Honorable Robert S. Calvert         Opinion No.~c-778
Comptroller of Public Accounts
Capitol Station                     Re:   Taxability for inher-
Austin, Texas                             itance tax purposes
                                          of Texas real estate
                                          belonging to a non-
                                          resident decedent
Dear Mr. Calvert:                         under submitted facts.
     You have requested the opinion of this office on the
above captioned matter. You have advised us that the decedent,
who was a resident of Florida, owned certain Texas real property
at the time of his death and that the attorney for the estate
takes the position that said real property is exempt from inher-
itance taxes by virtue of the underscored portion of the follow-
ing provision of Article 14.01, Chapter 14, Title 122A, Vernon's
Civil Statutes:
         I,   -provided, however, that the tax imposed
    by this Chapter in respect to personal property of
    non-residents (other than tangible property having
    an actual situs in thisstate) shall not be payable;
    (1) if the grantor/or donor at the time of his death
    was a resident of a state or territory of the United
    States which, at the time of his death, did not
    impose a transfer or inheritance tax of any character
    in respect of personal property of residents of this
    State (other than tangible personal property having
    an actual situs in said State); or (2) if the laws
    of the State or territory of the residence of the
    grantor or donor at the time of his death, contained
    a reciprocal provision under which nonresidents were
    exempted from transfer or inheritance taxes of every
    character in respect to personal property (other than
    tangible personal property having an actual situs
    therein) provided the State or territory of residence
    of such non-residents allowed a similar exemption to
    residents of the State or territory of residence of




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Honorable Robert S. Calvert, Page 2 (C-778)


    such a grantor or donor. For the purpose of this
    Chapter the District of Columbia and possessions of
    the United States shall be considered territories
    of the United States. Provided further that the
    provisions of this Chapter shall not apply to
    residents of those states which have no inherit-
    ance tax law." (Emphasis supplied.)
     The attorney for the estate has stated his basic proposi-
tion as follows:
          "The State of Florida does not have an inher-
     itance tax law, but does have an estate tax law,
     which seemingly imposes an estate tax similar to
     the additional tax by Section 14.12 of our General
     Taxation Law as amended by the 1965 Legislature.
          "The Courts of this state have uniformly
     differentiated between inheritance taxes and es-
     tate taxes, holding the former to be taxes imposed
     upon the right to receive or succeed to possession
     or enjoyment of property, while the latter is
     imposed upon the right of a donor to transfer
     property.
          "It is my opinion that the underscored pro-
     viso means just what it says, and that our courts
     could not read into the statute a holding that the
     residents of a state which has an estate tax law
     would be subject to Chapter 14 of our.General
     Taxation Laws unless it be on account of the 1965
     amendment to Section 14.12."
     It is, of course, unquestioned that only the state wherein
real property is situated has jurisdiction to impose any kind
of transfer or succession tax. Insofar ns we have been able to
ascertain, no state having a death tax of either the inheritance
or the estate tax type has failed to levy a death tax when real
property within the state is subjected to death tax under the
controlling statutory provisions. The residence or nonresidence
of the decedent is immaterial. The proviso as interpreted by
the attorney for the estate would thus result in granting an
exemption from inheritance taxes when a nonresident decedent
owns real property within this State and the domiciliary state
does not impose an "inheritance tax." This result is urged



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Honorable Robert S. Calvert, Page 3   (c-778)


despite the fact that the domiciliary state would.have no
jurisdiction to impose such a tax even if it had an "inher-
itance tax" law. And the same jurisdictional defect would
exist even if the death tax were in the form of an "estate
tax" except in those instances in which the state "estate
tax" was enacted solely for the purpose of taking full
advantage of the credit originally allowed against the
federal estate tax by Section 301(b) of the Revenue ct of
1926, 26 U.S.C.A. Int. Rev. Code, Section 813 (b).l/"Simco
v. Shirk, 146 Tex. 259, 206 S.W.2d 221 (1948);,sinnott v.
Gidney, 322 S.W.2d 507 (Sup.Ct. 1959).
     The whole purpose of the exemption provision was to
prevent double or multiple taxation of personal, not real,
property (other than tangible personal property having an 2,
actual situs in Texas) belonging to non-resident decedents.-


