                                    May 29,    1956


Honorable Tom Reavley                   Opinion   No. S- 199
secretary  of state -
State of Texas                          Re:   Proper method for fixing fran-
Austin, Texas                                 chise tax liability of a corpora-
                                              tion dissolving   within one year
Dear Mr.   Reavley:                           after incorporation.

            In your Letter requesting  the opinion of this office     on the above-
captioned question you state in part as follows:

             “Although under ordinary circumstances           a new
      domestic corporation       would not be required to file a fran-
      chise tax return until the expiration of the first corporate
      year, it seems only logical that a corporation        . . . [sub-
      mitting Articles    of Dissolution   within one year after incor-
      poration]   should’be required to immediately       file a return
      in order to present this office a basis for computing the
      franchise   tax to be paid to permit it to legally dissolve.
      The Texas Business       Corporation   Act prohibits the filing
      of Articles   of Dissolution   unless the franchise    tax is paid,
      and our problem then is one of determining        the period for
      which the tax should be exacted.

              “Article 7084.V.C.S.   of Texas, as amended, requires
      the computation of the tax upon the stated capital, surplus
      and undivided profits, and certain bonds, notes and deben-
      tures at $2 per $1.000     or a fractional part thereof ($2.25
      on and after May 1, 1956). but provides for a rditnimum tax
      of $25.   This, of course, would be for one full year as fur-
      ther provided in this Article.

             ‘With the foregoing facts before you, please advise
      this office If we should collect the franchise        tax as would
      be disclosed    by the return demanded of the corporation for
      one full year: or. should the tax be apportioned in order to
      exact the franchise      tax only for the period from the date of
      filing Articles    of Incorporation    to the date of submitting
      the Articles    of Dissolution?     If the tax is to be apportioned
      and the amount for only a portion of the year should be less
      than the minimum,       shouid that amount be accepted, or should
      we demand the minimum tax of $257”
*.   ,.




          Hon. Tom    Reavley,   page 2   (Opinion No. S-199)



                         You should collect the franchise    tax for a full year as dis-
          closed by the return demanded of a domestic corporation          which submits
          Articles   of Dissolution within its first corporate year.     There are no
          provisions   for apportionment   of franchise   taxes due by corporations    in
          Title 122, Chapter Three, Vernon’s       Civil Statutes, or elsewhere   in our
          statutes.



                                               SUMMARY

                         The proper method of collecting the franchise        taw
                  of a private domestic corporation      dissolving within one
                  year after incorporation    is to collect the franchise   tax
                  for a full year as disclosed   by the franchise   tax return
                  demanded of the corporation.

                                                     Yours   very     truly,

          APPROVED:                                  JOHN BEN SHEPPERD
                                                     Attorney General of Texas
          We,. V. Geppert
          Taxation Division
                                                          &&/$+&&A
          Mary K. Wall                               BY
          Reviewer                                        Henry         tes Steen
                                                          Assistant
          J. Arthur   Sandlin
          Reviewer

           L. W. Gray
          ,Special Reviewer

          Davis Grant
          First Assistant

          John Ben Sheppard
          Attorney General
