         OFFICE OF THE ATTORNEY      GENERAL   OF TEXAS
                            AUSTIN



Honorable Oee. “. aheprrard
Domptrolla of Fublfo Amounts
Auatln, Texas




             “The quertioa ha                   to tnir llqmrtasnf
     M  to whether a Preduot                     tfon owenlted
     on(Lerthe Fede                              ad valora tnxoo.
     Ii w, ‘whatpa                               mat to    the nd
     valoaer tsx?                                 nuah as brrias
                                                  o+rlght by the          -
                                                 e3 I8 its taxnbrr       -
     stook taxabl                              0 or Hatlonal    Bratpa




                                   ~ln~lfd, of Tit&a 12, O.&GI.A.,
                                   08, prnmxa and duties of Pmduo-

                                      2; U.S.C.A., authorl~~ rueh
                                       becribo a& pay top a&am A
                                        olatiionlooatmd IFapihedir-
                                        ae nmount 8ufrlolont to
malrntalnthe a                           held by it aad ot&er hoLdarm         /’
ai Clam A atoak equal, as nearly aa my be, Eo twenty pr ourturn
et the rolwaa or loans ~m&icror to be iwile by said emooletioa.
‘l&t statute further ,pzwMor that the Wodaot~oa Credit Gvrpbn-
tfon amy at any *lne  require ths asmcrlatlonto re$irs e& aalioel
8took h&Ld by the 4OFpWQt.iOr?    In euoh a8bOOleth&, ti irsthe $Um-
amt of‘the corporation,     t&e wsooiation bar rw~ourma arai~labls
tbe?Qfoxo~
~Onarable Gee. H. Sheppard, page 2


              35Otga llsd, O? Title 12, U.S.&A., roridea
for                   or Produotiun Credit Ammoiat f0~8.
      the organisetltdn
            &motion ll31s, of said Tit18 12, U.S.C.A.,
         t0 thB OBpft51 StOOk OS PrOdUOtioil
ralatillg~                                  Credit ~a50aia-
tioale,proviEee es t011ws:
                -he atoek of a uo hlwooietlona  shall be di~idad
       into 8harea of $5 ssah~ and therr shall be two aJ.aaaaa
      Of Suoh atoak; (1) Ofa A atook whiah la to be had
      by Produotion Credit Corporations,and *iOh may be per-
      oh~ad and held by Investors,and (2) slaaa B StOOk
      rzllshmy b. pumhaaed only by iarm?       borrwers   ?rmn
      the aaaooietionand iudiridualaaligiblo to besore bormmara.
      C1a88 B stork only ~sh8l.l be entitlod to rotin(gri$hta but
      oaoh holder oi auoh atoah shall bs entitled to no more than
      one rots. Ho olers B stock, or a&xyintera& therein or
      right to receive dlridanda tharaan, shall bs tranatarred
      by set o? partiss or'op8~atIcmo? law sroept ta amthey
      ?armo~ borrewer or an individualellglbls to bsowia ~a
      borrower,   mad then onlg with tho approtal o? the disoeteza
      of the aaawlatlen. ?&oh holder,03 alas8 B atook, within
      two yoara arter he hea osased to bd a borrower, .sh&l
      erohaago auoh alas8 B atook lt the iair book ralw (not
      to axooad par) thereor,as 4rtermlnad by the aaoooietioa,       *
      ror olua A atook. All ato@k shell shape in diridanil
      diatr1bat1onawithout preferenca,but tiledirectors O?
      ths araooiationMJ, ia their dia6~a8ion,       app&y the emoimt
      of any divldsnd   payabla to a holdaT e? olaaa B stack to
      any indabtedneasof suoh holilarto the raaooiation. Olaae
      A atook shell be T;re?erred   as to assata of the aaaoeiation
      upon liquidation. . . .*
            Se&ion llPg, O? Title 12, U.S.D.A., praridea that
-ah Produotion Credit Aarooiatfooshall, Pador auoh ruler arid
raguletionaas may bs pmaaribad by th8 Fmduotfon Credit Csr-
porntion of the district with RFDFWal O? the O096ZnOr Of tha
Fara Credit &M.nlatratlon, inrest its ?unds and make loana tar
farmars far general agxlaulturalpurposes in the mmnar therein
~roolded.
             section 11314543,
                             o? Title 12, U.S.C.A., prO~lda8 that
under orrrtein oonditlonathe Prodnotion CreditiAaaoOiati0n IS
authorized and ezxpowered to make laaaa to tarrfma ?or tha purpoao
of enabling thsa to make home alte??aticma,  repaim, end isprcne-
m4nta, ati to aall, dlaaount, assign, or otherwise dlapae O?
any loans made by them fn the ma8mar provided ,th8rOin.
mmaabl8   Gao. 8. aheppard, page 9


