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