       OFFICE OF THE AlTORNEY       GENERAL    OF TEXAS
                           AUSTIN




gonorablo Ii.Pat gdwlrda
cirll Dlrtrlat Attornty
lM1l.m county
prma, Telm
Attention: Mr. Allen Idelton


                                               tax      purpo808   of
                                                in the procerr OS
                                               ions rllovanoe of
                                               Ion for federal
                                               ad by taxpayer.
                                              1943, December 13,
                                               our opinion on l

                                                inventory
                                     r ep o r ted AII
                                     t At $155,872.18. Thlr




         Yith rrrpeat to thi8 8ituatlon you h8re inquired rub-
8tAntiAlly a8 fO11OW8 :
          (1) Uhothcr Zttma  ot labor, overhead and gen-
     err1 admiairtratlvb rxpe~es 8ro to be laoluded a8
     items of 888tt8 ia rrrlving At the taxable T81U8 Of
     the per8OMl  property Of t bU8ioe88 tllteI’@8b, vhert
p&ablt          8.      P8t   &tdYICd8,   plg8   2


         8U8h proparty L8 in t&o procs88 OS                    h b r lc r tlo n lu3
         vhrrr tht forego-   itaM hare born                     l~a d.din aoa-
         motloo ulth 8UOh frbrloatlon.
              (2) Uhethor the               tarprpr   8hOUld bo pormlttod
         to deduct the amount              Ov8d for red0wi   lnoome oad tx-
         tt88   JS'Ofit8 t&X88          fiw    it8 8OOOWt8 8lAdbill8 rt-
         orivaok.
          HO 8~Oii10 pOV181OM in the 8trtUtt8 Of thlr St8te
drrl vlth the valuation of good8 in tht proar88 of irbrlo~tloa.
IDytver, the gonorrl rtrtutorf porl8loM   vlth re8peot to the
& u8t:OliOf             &bW8OlUl    pOmrtr       M O l8 iO11OV8:

              "Arti    7174. . ..Ptl.‘8olul                ~OptrtJ     Of lVOry dt-
         88rljation&All be valued at                 it8     true    aad full valua
         in aonty.
               "Art101t 7149....The terr @true and full value',
         vherever urtd rhtll  ba hold to U88n the fair market
         V81U8, la oMh,   at th8 phOt vhtrt th8 pl'owrty  to
         vhioh the tor8 18 applied 8bll be at the tirr   OS @I-
         re88mettt,being the prloe uhiah OOUld ba obtelaed
         thertfol,tt &dV8tt   8t10, 8nd Wt 8t fOr8td OF 8Uo-
         t1oo 8alt.F
                     , “narlretva1~8~ or *farir)
             Yloreovtr                         urket valuog hrr
bea deftned a8 "tht amount     of roat~ thAt t per8013d88irbg to
8011, but lratbo\ab to do 80, Could, vlthin l rra8oMbh tire,
pooure foV 8uah prOprtJ tl'O8l l pr8W      uho dO8tit8 Bad i8 able
to buy, but l8 not bound to gUl’Oht8t   the prowrty.   ft 18 the
mount   that   eould~bo obtalaod at priv&te 8tlt Aad not 8 ioroed
or auct$oa 8tiO.' 40 To%. J\P. 150.
                Vhrrt               w88t88.~;
                              trublr prOptHy     X0 Fklt     V81U8, th8
tU&8lJO88OF             W8t    888088
                            8UOh &WOmrtt   8t it8    ma1   Or ilitria8i.o
         Artlole 7211. & Id,l8 18 Uid ia 40 ‘IltX. J(P. 149,
"IO& FatrLarlO V8lU0 18 aOt mentlOMd          in the 8tatUte   (R. S.,
ht. 7206)  that d~tfirre8 tht
 (but only in
rith rtrgeot to
tht l88t88Or,
Iatrlnrlo worth; but thl8 18 done on17 when ld lf it                            rppe858
t&t   the property la qutrtioa brr no wrkrt value."
 worrblt   8.   ht   Rdvrrdr, page 3


