.‘::. OFFICE OF ‘THE GENERAL, OF TEXAS
.~’,AUSTXN
‘., &l8tin,
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Honorable
‘comptroller of
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.~.Doai Siri
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oritlea upon whioh we ~.;
llevs it may ‘be helpful -I
ubaoription warrantam.
o bs wnrraata lseued by a
et to atoak etidoaa- .!
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Artlalo 15, R; B. S ROE. Se88.r .i
ioh your request is ahated, was
AOL A aomparleon Of the pertinent ,!
,, ro rtwenu~ m3afwe8. f5eom8roquielta. Thus0 :
POF~~OJI? r0ii0w:
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.. *Art. 7047111. Stools trausror en4 saXerr tax- - I:‘~ ’
Tax irqoaa4~ afrixlng atampa; mamorandum0r sale ‘.
.~ ~aSeotlOn 1.. Thoro I8 hereby imposed an4 levied i
* a tax’ a8 herelaaftar provided on all tsal+m, agreomeata ;j .
to oell, or nionoraa6a of salefi sad all~~4ellverle8 or
’ ~.tnaoSoro or. &area, Or ar~tdoates of atoak, .or:~’._ - j i
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Bon. thorgo 8. Shoppar4, Page p!
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oertiti atao for rlghta to’etook:, or owtirl-
oaten 0f dopooit rapresentla~ an intarest la
or reprooeatlag oortltloates kado taxable under
thla Sootioa ln any doneof or r0r0ir4 aesoola-
tlon, oozpany, or aorporatloa, or aertlrloateo 0r
lnteroot la any bueiaeoo oonduotod by truoteo or
truatoeo made aftor the 0rrOOtivd.9 Cat0 .horoor,
whether UT&I upon or shown by th.3 books or the .
~aoeoalation, donpeny, aorporatlon, or trustee,
or by any asolgamcmt la bl’enk or by ‘any do1.ivez-y
or any pagoro or egreomnt .or m0oorana0t3 or other ..
srldonae or sale or transfer or order ror or agree-
mnt to buy, whethor iatermadiata or rinal, and
wbethar lnvsotlng the holdor.uith the beneflolal
late&A la or legal title to ouob atook or other
oortifioate taxable horeundor, or wlth tho posses- .‘..
: olon or ~86 thsroot ror any purpose, or to oooura
the rOm0. payment oi ~onoy or tbs ruture txwno-
tar of any ouah otock,, or aertiriaato, oa each : * *..‘.,:~
hun4rs4 4ollaro of faoa~.valua or traatlon thereof, ~;;. I;’
oonto, ercrept in cases where tho shares
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‘tbrss.(S)
or oartfffaatao ar6 loauo4 wfthcut dealgnats moaa- :,
tary voluo, ln wblah aaoe the tax, shall be at .tho ., -
$Fate ff thrqe (J) oonto to? eaoh and, avery.ahme. ::
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IChapter50 Civil ‘IA&J Uow York. *Tranofero
8ubjeOt to Tax- provldos ati iOliOw8:
“SOO. 270. Amount of tax - 1. There la hereby ,”
impose4 au4 shall Sxae4latoly accrue an4 be aolleatod
a tax, a8 herein provided, oa ~811 sale8 or s&room.i#o
” to ~311, or me8ioranda 0r oale‘e an8 all .dellv~rieo or ..
: tranofero OS shares or a0rtlilosteo ot otoak, or oortl-
rloateo oi rlghta to atook, or aertlfloatoo of intorest
ia property or aooumulatlons, or aortiiioatss 0r depoolt
reprooontlng aertlfloateo taxable under tblo artlolo, in
any 4omaotio or foreign neeoolation, oo~~ptny or oorpora-
tloa, or oortlfloatoo 0r interest la buaincoa oooduote6
by a trustee or trustees msde artor the ilrot day or
,..~ June, aiaotoea hundrad five, whether uado upoa or ‘.’
.ohownmbythe. bOOk8of thea aeeoalat~on, aozipany., apr- ,..
poratlon or truotdo, or by any aoslfgumnt 1x1blank, or
:. .. by any dellvory, or by say paper or a&reom+at or niouo-.:. ‘.
.; raadum or 4thor ~vl4enoo or sale or traaorer, whetheq : “. ‘.
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. lntamrodlate or final., ‘end ahether lnve6ting :.
