Untitled Texas Attorney General Opinion ( 1943 )

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