              Tha qUO8tiUlIof vhothor t&88 gOOd8 all be 881d to
   8088l   urkot     value fror vhleh thtlr true @ad full valw am
-?r got
 u
     4et0FmiIWd 18 l qU08tIOa Of ftOt upoa vhloh thl8 dopartmtnt
          oompetont  to pall. ut8t %X&8 &to1 co. v. citr 0r El
 m80, .t al*, @ s. w. (26) 772 777 (OrrOP di8mi88td). tit
 01 oooy of bus O~IaIon No. 0-2kO loolored hrrcovlth.      COn88-
 ,~&tl~,     V8 OF. urublr to 8tatm uhethrr th8 groptrt7 Ia QUt8-
 ason rhotid bo l88088.d at It8 nrktt     valw or at It8 real or
 ~trln810 Vallu. Eovev8r, you are r~rpotrull~       ldVI8@6 that if
 th# QUalifItd OffiOkl8 dtt.rtiM      tht thI8 WOgdrtr m88088d
 8 -tit      valw On J8IMr7   1, 8UOh PPOpWtr 8hOtid be taxtd at
 it8 sarkrt valw aooordlng to th8 above formuhe.

           On the other brad, ii it rhould be deolded   th8t thlr
 popertf pot8t8804  no market- value on JUWPJ 1, the property
 &ould be ~rrrred   and taxed at it8 “rul or latrln8lo value."
 11 ua8t Tax48 Rot01 CO. 1. City   Of El P880, 8U l, the El PI80
 Court Of Civil 4&W818 qqrored     8 Chtl'gtby t rOVtr oourt to the
 effect that;
           'thr Peal or lntrln8lo value of property 18 rt-
     prorented br that 8Um Of ronty vhloh 18 l fair 8qUiV-
     lltnt of ruch property.  Tht proptr determlnatlon  of




     of among the tlawntr th8t may b8 trken into oonrlberr-
     tion 18 the location, 008t alrdohrrotor 0r iXpOV8-
     uat8,  rent81 hirtory, ir any, locrtlon a8 to Suture
     grovth of the Cltr, rale8 of ldjaorat property, If
     Any, the U808 to vhloh tht mrtr     18 DUt or of vhleh
     it 18 iWa8OolblY 8U8009tibl0.   (Eaplmsl8 added)
           COr tartpUFpo888, thi8 18 the Only judiliil def%nltlon
 of the torn 'ro81 or l.ntrln8lcvalue" vhloh vt htvo found in the.
 8888 hV Of thi8 St8t,, Uhilr thlr deSl.nltloa   ~88 rormulated
 vith rompret to tht vrluatlcm  oi real woptrty,  ve think that
 vwh oi the lragwge   of thr oourt, and pmtlO5rlJ     th# portion
 above underlined,rr proper17 br wtd 88 8 guide by thr t8x 80-
 1088OP and tht bOtrd Of 8qWlit@tiOfk in 88Mrt~illi&% the I'881 OC
 latrlnrlo vrlw 0r ptrrontlty.
                        MV8rd8,        986t     4


                         ynablt to 8af_to vhrt rxtant,~ir at all, ex-
   diture8 for labor, *to., will, la a prrtioular ca80, enter
- to a 6otar8laatloa either Of wrkrt    value or of rob1 or la-
        ralw.   It 18 pO88ibl0 VI ftti,     t0 pO8it 8 8itWtiolr
 u vhloh 8uoh lXptaditurtr rod4 b8 hl&lr 8i@kifiO@Iit~eontrar;-
vita,    000 OAI tt8ill        i.M~iM         8 8itWtiOn
                                       iB vhioh ruch tXptnd;-
~~08     would have a nlxtromoly nogli(llbla lrre0t
                                              upon the valua-
(100 of tha truble px-operty, ~OOrt8btie8 8uOh 88 tb80, to-
pther with        the   extent    to   vhlah        the   VblWtlOll of propertg 18 a
(U88tlOa 0s snot, prertnt our giviag a more detailed la8var to
P~r     rirrt    iaquirr.

