                                 EC,              NET       GENEIRAL




     ~,~                               June 16,     1967


Honorable Robert S. Calvert
Comptroller    of Public Accounts                  “,
State Capitol
Austin,   Texas 78711

                                          Opinion       No. M- 92

                                          Re:     Whether the value of an indebted-
                                                  ness secured by mortgages against
                                                  real estate  located  in Canada and
                                                  held by a resident   decedent   of
                                                  this State should’be   included    in
                                                  computing the amount of inherit-
Dear Mr. Calvert:                                 ance taxes due.

       You have requested      the opinion of this Office    on the
above captioned   question.     We quote the following   excerpt
from your letter, .of request:

                  ‘!We desire   the opinion     of          your office
           with respect      to the inclusion              of mortgages
           against    real estate    located    in          Canada for
           inheritance     tax,purposes     held           by a resident
           of the State of Texas.
                  ,I
                       e[The
                           0 D  Decedent7 died testate      a resi-
           dent of Harris County, Texas,          on November’g,
           1965, and among the assets         of his estate   were
           mortgages     on real estate    located   in Canada
           and payable in Canada in the amount of
           $22,581.00,      These,mortgages     were omitted
           from the State Inheritance         Tax Return by
           . . . . the attorney   for the estate,     because he
           stated    that Texas did not have jurisdiction
           under Texas Inheritance        Tax Laws over a mort-
           gage on real property       situated    in Canada, to
           which this Department does not agree.

                  “It has been the rule of                 the Department
           for   many years to include  for                inheritance  tax


                                                -417-
                                                                            .     .




Honorable   Robert       S. Calvert,     page 2 (M-52)


        purposes    intangibles    owned by a resident      of
        the State of Texas regardless          of whether such
        intangibles     are located    within or without       the
        State of Texas.        This rule also covered      in-
        tangibles     subject   to foreign   jurisdiction.

             “Please advise            this     Department    whether
        our rule is correct.”

       A mortgage is merely security      for the payment of a
debt 0 39 Tex.Jur.2d    12, Mortgages and Trust Deeds, Sec. 4,
and authorities   cited  therein.   We are therefore  rephrasing
your question   to read as follows:

               “Whether the value of an indebtedness
        secured by mortgages    against real estate
        located   in Canada and held by a resident
        decedent   of this State should be included
        in computing the amount of inheritance      taxes
        due.’

         Article   14.01,   Chapter           14, Title     122A, Taxation-General
20A, Vernon”s    Civil    Statutes,           provides    for the inheritance      tax,
in part,   as follows:

               “All property       within    the jurisdiction     of
        this State,       . ..,  regardless    of whether such
        property       is located     within or without      this
        State,    ‘..,    shall,    upon passing    to or for the
        use of any person,          ..-# be subject    to a tax *.=’


        The attorney     for the estate   has written      us with regard
to the matter under consideration,        putting     forth his contention
that Article    II(c)   of the 1961 treaty    between the United States
and Canada (13 U.S.T.       382), in providing     that debts shall be
deemed to be situated       at the place where the debtor was ordi-
narily  resident,     would, in the instant     case,    preclude the State
of Texas from including       in the estate    the indebtedness,    and
mortgage securing      the payment thereof.

        Article      I .of   such   treaty,      in part,    provides    as follows:

                  “1 ‘   The taxes referred    to in this Convention
                         are:
                         (a)   for the United States of America:
                         the Federal   estate  tax;
                         (b)   for Canada;    the est,ate tax imposed
                         by t,he Government of Canada.”
                                       -41%
Honorable     Robert    S. Calvert,     page      3 (M-92)


         Such limitation   excludes  from coverage  by the treaty
t,he inheritance   tax levied   by the State of Texas or any other
tax levied    by any state and, therefore,    such treaty has no
bearing upon any such tax.

          By Opinion No. o-6122 (1944),              this Office    upon aythori-
ties cited      therein,    expressed       the opinion    that the legal      owner-
ship of int,angibles        by one in Texas gives such intangibles                a
business     situs   in Texas and makes them "property              within    the
jurisdiction       of this Stat,e."        The inclusion     of such int,angibles
owned by Texas residents            has been the administrative          policy     of
the Comptrollerqs        office     since    the date of such opinion        and we
have no basis for overturning               such opinion    or the administrative
policy     in conformity      therewith.        Therefore,    it is the opinion        of
this Office      that the value of the indebtedness              secured by the
mort,gages should be included             in the estate     when computing the
amount of inheritance           taxes due.

                                      SUMMARY

               The value of an indebtedness       secured by
         mort.gages against real estate     located    in Canada
         and held by a resident    decedent    of this State
         should be included   in the estate     when computing
         the amount of inheritance     taxes due,

                                    Y&s      very   truly,




MMF:ms

Prepared     by Marietta   McGregor       Payne
Assist-ant    Attorney   General

APPROVED:

OPINZON COMMITTEE
Hawthorne Phillips,   Chairman
W. V, Geppert,   Co-Chairman
Harold Kennedy
Mario G, Obledo
Louis Berry
Robert Flowers
STAFF LEGAL ASSISTANT:
A, J. Carubbi, Jr,
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