinion No. c-286   )

                     within the State of Texas: or (3) to
                     or for the use of such an organlza-
                     tion organized or operating within
                     any other jurisdiction which grants
                     a reciprocal exemption. Bor the pur-
                     poses of this paragraph, jurisdiction
                     means any state or territory of the
                     United States or the District of
                     Columbia."
                 We quote the following excerpts from a letter
           which was submitted to you in oonnection with gaining
           an exemption under the above quoted provisions of
           Article 14.06.
                       "Our case In point is the estate
                    of F. W. Dye, deceased, who died on
                    March 15, 1964, a resident of Dallas,
                    Texas. In the Third Codicil to his
                    Last Will and Testament, Mr. Dye be-
                    queathed the residue of his estate
                    to the F. W. and Bessie A. Dye Founda-
                    tion, a Texas non-profit corporation
                    chartered in 1961 which is a charitable
                    and educational organization exempt
                    from federal income tax under Section
                    501(c)(3) of the lg.54Internal
                    Revenue Code. A copy of this Codicil
                    which has been admitted to probate
                    by the Probate Court of Dallas
                    County Is enclosed for your reference.
                        II. . .

                        "You will note that Section II of
                     theCodIcil, relating to Section V
                     of the Will, provides for three-fourths
                     of the bequest to be used exclusively
                     in the State of Texas; however, there
                     is no provision that the remaining
                     or&ourth   must be used outside of
                             Seemingly, under the second
                     paragiaph of Article 14.06, the
                     trustees of the F. W. and Bessie
                     Arabella Dye Foundation would cause
                     this one-fourth to be exempt from
    Honorable Robert S. Calvert, Page 4 (Opinion No. c-286   )

          the Texas inheritance tax by filing
          a written irrevocable commitment for
          the use of the one-fourth exclusive-
          ly within the State of Texas at
          any time prior to the payment of
          inheritance tax. me other three-
          fourths would,automatically be ex-
          cluded from taxation by the last
          clause of the last sentence of such
          paragraph inasmuch as same has been
          transferred to a religious, education-
          al, or charitable organization for use
          exclusively within the state.”
     An exemption could be obtained for one-fourth of
the devise and bequest by Irrevocably committing It to
use within this state at any time prior to the payment
of the tax. The statute is plain and unambiguous In
this respect.
     We quote further from the aforementioned letter
with regard to exemption under the third paragraph of
Article 14.06.
             II
              . . . Moreover, the third paragraph
         of Article 14.06 would provide an
         exemption from inheritance tax of the
         one-fourth since same is bequeathed
         to a religious, educational or charl-
         table organization which conducts its
         operation on a regional basis consist-
         ing of not more than five contiguous
         states, one of same being the State
         of Texas. me F. W. and Bessle Arabella
         Dye Foundation, being a Texas non-profit
         corporation, has heretofore conducted
         Its operation only in the States of
         Texas and Arkansas. We assume that
         If an exemption were claimed under the
         third paragraph of Article 14.06, the
         trustees of the Foundation would still
         be authorized to use the one-fourth
         bequest in three additional contiguous

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Honorable Robert S. Calvert, Page 5 (Opinion No. C-286   )

          states (for example- Oklahoma, Missouri
          and Louisiana) without violating the
          terms of this exemption."
     Exemption could be obtained under the third paragraph
of Article 14.06 if the'appropriate commitment is executed
by the Foundation. This office has passed upon a similar
question in Opinion No. WW-1141, a copy of which is attached
hereto and made a part of this opinion for all purposes.
     We again quote from the letter attached to the
request for an opinion of this office with regard to
exemption from inheritance taxes of the devise and
bequest in question.
             "Our problem arises under the fourth
          paragraph of Article 14.06 wherein an
          exemption is provided for religious,
          educational or charitable organizations
          operating in states which provide
          reciprocal exemptions for Texas charl-
          ties. ?s it possible that an exemption
          may be had under Article 14.06 for
          the one-fourth bequest if the trustees
          of the Foundation should file an
          'irrevocable,commitment' in writing
          and prior to the payment of the tax,
          stating that the bequest, if not used
          in three additional contiguous states
          not including Texas and Arkansas, will
          be used only in states which provide
          reciprocal exemptions for organiza-
          tions operating within the State of
          Texas?"
      That provision of the fourth oaragrawh of Article 14.06
 expressly provides exemption    for 'an 0Eganization
   charitable 7 organized or 'oeratin within any other
f urisdiction-which grants-Y
                           a ret procal exemption." (Emphasis
 supplied.) In view ofthe plain language of this provision
 as to operation alone effectuating exemption in jurisdic-
 tions which grant reciprocal exemptions, and for the same
 reasons exemption was allowed in Opinion No. WW-1141

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Honorable Robert S. Calvert, Page 6 (Opinion No. c-286        )

(see particularly paragraph 2 at page 7 of Opinion
No. WW-11&l), we have concluded that a properly
drawn commitment in line with the terms of this last
quoted provision would be sufficient to effectuate
exemption.
                  SUMMARY
               Under submitted facts, a devise
            and bequest to a charitable non-
            profit corporation may be exempt
            from inheritance taxes pursuant
            to the provisions of Article 14.06,
            Title 122A, Tax.-Gen.. V.C.S.

                                  Yours very truly,

                                  WAGGONER CARR
                                  Attorney General of Texas

                            By:
MMP/sh
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
W. E. Allen
Arthur Sandlin
Cecil Rotsch
Pat Bailey
APPROVED FOR THE ATTORNEY GENERAL
By: Stanton Stone

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