                With rtrpeot      to your       reoondquartion,  Article 7147 de-
finer 'per8onal ptiopert~” for                 purporrr 0s taxatioa a8 lnoladlng,
inter 8118:
          II .. all rontyr At lntrrrrt, llthtr vlthln or
     vlthou; the St&t@. du8 the Mr8on. to ba tued over
     8nd &bow What he-pay8 lnt&8t    6r, ~bnd all other
     debt8 due 8uOh 9er8On OVtC 8Bd abott hi8 Illdbebt8dM88."
     4
           lit underrtaad from your ltttrrr that the trxpryer in
quertlonolalu that it 18 entitled to dtduot the amount Of it8
fedtral lnoo8e and *xc088 profit8 trxer for tho prectdlrrgpar
f'ro~it8 looount8 8Pd bill8 racelvable la datarmlnlng the usount
of it8 t8xablr ~r8onal    property. If the taxpayer 18 tatltltd
to thfr deduotlon, it 18 only brcrrwt ruoh tax88 can bo oonslder-
od 80 "iad.btOdne88'within the MO8lliw Of the &bow quota6 8t8t-
8t(r. Although oa Jaawrf 1 the fedora1 tura for the prtctdlag
vu are a llabIllt~ lgaIn8t the taxpayer, and although the
aorm811~art a praftrred    lI~blllt~, 8UCh tu88 are not the E lad
Of llablllt~ vhloh our OOlU't8bad there ia othtr juri8dlOtlOn8
htr aonrldertd a8 an lndebtednerr. In Aopubllo In8. Go. v.
E$hland Park 148      ndont Sohool Dl8trlOt of Dallar County, et
  '# 102 9. W. (2d7el&, the Supreu Court rtatrdr
        ,'
            'Wo do not think taxer are 'deduotlblaa8 a debt
     uhder Art1010 7147, R. 8. 1925. Se* luthorltio8,
     AbOW Olttd, AId th0 Oalt Of TU Corrri88iOnV. Hat-
     ~lonalJ4elleabltCarting Cospaa
        144 N. B. 604, 55 A. L R. 1448; :ki :%::io:!”
          IQ a 8Ub8eqUelkt8Uit bttveen thr 8OY ptrtit8,  rt  l’t-
od 18 162 3. Y. (24) (r8Ter8ed on other groundr, 1‘713, W. r24)
                                                                                            5%




                                           01~11 Appt818 rtiborated upon ihlr

              Vt  aoaoludr that taxer do not oorutltut8 80
        ‘lrrd.bt.dat88’ within tht 9UrVl.V Of hPtlOh  7147
        R. 8. ‘A8 the obllgatlon t0 98J tUt8    do88 not Port
        upon any ooatraot rxprarr or Impllrd, or upoa the
        OOa8Wt   0s tht taxpapr, a tu 18 not a debt In thr
        ordlnar~ 8t118t 0s the VOrdJ althoryh it 18 a llabllIt~
        or obligation, **a.( 61 C. J. Taxation, 9. 70 1 4.
        A998llao~8 tu ro88rvta are therrfore l88888able until
        exempted         b     lx9rt88    rrfrroaoo     I.8 a debt rtatuta        8uoh
        a8 Art.        7117.’
                 Conrrqu8atlf, in           ln8ver to
                                    vour rroond quertlon, JOU
6p8 r88p@OtfUll~               ,bdVl884   8hould not bo per-
                                          that   the   t8xppr
&ted to drduot tht amount owed for foderrl lnoome and lxct88
pafit taxer from it8 boOOUnt8 bti bill8 rroolvablo in dtter-
dairy the mount 0s it8 taxable ptrronal proprrty.
         Trurtlag that the foregoing 8atl8r8otorlly8OIV0l’l
lour lnqulrla8,v8 are
                                                                Ver7    truly 70~8
e:&                                                     T?FG



 c.1. .:-‘::li   cl.::’ ,.. ,.I.   .
                                                                       R. %an    Woorhead
                                                                                A88irtUkt
2DNrdb
Bnolorurr
