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