           OFFICE   OF   THE   ATTORNEY     GENERAL   OF   TEXAS
                                   AUSTIN




iionoratle Tom L. Asauaholnp
:~.carataryor :Xata
AUStin, Taxas

Duu,LUrt




                                                  , be oaken into
                                                   to bu oomplite4




         Artlole  9034, RsvltmU Stnfateu lQQS, aa amen4eU kot6 1931,
end Legisleture, 3. 441, Oh. ZQS, gea. 1, providsa that the
Sranohlee tax of' corporntloes *b&U be baedd upon:

                    t&et prepwtdon OS the aatntan4%ngaapitrl

    outetundlrig ba48, rmkrr aad 4obenti~o, other tkan tbe~s*
    smtttrlng in has than a year Srom Qatu af iunua .
                                                    . . .*
          The ;?urposecf tf,c:
                             Legisleture 12 addlu~ notes, bends
mid debentures utturinp !n less thn Gne yWr from date or iSSue
uss tc neucure the tax oc soliebasis so as to include the aatual
pentauent capital Or the cor?oratlon, vihlcb hsd prevloualy bean
exclwled In some Instances because of its form. However, in deter-
lrin1n.g
       how  this result isto be aacoepllshed we n;uctlook to the
body 0r the uct itself.

            By ita express language, Article 7084,as an;snilaA,
                                                              sxoapta
notes    mmuing   in loss than a raar rrom date or lsbue, the sob
orikria 1s the Smturity date. Ho qualifioation 16 ma& for note8
whloh mey be outatendlng and -paId after the maturity date or at
the cloas oi,the corporate aooountlng year.

        Paper payable on dacand 18 due an4 aotlonablw isdiately
afthout&uliaml. 6 Tu. Jur. p. 681, Sea. 96. Themrore, notam’:
payableon asrnand rattare lee8 than a mar troa 64to 0r iuu8 ~*.
oow rlthln the statutory uoeption.
         It was stated in Southam 'isaltyCorporationv. l6&&&.,
                                                             .:~..r
                                                               .a
(ccr t$h, 1933) 66 Ired.(3) 934s
             *The exoluslon or short-time loana, that le, thow
        ror l~sss than a year, is also not arbltraxy. Ii 6uoh .ara
        iotuelly repaid wlthln the Je8r, they have not bean ',:.
        oapltal employesl during the whole tai perlo&  If roaeWi&
        thronghaut the year, they ay larve to ptivlde workig'
        oapltal just a8 thou& origI5aI.4 ror 0 yeor, but in
        truth they are no penuanent oapltal, but the indul&egioe
        la at the rlll of the orvditor end generally Rmw
        by a high rate 0r interast.   A 11~~ or slw+w   s*~:;t~+~-',
                                                                   '(:
        proper to be made at some point, .Md one year, the ~period
        uhlob the tax is to oov6r. was not an unreqsonable pltioe
        t0 rix it.*

            filth rerem3oe   to your 8eoon1Y tmestlon, we a6bumie that in
each instance there la a bona iids renewal or ertenalon of the
paper   SO  as to nifituro short 0r n year rrom tho aats ~0r~mnslril.
~rtiols    7084 makes no mention 0r rsnauala or sxtanaloaa.

             'ho vlers    lay be taken.       Blrat, the original issue date
may be taken as the *date of leaue* rcriarreato In the statute,
and lf extended so that the seoond period plus the original $erlod
1s   &Ore   than   ona   year, the   final   natority   date   w0uld   be mora than
one year rrom the original *&at6 of lnsue*. ,On the other ha&,
the posltlon lvay be taken that when the paper is extended or
renewed, it la in raat end erroot a redssue  or the paper ana when
ROZ . Tox 1. Beauchamp, Irarch29, 1939, Page 3


ccuputlng the rreturlty
actual "detc Z issue" referred tc in the statute.
         Bona fide reaewals cr extensions are no more ir:cmrlict
wlth the express int?litlonof the L43gislatul-e
                                              findterrm or the Iict
tban issuing 4eranQ notes rhicb the payee sufrers to run more than
e year wlthout collection; issuing aotea Paturhg leas then a
year rrcm date of issue but abloh are allowed to run for several
yeara without renewal cr paymnt; notea),bonds azd debsotures
which are oalled in end cancelled an6 new obligations aotually
l#S?md. In each lostanae the indu&enOe 1s at the ~111 of the
oro4oeor.
         Althollgh thl* POillt ru not. 8peolti8ally      berore the
oourt in the Southern R+elttyCorporatlomaaw quote6 above, the
aot was ummlaad iram the 8taMpoiat af it8       validltq    end we think the
ruwnlng 0r the aourt 1s .soundwhen lpplle6 to the in6tuit          0880.
m~Wxte          ynothor bada for azmpuf+f$the tu woul& be to
         .                             :

             90   U’O of   the   O&ion   that   uoh   Of   Joor   QUO8tlone   mhOUl6
ba   aMwon        ln the   Mgat.iV~.