   l/ The 1954 Code reaches this result by providing that the
bas& estate tax and ,theestate tax imposed by the Revenue Act
of 1926 shall be 125% of the maximum credit allowed against the
Federal estate tax for state death taxes paid. I.R.C., 1954
6 2011 (d), 26 U.S.C., 8 2011 (d).
   2/ This exemption provision has an interesting history. It
was-first enacted in 1929. Acts 41st Leg., 1st C.S., Ch. 50,
p. log. At that time under the decisions of the Supreme Court
of the United States double taxation of transfers of intangibles
was permissible. Shortly after it was passed, the Supreme Court
decided four cases which limited the right to tax intangibles
(reserving a decision of the question in the event such intangi-
bles had acquired a business situs) to the decedent's domiciliary
State. Farmer's Loan and Trust Co. v. Minnesota, 280 U.S. 204
(1930); Baldwin v. Missouri, 281 U.S 5tlb [1930 ; Beidler v.
South Carolina Tax Commission, 282 U:S. 1 1930 * Fi     National
Bank of Boston v. Maine, 264 U.S. 312 (1932). Tie r%procal
exemption provision was omitted when the inheritance tax law was
amended by H. B.' 990 in 1939. Acts 46th Leg., R.S. 1939, Ch.
13, p. 646. H.~B. 990 passed the House on May 9, 1939. On May
29, 1939, the United States Supreme Court abandoned its single
death tax theory and held that intangible property comprising a
trust was subject to tax both in the state of the decedent owner's
domicile and in the state in which the property was held by the
trustee. Curry v. McCanless, 307 U.S. 357 (1939); Graves v.
Elliott, 307 U.S. 383 (1939J. Thus even before the act omitting
the reciprocal provision was finally passed on June 20, 1939,
there was again great need for the provision, which, however, was
not reenacted until 1945. A_c3t.s3tgth
                                     Leg., R.S., Ch. 98, p. 148.
Honorable Robert S. Calvert, Page 4 (C-778)


The first part of the provision exempts such property if the
domiciliary state or territory did not impose a death tax in
respect of such property of residents of this state. The
second part is completely reciprocal, and the Ghird applies
"to residents of those states which have no inheritance tax
law."
     Florida's estate tax is authorized by and limited to
credit allowed that state by the federal Revenue Act of 1926.
It is beyond the power of the State of Texas to increase or
decrease this. Since this type of estate tax could not legally
have been embraced with the Texas exemption provision, we must
assume that the Legislature did not intend to enact an illegal
and ineffectual statute.
     The differences in the scheme of taxation between "inher-
itance" and "estate" taxes is not material to a decision of
the question presently before us. Prior to the 1965 amendment21
of our inheritance tax laws, Chapters 14 and 15 of Title 122A,
Taxation-General of the Revised Civil Statutes of Texas, as
amended, were entitled, respectively, "Inheritance Tax" and
"Additional Inheritance Tax". Despite the Legislative designa-
tion of the tax imposed by Chapter 15 as an "inheritance tax",
our courts have recognized that the additional tax is a tax
which is in the nature of an "estate" tax. State v. Wiess, 141
Tex. 303, 171 S.W.2d 848 (1943); Strauss v. Calvert, 246 S.W.2d
287 (Tex.Civ.App. 1952, error ref., n.r.e. . Therefore, we
think the use of the term "inheritance tax' inthe proviso in
question may be construed as including both inheritance and
estate taxes.
     Both "inheritance" and "estate" taxes are "death duties"
which embrace all duties occasioned by death. 28 Am.Jur. la,
Inheritance, Estate, and Gift Taxes, Sec. 3; Matthews v. Jones,
245 S.W.2d 974 (Tex.Civ.App. 1952, error ref., n.r.e.). Although
the subject matter of a death tax statute may be either the
transmission of property or the legal privilege of taking pro-
perty, the tax is essentially a transfer tax on certain gratu-
ities flowing from the dead to the living. 28 Am.Jur., supra.
When so analyzed, it is evident that the resulting tax in both
cases is a burden upon or a diminution of the gratuity. It was
to equitably distribute this burden and prevent unwarranted
diminution of estates that the exemption provision in question


  3/   Acts 1965, 59th Leg., ch. 402, p. 830

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was enacted. Such being the purpose of the exemption, that
purpose can be effectuated only by disregarding the techni-
cal differences between estate and inheritance taxes.
     You are, therefore, advised that the Texas real pro-
perty belonging to the nonresident decedent is subject to
inheritance tax.
                      SUMMARY
          A nonresident decedent's real property
     situated within the State of Texas is not
     exempt from inheritance taxes by virtue of
     the exemption provided in Article 14.01,
     Vernon's Civil Statutes, for "residents
     of those states which have no inheritance
     tax law" because said provision is applic-
     able only to certain classes of personal
     property for the purpose of preventing
     double or multiple taxation.
                                    Yours very truly,
                                    WAGGONER CARR
                                    Attorney General of Texas




                                        Assistant
MMP:ck
APPROVED:
OPINION COMMITTEE
W. 0. Shultz, Chairman
Gordon Cass
Bob Flowers
Pat Bailey
John F. Pettit
APPROVED FOR THE ATTORNEY GENERAL
BY: T. B. Wright



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