.‘. . .i ’ .tha holder wlth the bannefioial Intereat la or
.*. leeal’tit& to said otook, or other oortlSloetos
tarable hefaun&er, or merely orith tho poe6e66lon.
or me thoreOS for any purpose, or to Beauro the
Suture paynen~ or money’, or t&e Sututa tranator
of any such stock, or oort~tioatea.~
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We obeervo that the longuagd.os the tuo hots. do-
scribing the tranoaotiono taxable seeagpbroood in exactly tho ’
#arm uord6, though not arranead. In tbe eaaio oontlnulty. 9io
’ ;Seif.to rind exgreas laLan(;uapin either of tbmo statutes at-
trmptlne to. levy a tar upon Ytlfihtn to aubecribe to stock.*
: SUma tho United States Xnternnl iiovenuo Aot, Title .
26, pqrqraph lf302b, U. S. C. A.. had Its lnaeption prior to
the p66aee of the Toxaa statute, we nust grasumo that the
:eglslatura bad ouoh Aot before It at .the tlma It adopted thm .
RowYork statute as the model for lts‘aSSort6. The exprers
16nguage of f’ pert of the Federal Aot i0 a9 follows; ,, .-
-(b)Sales and tranofoars. On all mlea, or
agreemeat to aell,, or monrorando0S eslos or. de-
livarlee or, or trapsfort of leg61 tltl@ to any ~0S
tho~rbfnw or oert$Slaatas mcntlonad or described
id euboootlon (e), oc to xkhta to subsdribe for ’
. .: or reoeloo’suoh ahares or oartlSlcate6~ whether
m6tYeupon or shown by the. book0 of the oorporatlon :
, : or .othpr: Organl68tlOn, or by’anp 6t36lgUi~~nt in .
bleak, or by any delivery,, Or by any paper or agree- ’: ’ .
meat or memorandumor other evldenaa of tran6SOr or : .~
: sale (whether ontitling the holder ia any uonnor to ,,’ .: s
the bobeflt oS suoh ahaT oertlfioate, interest Or .
rlehti, or not), on eoob &lob of per or faoo ,oalu6 :
or Sreotion thereof of the aertifloats6 OS suah
oorcoratlon or other or&ealzatlon (or OS the 6haroe :
wbero no’oertifioatoa were iesueb) . . .*'
In ~o&Hzulng a etatute, the .gurpo~e lo to. eeaertaln
the lo&lative intent end from ou,r oboorvatlon of the ex~resa
rcvi~ions oS the tbres revenue maasure6, we Sind that mnse
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‘IfIr ta to subsaribe to etoOk* though InelUded in the Podoral
et?Auto in onritted Sran the fiat York and Tours statutes and we
muetkeep tb~tinotlon oloarly in dad in soeking to tletor;
tin0the intentionor tho Lei3lalatUrO~
167
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~0s. Coorgo 8. Shoppard, Page 4
The Texas law being oS rOOat orluln, ha6 not been
;ntorprett?d by Our OOUrt6, sad for that FeaBon, we mot turn
to Now York dooIsion6 and ruleo and rogulotlano of Ite tax
suthoritiee for a oomtruotlon of the quoatlon herein pro6ent-
The60, or oour60, aro not'conolu6Ive but are pOr6U6aIVO
:% rhoulb bo 61vea @oat woI&ht.
Conmonpanotloe end prooeaure of aorporatlons doing
busineos tbroueh the New York Etook Pxchan(~e uni!er nsthodr ap-
proved by the New York Tax Co~~~~lsslonshould be oonsldercd Ja
doterdnlne ~ranseotione taxable and tranoaotlona not taxable
unbar Now York furlsprudonoe. Oboarvlng the rU1tl6 68 inter-
protod by ParagraFhh8600000,60-300, InolusIre, the Corporation
Tax Servlae, C. 0. Ii., 11. Y. 1; paragraph8 41004l34, Inolu-
ei+e, Corporatloa Servloe,. Yrentioe-Hall, Vol. 1; knaChrl6ty
&XoLoaa, Tbo Tranofer of Stook, 2ntl Ed.; we observe thotr
I. Subaorlptlon werrant 16 a oertISloato . ..
~srld~nolag tha right to aubeoribe to stook and Is' t
Issued by the oorporatlon to the titookholder ontitled *
to the prlvllege of subscrIbIng to the stock to be la*-
rutid. I”oragraFh 4108 and I’sragraph 4205, Premtlao-,
. Hall Corp. Serv., Vol. 1.
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‘XL Fresentatlon of warrant.
(a) Tbo,warrant shall be preaeated to tho
oorporatlon before tlio expiration date shownon
,a. the SaOe of ouohwarrantaad upon suoh prO6Ont6-
.: tlon the bearer nay 6ub6OrIbO to etook. ,fS full .:..
