Honorable Robert S. Calve&         Opinion No. M- 722
Comptroller of Public Aocounte
State Finance Building             Re:   Taxability of bank share8
Austin, Texas                            of stock for ad valorem tax
                                         pprposes under Articles 7165
                                         or 7166, Vernon's Civil
                                         Statutes, where the bink
Dear Mr. Calvert:                        18 not doing business.
     The question presented in this requeet involves the taxability
for the year 1970 of shares of 8tOok of a etate banking corporation
which on January 1, 1970, wa8 not doing business in Texas. Wore
epecifically the question atatesz
        "Whether shares of stock in a atate bank represented
        by instruments in writing issued on December 15, 1969,
        and contract8 forming an integral part thereof, are
        taxable for ad valorem tax purpose8 a8 shares of stook
        under Article8 7165,and 7166, Vernon Civil Statutes,
        Por the year 1970, when the bank wa8 not authorized
        to commence operations as a bank until (I) all con-
        ditions precedent of the State Department of Banking
        were met, and (ii) all agreement8 and contract8 among
        the principal organizer8 with ita conditional share-
        holder respeating whether the bank would commence
        were complied with, and whiqh bank in fact did not
        commence operation until January 3.9,1970, such
        conditions to operate not being fully 8ati8i’ied
        until such date."
     The etatutea dealing with ad valorem taxation of bank8 and
bank etock are Articles 7165 and 7166, Title 122, Taxation,
Vernon'8 Civil Statutee, which read in part:
     Article 7165:
        "Every bank, whether of,lissue'
                                      or depoalt,...shall at the
        tima,fixed by this chapter for listing personal property,
        make out and furnish the a88e88or of taxes a sworn state-
        ment ehowing:


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Hon. Robert S. Calvert, page 2 (M-722)


        . . .

       "4. All other banka, (other than national banks)...
        shall render their list In the following manner:

        ...
       '5. All other property belonging or appertaining
       to said bank or buslneaa, including both personal
       property and real eatate, shall be,,lleteda8 other
       personal property and real estate.   (language
       in parenthesis oura)
     Article 7166:
        "Every banking corporation, State or national, doin
        brinesa In thl8 State ehall,...render its real+ e8 ate
           the tax a88e8aor at the time and In the manner
        required of IndIvIduala. At .the time of making euah
        rendition the president or Borneother officer of said
        bank shall file with said a8Be88or a sworn statement
        showing the number and amount of the share8 of said
        bank,... Every shareholder of said bank shall,...
        render at their actual value to the tax asse88or
        all 8har8S owned by him in such bank;... Each ahare
        in 8UCh bank ahall be taxed only for the difference
        between Its actual cash value ahd the proportionate
        amount per share at which its reti estate 18 aSSe88ed...."
        (emphasis added).
     Each of these two statutes, on their face, would 8eem to
require the rendition of real estate and personal property. This,
however, la not the case a8 the Court in City of IAar8hall v. State
Bank of-Marshall. 127 S.W. 1083 (Tex.Civ.App. 1910, error refueedl,
construed,these-itat&tes, taken together, %b m&an that Article
7166, supra, operates:
        II
         ...to except Incorporated state banks from
        the rovlslons of Article 5079, (now article
        71657 1n 80 far a8 that article may be relied
        on a8 a ba8l8 Of a8Be8Si   the personal property
        of such banka." (page 10"f6) (language  In
        parenthesle ours).




                          -3494-
Hon. Robert 9. Calvert, page 3,(&b722)

     From the oonstruotion given to Artlole 7166, mpra, it i8
evident that said Artlole must b8 looked to alone, In dQte?minlng
the taxability of share8 of 8tOak of a banking aorporation, This
Article Is limited In it8 applioation to oorpQratiOnS
In Texar. The banking corporation desarlbed in thir
not comence its buSine88 operations until January 19, 1970. On
January 1,.1970, when the 1970 ad val,orem taxer Were a88e888da
the banking corporation wa8 not doing bu8ineS8 in Texas; therefore,
Its share8 of stook outstanding were not required to be rindered
by the shareholders of said bank under A&iole 7166,,  supra.
     Where the ahareholder Is not required to rendar for taxation
It allo fOllOW8 that he oannot be compelled to pay taxe8 upon the
authority of Artiole 7166, supra. City or MarShall'v. State Bank
of Marshall, supra. The banking corporation is not Pequlred to
render It8 issued and outstanding sharer and ie thezVfoPDnot
taxable on these sharea, The banking oor oration 18 not required
to render such property under Artlale 716% , rup~a, and thr taxa-
tlon 0r Lts pereonal property i8 exoepted rr0m the provlrlon8  of
Artiole 7165, supra.
     !l& request limit8 its lnquirg to the taxability of .the bank
share8 of stock under only Articles 7165, and 7166, rrupra.

                        SUMMARY

             Shares of 8toak of a banking oorporation
        are not taxable for ad valorem tax purposes
        under Artlole '7165,Title 122, Nxatlon,V.C.S.*
        nor are they taxable ror 1970 under Article 71k6
        of that Title where the corporation wan not
        doing buslners in TexaS_on January 1, 1970.




                                    C. MARTIN
                                    Oenwal 0r Texu




                          -3495-
Hon. Robert S. Calvert, page 4 (M- 722)

Prepared by Wardlow Lane
Aesistant Attorney Qeneral
APPROVED:
OPINION COIMITTEB
Kerns Taylor, Chairman
Bill Allen, Co-Chairnlan
Harriet Burke
Max :+Iamllt
          on
Bob Flowers
Jack Qoodman
MEADE 8. QRIFFIN
Staff I&gal b8i8tWlt
ALFREDWALKER
Executive k38iStSBt
NOLA WHITE
First ASeietant




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