             OFFICE OFTHE    A'l-fORNEY GENERALOFTEXAS
                                 AUSTIN

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         Xonorablo Worgo H. Sheppard
         Comptroller ot Pub110 Aaoount8
         AulrtiIl, !hXaS
         Dear Sir:




                                                lottor of Ootober 11,
         1040, in Rhloh                         on of thle      departmnt
         a8 to the appl                             horitanoo Tax law to
         the r0ilowfng



                                          all of ths ooamunlty




                            death of tim survivor thr prop-
                           ueathed to tke aurvltln5 helm
                          Mm. Thomas, one-half to desoend
                     hire   and’the other hali to Pam  to
              his heirs. The question now arises in the
              olosing of this eatate for inheritanoe tsx
              purposes, as to whether or not the property
              or m. Thoraas,who died Sirat ,.paeeed t0 hle
              heira at that tinn or rhetlnr or not akl Of
              the sstate paseed at the death of tb l  UrVf*ur,
              one-half to the heira of Mr. Thomas aob the
                                                               13


Honorable   George A. Sheppard,   Page E


     other half to tha heirs OS l&a. Thoma8."
          Artiole 711'7,Varnonla Annotated Civil   Statutes,
reads a8 followat
           "All property within the jurisdlotlon
     of this Stata,   real or personal, oorporate
     or lnoorporate, and any Interest therein,
     lnoludlng promrty paaalng under a general
     powar of appointment exerolaed by the de-
     oedent by will,   lnoludlng the prooaeda oi
     life lnauranoe to tha extant OS tha amount
     reosloable by the ereoutor   or adminlatrator
     as lnsurenoe under poliolea taken out by
     the deoedent upon hla own lite, and to the
     Wtent of the axoeaa over Forty Thounend
     Dollar8 ($40,000) or the amount reoelveble
     by all other banaflolerlea 88 insursnoe un-
     der pollolea taken out by the deoedent upon
     hla own life, whether belonging to lnbsbi-
     tents of this Stete or to paraona who era
     not Inhabitanta, regardleaa of whetbrr auoh
     proprty la looatad within or without tibia
     State, whloh ahall pa88 ebaolutaly or in
     trust by will or by the law8 of deaoant or >~
     dlatrlbutlonof thin or any other Steto,
     or by deed, grant, sale,   or gift made or
     lutendea to take efteot Ia possasalon or
     enjoymant altar the daeth of the grantor
     or donor, aball, upon paaalng to or for the
     UEO of any person, oorporatlon, or eraoole-
     tlon, be aubjeot to a tax for the bsnetlt
     of the Statala General Revenue Fund in eo-
     oordanoe wlth the following olaaalS~oatlon.
     Any tranafar made by e grantor, vendor, or
     donor, whether by deed, grant, aale, or
     gift, shall, unless shown to the oontrary,
     be deene& to have been msde in oontempla-
     tlon or death end subject to the aam tar
     as herein provided it euoh transter Is
     msda within two (21 years prior to tha
     death of the grantor, vendor, or donor, CC
     a material part of his satate, or if the
     transfer made within euch pewlod ia in the
     nature of a f lnal distribution of property
     end without adrqusta valuable oonaideration.
     AOt8 1925, 2nd C.B., p. 03; Aots 1929, 41at
                                                             1


gonorable Caorge R. Sheppard, Page 3.


     Leg., lat c.3.. 9. 108, ch. So h 1; Aota
     1839, 46th Leg., Ii.B. # 990, b 1.”
          Artiole 7123, Vernon’s Annotated Civil Statutes,
reads as follows:
             “If the property paeslng aa etorseald
     ahall be divided into two or mora estates,
     aa an estate ior gears or i’orlife and a
     remainder, the tax ahell be leviad on eaoh
     eatate or interest separately, eooordlng
     to the velua of’the asme at the death of
     the deoedant. The value of eatataa for
     yeera, eetatee for life, remalndara and
     annuities, shall be determined by the *Ao-
     tuariss    Ooablnad Experlenoe Tables,* et
     rour per cent oompound intareat.w
          Under the above quoted ertiolaa unqueatiohably
the lnharltenoe tax 1s due on the husbend’a ahre of tha
oonmunity a&ate which ha reeves at his daath end is pay-
able by hia heir8 on their raapeotiva intereets or eatatea
in such decedent*8 praperty. The tax lo due et luoh fiu
end 1s to be paid by the rerious eeteter  or lntereata in
proportion to the value of eaoh lnteraat in the property.
There la no provlalon for the postponement of the payment
o? the tax until the property 1s aotually reoeived  by the
ramindarmen.   The Aurtfx Court of ~Cfvil Appaala, in the
oeae of Bethae v. Sheppard, (en yet unreported), stated en
followa :
         Wenifestly tha atatutaa do not eu-
    thorlze the postponaxant of the tax to
    await suoh oontlngenoy or oonditlona rub-
    sequent, end these ooaoluaiona aaawer all
    elternatira oonteatlone of appellant that
    only portions of the value of the oorgua
    or prlnolpnl were taxable. our above oon-
    olualona alao deny the oontantion of appal-
    lant tbst the tax ahould bo poetpouad to
    datemine whet eventually might happen dur-
    ing tha sight yeer period &tar the daeth
    0s grantor or aettlor. Xotblng,In the stet-
    ute authorizer such postponaxant of the tax;
    but to the oontrery it shows that tha Legia-
    lature intended that the tax beooma due and
                                                                  116

flonorableGeorge R. i:heppard,Fag4 4.