.“:. paymentI6 made IOr the shares to .be iosued 6ub-
6oriber la delivered a reoeI$ OvIdenolng hi6 rI&ht
to the otook, entItlIng him on a spsoiflad datd~‘to
uortaln full share6 or Sraotloa6l 6heres Of atOOk,
subroquentlp bolng i66Ued OOrtlfiO6tO8 OS atook.
F6ragraph 4208, Prontloo-Xall Corp. serv., Vol. 1.
(b) .fn evant bearer eleots to pay for suoh ~’
share6 llr Inetallmeats be IS laouod a negotfablo '.
.MOelpt, ovIdonoInghi6 right to the stoak, entitl-
*. '. ing the holdor on a 6peaIsIed date t0 OertalXi full
ohare or .sraotlonal eharos~ or atook, and upon
: -bin61 pqwmt, at the the an&In the mannoropeol- :
‘Slad,&e ia iosuod, oortUloato8 of 6took. .
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son. Gaor~e Ii., ShepDard, Peg9 s
Upon the tranarer by sala or otherwise of subsorlp-
tlon nrrants, datlnad in Paragraph I above, the Federal Tax
rppller and stampeara roqulrad to be arrlxed and oanoalled.
’ Tba Uaw Yor& tax doae not apply to this’ transaotloa. Para-
graph 601lC9, C. .a.~ X., B. Y. 1; ,Paragreph 4205 and pa80 4148,
Praatl00-Hall Corp.Sarv?, :Yol..l; Ohrioty & UoLaan, Paraereph
563, page 834.
Subsaquant to tha aot or subsoiibina to the atook by
*.*a bolder oi a subscription warrant ,as described In Paragraph II.
* (II) and (b) tbaraof, eny trensaotloa.involving the traoarar of
the rl&ht- held by tha subsorlba~ requires the arrlxln6 and oan-
.oallatlon of Unltad Stotae Revenue Staops and New York Revenue
stamps. : Sohmar v. Rarflaa, 1m-a; ParaCrapb 4205, Sea. 7,
Prantloa-Ralf Corp. Serv., Vol. 1; and Pnragraph 60-301, ~The
.Qorporatlon Tax Servlo~,0. 0. ?.. X.-Y;1; .‘,
” : The State oi Naw York ‘Tax Department, Albanp;Naw York
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in ‘,la.tter to the New York Stook Exchange, dated Kay S, 1922,. r&t
“Ey ‘CartlilOata Of Richtis to Steak* IS meant ._
o& sudh. oertlrloatas wbloh ontltla tha holder on
a apsoiri6d d&e to oartaln run share8 op rrsatlolul
share8 of atook. *Rights to oubacrlba’ to stock do’
not oozaa within this meanidaare
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the statute.W (Undarsoorlng our5J
Pursuant to a wzlttan request by the) wrltor tha State
oi New York Dapartmant or .Taxetlon and Pinanaa answered by’latter
.&to6 l!?ar0hl;-1944, advlsl& u5 further +th refaronoa tb rub-
rorlptlon warrantethat 8uah are not taxableunder New )lOrk Law.
The partlnont. part or auoh. latter reads as lollowsr
*The raderei rtook transrar tax law 40rititaly ‘.
provides ior a tax on tranafers of laplal title to
*rlp,hts to subeorlbe ror*atook. The New York law.
has no slaillar provision. It does tax trauerara or 1~’*
.*oartirloatea ‘or ~rlghts to steak’ but tha Tax Corn-
mla8l0n has held that a oortltioate giVin6 tkP right
;;o~$?Ohaer atook 1s not T oartirloote or A6hts t
.
*I osmiot rerer you’to any oginlon. of our ,.
2ttfkney Caneral: or to any dooleion of our ooUrt8 ,.,
on the quo&lo& : ?y way or- r.aaeonlng it may be. ..’ -
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..” pointed out that~ a right to subearlba So= stoak . .
‘or a rjght to purchase stock is likely to be of’ .
The aoaaldaratlon whloh must be
Id for thi subeorlption or the purchase will
n many oases, at least, represent as much as the
: : stock 1s worth. It saama highly lnaquitabla~, .
tbaratora, to impose the 6ama tax on a transfer . .
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OS a stook purohasa warrant, (a oertlrlcate or a
..~~rl&ht to rooaiva stook after paying ‘-- . . . ; -
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:- . .. . Aiiiatant .