            SubchapterVI, of Chapter 7 Of Title 12, U.S.C.A.,
18 entitled: "PROVISIGRSCWON TO PRODDCTION CRFDIT OORPORA-
'1'1Oh5,
       PRODUC'TIONGRZDIT Af3SGCIATIGhS,
                                      RFGIONAL ARD GRNTRAL
RANKS PGR COOPERATIW3.* Section llJ80, of said YubahapterVI,
pzovidee as Iollows:
            aThe Cmtral Rank iW Cooperativea,and the Produe-
    tlon Credit Corporatlon8,Produotiou Crsdit Arroolatiou8,
    and Bank8 for Cooperatlres, organized under thlm ohapter,
    and their obligationa,8hall be deemed to be fnetrumeutall-
    tlor oi the United Statea, w    a8 8ueh, any end all aotr8,
    dobenturaa,bondr, and other ouch obligations188ued by
    such banks, ar8ooiatlon8,or oerpontlon8 shall b8 asmpt
    both aa to prinaipal aud Aatosrst tram all taxation (naept
    surtaxam, astate, Inheritance,and gift   tame) hoa,or hero-
    after iapoesd by the United Stete8 or by say State, Terzl-
    torlsl, or looal taxing aathorltj. Suoh banks a88oolatlon8,
    and oorporationa,their proprrtl,   their iranehire8,aapltal,
    reserdPto8,surplu8, and other fund8, and their inoam8, rball
    be aaapt tmra all taxation now or hereafter   inpored by the
    United States or by any State. Terrltorlsl.or looal




           We think that it ia olear that Seotlon llso, quoted
above, olearly answera your quostiaprl,end
                                         that notm or the property
nor aasete of a hoduotlua OreQit Aasooistlonam subjeot to the
taxing power of this State eroept "that any real property and any
tangible personal property or such . . . aesooiatlone, . . . and
corporationsshall be subjsot to Federal, State, Tarxltorialand
loeal taxation to the aams extent as other elsdlar pieportr tud
     n Is do bsliate, however, in rim or the la8t aentehoe ot
;a;d'Seotion1190, quoted above, that the Bongre88 ha8, either
expresslyor by inpltoatlau,authorlredthe properties oi a
Prodnotion Credit Assooiatfohto be taxed the 8am6 a8 other property
8ubjeot to th6 jurlsdiotlon0r the taxing power 0r the State or
Tern8 after the atoo::held in it by the Produotlou Credit Gorpora-
tlon has been retired.
xonorable Oeo. R. Sheppard, page 4


            Sinae theme are no SpsOirifJraOt8 presented to u8
b,t you in your lnquirl, we trimt that the r0rsgoing f'ullp
mawem   the questions submitted bgr.
                                   you.
                                           Pours very truly



                                       u              m,s-
                                  BY
                                               Xarold MoCraokan
                                                      bSiSt8llt
xMoc:Awd




                   .b.PPROVECJUL
                               16, 1g42