      payable l~~d!a~ely after the death of
      erentor,      .
          The question in the specific oaae which you preaent
is whether or not the property belonging to the one half cam-
munltp interest of J. 7:.Thomss which hsa now paesed to his
raaalndarman or helm wsead under the terms of his will et
the time of hi8 death at whioh tlma lt wea taxable or dld It
pas upon the death of his wife, the survivor. It 1s our
opinion thst the rormer Is the correot analysis oi the alt-
uation. Under the will 0. Thorns8left his share of tha com-
munity estate to his wife for her life with the power to aia-
pose or the same but provlded that if eny of the mama wna
latt et the death of his wire that it should go to his heira.
It Is our opinion that when heirs so take the remslnlng prop-
arty nt the death of Hr. Thomas * aurvl~lng wife they era tak-
ing the same under the will of Mr. Thomas and whatever lntar-
ast or eetate~thay had in the property wan taxable at the tlma
of I&r.Thomas* death and would not be taxable et tha time of
the death of the euld.ving  wife.
          In Opialon No. 04551 this department construed a
rill in which a husband left &la property to hfs wlfa for lire
with power to dispose of aama but provided that if any of it
was left at the time of her death the ramalnder should go to
his daughter. :Qeruled in eeid o,oinioathat upon the hueband's
death both the wife and the daughter had an latereet or estete
in the property whloh interest or estate should be taxed and
valued in acoordanoa with the rhlue of the aama et the time of
the husband*8 death. This sama rule oi law was aMOunOad by
the 3uprame Court of Wleconaln in the ease of State v. Merrill,
24s N. W. 909. The court atatee as follows;
         *The statutory provisiona above atated
     disolosa a oomplete mhema ror the valuing of
     interests in eetetea ~ivsn by will and for the
     imposing oi the tax upon such interests trana-
     ierred a8 of the date of the death of the tsa-
     tator, end for the payment of the tax upon its
     impoeltloa, whether the sotual enjoyment of
     the interest transferred be present or future.
     The tax ie lmpoaed upon the right to reoeive
     end ie ffZed by the value of that right. State
     ex rel. Kempsmith v. Wldule, 161 Vile.3@9, 154
     N. 6. 695. The state 18 entitled to an lnherl-
     tance tax measured by tha market value of the
     interest.transfarred ana the value for texlng
                                                                 1lW

Bonorablr George 8. Sheppard, Pago 5.


        purporea oannot be reduoed by dividing it
        into term ortates and lnmainders. Estate
        oi Stephenson, 171 F!ls.452, 468, 459, 177
        A. W. 579. Thus the oereral lntersstfi
        transferred by the will in suit were sub-
        ject to valuatfog tt the time or the testa-
        tar’s death.       .”
          The United States Board of Tax Appeal0 pamad on
a question very rlmilar to the ona you present in the oam
of Carrie L. Jones v. Commlsaioner, deoided May 29, 1940.
Ln that oaae a testator bequeathed hi4 property to his die
ror life with remainder to their daughter. By the teama af
the will the widow we8 given the power to dispose of the
property including the right to detlm, mortgage or sol1 the
       During her liietlme the widow made a transfer in truer,
?%d     aeduritlea reoelred under the will of her husband dlr-
ecting that nhe should raorire the lnoome therefrom for llia
ml that umn her d6ath the entire trust estate should bo
paid to her daughter. The widow dlod. The daughter wrot@
the trustm that she alooted to take the seouritire   under
the ~$11 of her rather.   Tim oourt hold that the daughter
did take the fseourlties undrr the will of her father an6
that their value et the tlmo of the wldow*a death 18 not
included in her rots8estate. 8% believe that the United
State@ Board of 4ax Appeal6 bae laid down the oormot ruin
to be applied in mxoh a cam.
          You are therefore advised that the huCrband’8hair
of the oonmunlty property whiOh now pansea to hlr holrr upon
the 6eath of his aurvivlng wife was taxable in aooordanoe
wlth its value at the tfnm of the humband’s death and is not
taxable under the Texas Inheritanoa Tax laws at the tlaa or
the death OS the eurrlvlng wife as part of her eatate.
                                       Tours rery truly
                                   ATTORagP GElWIAL CF TBras




BGSRS
           APPZ:"'



           ATTORNEY GENSRAL OF TEXAS
