               THE       .&TJJORNEY           GENERAL

                             OF    TEXAS

                            AUST~NII.‘~%~R



                             February 1.8, 1960


Honorable Bill Allcorn                       Opinion No. WW-807
Commlssloner
General Land Office                          Re:   Whether Veterans' Land
Austin, Texas                                      Bonds are exempt from
                                                   inheritance taxes
Dear Mr. Allcorn:
     You have requested the opinion of this office on the above-
captioned matter.
     If exemption were to be accorded, it would be by virtue of
Section 30 of Article 5421m, Vernon's Civil Statutes, which
reads as follows:
          "Bonds heretofore and hereafter issued pur-
     suant to the provisions of Section 49-b of Article III
     of the Constitution as same may be amended, and Statutes
     enacted to implement said provision of the Constitution,
     shall be exempt from every character and kind of taxation
     by the State of Texas, cities, towns, villages, counties,
     school districts, and all other political sub-divisions,
     and public agencies of the State of Texas."
     The constitutional provision above referred to contains no
specific provision for exemption of Veterans' Land Bonds from any
kind of taxation.
     It has long been settled in Texas that inheritance taxes are
privilege taxes rather than property taxes. We quote the following
excerpt from State v. Hogg, 123 Tex. 568, 72 S.W. 2d 593 (1934):
          "An examination of the authorities convinces us
     that the almost universal rule is that inheritance
     taxes such as are levied by our statutes are held to
     be privilege taxes, and not property taxes. In other
     words, the tax is upon the right of succession and
     not upon the property . . . .
     Following the above-quoted statement the court cites approx-
imately fifteen authorities and states that these authorities could
be multiplied several times.
Honorable Bill Allcorn, Page 2,                  Opinion No. WW-807


     The holding in the m       case was expressly approved in
Cahn v. Calvert, -Tex     -,     321 S. w. 2d 869 (1959).
     In 85 C. J. S. 862, Taxation, Sec. 11.18, it is stated that It
is generally held that death taxes may be imposed with respect to
Federal bonds or securities which could not be taxed directly because
of the theory that such taxes are on the privilege of transmission
or succession.
     Since the statutory provision in question only exempts
Veterans' Land Bonds from direct taxation, you are advised that
they would be subject to inheritance taxes, assuming the transfer
is accomplished in a manner covered by the provisions of the ln-
heritance tax statutes.

                               SUMMARY
            Veterans' Land Bonds are not exempt from
            State Inheritance Taxes.
                                         Very truly yours,
                                         WILL WILSON
                                         Attorney General of Texas




                                           Assistant Attorn
MMP:ag
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
John C. Phillips
Harris Toler
Arthur Sandlin
John Wlldenthal
REVIEWED FOR THE ATTORNEY GENERAL
By:   Leonard Passmore
