Hon. Robert S. Calvert       OPINION NO. WW-322
Comptroller of Public,Accounts
Capiton Station              Re: Whether State Admission
Austin, Texas                    Taxes will accrue on
                                 Admissions charged to
Dear Sir:                        attend The Royal Ballet.
     In connection with your request for an opinion from
this office on the above captioned question, you have
supplied us with the following facts.
     The Royal Opera House Covent Gardens, Ltd., is a
non-profit corporation organized under the English
Companies Act with its princip&4 office in London,
England. Among its other activities, the corporation
also presents The Royal Ballet. All the proceeds
derived Prom the performances of The Royal Ballet inure
to the general fund of Royal Opera House, which fund is
subject to unlimited liability for the maintenance of
the Sadler's Wells School in England.
     Contracting through Hurok Attractions, Inc., referred
to in the contract as 'Artist's Manager", Royal Opera House
entered into an agreement with Edna Saunders of Houston,
Texas, referned to in the contract as "Local Manager". The
contract stipulates that The Royal Ballet will give a
stated number of concerts on stated dates; and the local
manager agrees to furnish a theatre, a suitable piano
and various services in connection with giving the concert.
Paragraph 7 of the contract reads as follows:
       "All proceeds from sale of tickets will
    be turned over to Artist's Manager for
    Covent Garden. Not later than curtain
    .time of the day scheduled for the perform-
    ance, Artist's Manager will pay to the
    Local Manager in return for his above
    mentioned services, the sum of Thirty
    Percent (30%) of the net receipts accord-
    lng to the attached scale of prices, the
    maximum payment to Local Manager to be
    Eleven Thousand Nine Hundred Dollars
    ($11,900).   Local Manager will not share
Hon. Robert S. Calvert,   page 2   (WW-322,)


     on any Federal or State Tax Exemption
     which may be awarded to the Company."
     Article 7047a-19, ,Vernon's,CivilStatutes, which
levies the Admission Tax, contains the following exempt-
ion provision:
    It. . .no tax shall be levied under this
    Act eon any admission collected for dances,
    moving pictures,,operas, plays and musical
    entertainments, all-the proceeds of which
    inure exclusivel,yto the benefit of State,
    religious, educational or charitable institu-
    tions, societies, or organizations, if no
    part of the net earningsthereof inures to the
    benefit of any private stockholder or individu-
    al, . ."
     Although the contract fixes the amount of the Local
Manager's compensation in terms of a percentage of the
net receipts, it also fixes a maximum limitation as to
the amount the local manager may receive.,~We think that
it is immaterial that this compensation may be determined
by a percentage of the net receipts. This is obviously
an expense of production, and expenses of,production
must necessarily be mef by the producing charitable corpor-
ation before any benefits can inure to the corporation.
No part of the net earnings will inure to the benefit of
a private individual in the sense prohibited by the statute.
Therefore exemption should be accorded.
     You ask whether the holding of Attorney General's
Opinion No. WW-15 would prevent exemption in the instant
case. That opinion was concerned with whether a tax is
due on admissions charged for entertainment offered to
the public by sponsoring organizations.
     The opinion specifically held that where the spons<:l--
ing organization of a type eligible for exemption purchases
X:+~-I.owoutright and retains ~l.1<;fthe proceeds from ad-
mission::,no tax is due; butthat where i-uc:? organization
splits the admission charges on a,percentage basis with the
show, exemption would be denied. Language in the opinion
stressing the sign&ficance of the use of the phrase "net
proceeds" as opposed to the use of the phrase "all the
proceeds" was not necessary to a determination of the
questions there involved and should not be interpreted as
meaning that exemption Ishould be denied, if some of the
proceeds are used to defray expenses of production.
Hon. Robert S. Calvert, Page 3      (WI+322)



                        SUMMARY
         No admission taxes will accrue on admis-
         sions charged to attend The Royal Ballet
         despite the~~factthat a local manager
         may receive a stated percentage of the
         net peceipts because this payment is an
         expense of produation.
                                  Very truly yours
                                  WILL WILSON
                                  Attorney General

                                                     lu.
MMP/fb                              Assistant
APPROVED:
OPINION COMMITTEE
George P. Blackburn, Chairman
J; Mark McLaughlin
Leonard Passmore
C. K. Richards
REVIEWED FOR THE ATTORNEY GENERAL
By: James N. Ludlum
