Case Information
*1 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 rep o rted AII inventory t At $155,872.18. Thlr Yith rrrpeat thi8 8ituatlon you h8re inquired rub- 8tAntiAlly a8 fO11OW8 :
(1) Uhothcr Zttma ot labor, overhead gen- err1 admiairtratlvb rxpe~es 8ro to be laoluded a8 items of 888tt8 ia rrrlving At taxable T81U8 Of the per8OMl property t bU8ioe88 tllteI’@8b, vhert *2 8. P8t &tdYICd8, plg8 p&ablt
8U8h proparty L8 in t&o procs88 OS hb rlc rtlon l u3 vhrrr tht forego- itaM hare born l ~ad.d in aoa- motloo ulth 8UOh frbrloatlon.
(2) Uhethor the tarprpr 8hOUld bo pormlttod to deduct the amount Ov8d for red0wi lnoome oad tx- tt88 JS'Ofit8 t&X88 fiw it8 8OOOWt8 8lAd bill8 rt- orivaok.
HO 8~Oii10 pOV181OM in the 8trtUtt8 Of thlr St8te drrl vlth the valuation of good8 in tht proar88 of irbrlo~tloa. IDytver, the gonorrl rtrtutorf porl8loM vlth to the re8peot &u8t:Oli Of &bW8OlUl pOmrtr MO l 8 iO11OV8:
"Arti 7174 . . ..Ptl.‘8olul ~OptrtJ VOry dt- 88rljation &All be valued at true aad full valua it8 in aonty.
"Art101t 7149.... The terr @true and full value', vherever urtd ba hold to U88n the fair market rhtll V81U8, la oMh, at th8 phOt vhtrt th8 pl'owrty to vhioh the tor8 18 applied 8bll be at the tirr OS @I- re88mettt, being the prloe uhiah OOUld ba obtelaed thertfol, tt &dV8tt 8t10, 8nd Wt 8t fOr8td OF 8Uo- t1oo 8alt.F
Yloreovtr , “narlret va1~8~ or *farir) urket valuog hrr bea deftned a8 "tht amount of roat~ thAt t per8013 d88irbg to 8011, but lrat bo\ab to do 80, Could, vlthin rra8oMbh tire, pooure foV 8uah prOprtJ tl'O8l pr8W uho dO8tit8 Bad i8 able buy, but l8 bound to gUl’Oht8t mount or auct$oa 8tiO.' 40 To%. J\P. 150. at priv&te eould~bo obtalaod 8tlt Aad not 8 ioroed prowrty. ft the trublr prOptHy w88t88.~; X0 Fklt V81U8, th8
Vhrrt it8 ma1 Or ilitria8i.o tU&8lJO88OF W8t 888088 8UOh &WOmrtt 8t Artlole 7211. &Id, l 8 18 Uid ia ‘IltX. J(P. 149, "IO& FatrLarlO V8lU0 18 aOt mentlOMd in 8tatUte (R. S., ht. 7206) that d~tfirre8 tht (but only in
rith rtrgeot 88t88Or,
Iatrlnrlo worth; but thl8 18 done on17 when d lf rppe858 t&t the property la qutrtioa brr no wrkrt value." *3 ht Rdvrrdr, page 3 worrblt 8.
Tha qUO8tiUlI of vhothor t&88 gOOd8 all be 881d urkot value fror vhleh thtlr true @ad full valw am -?r 8088 l 4et0FmiIWd 18 l qU08tIOa Of ftOt upoa vhloh thl8 dopartmtnt u got 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 l oolored hrrcovlth. COn88- V8 OF. urublr to 8tatm uhethrr th8 groptrt7 Ia QUt8- ,~&tl~, ason rhotid bo l 88088.d at It8 nrktt valw or at It8 real or ~trln810 Vallu. Eovev8r, you are r~rpotrull~ dVI8@6 that if th# QUalifItd OffiOkl8 dtt.rtiM thI8 WOgdrtr m88088d valw On J8IMr7 1, 8UOh PPOpWtr 8hOtid be taxtd at 8 -tit it8 sarkrt valw aooordlng to th8 above formuhe. On the other brad, ii rhould be deolded thlr th8t pot8t8804 no market- value on JUWPJ 1, the property
popertf &ould be ~rrrred and taxed at it8 “rul or latrln8lo value." 11 ua8t Tax48 Rot01 CO. 1. City Of El P880, 8U , the El PI80 Court Of Civil 4&W818 qqrored 8 Chtl'gt by t OVtr oourt to the r effect that;
'thr Peal or lntrln8lo value of property 18 rt- prorented br that 8Um Of ronty vhloh 18 fair 8qUiV- ltnt of ruch property. Tht proptr determlnatlon of of among the tlawntr th8t may b8 trken into oonrlberr- tion the location, 008t alrd ohrrotor 0r iXpOV8- rent81 hirtory, uat8, ir any, locrtlon a8 to Suture grovth of the Cltr, rale8 of djaorat property, If Any, the U808 to vhloh tht 18 DUt of vhleh mrtr it iWa8OolblY 8U8009tibl 0. (Eaplmsl8 added)
COr tart pUFpo888, thi8 18 the Only judiliil def%nltlon of the torn 'ro81 or l.ntrln8lc value" vhloh vt htvo found in the. 8888 hV Of thi8 St8t,, Uhilr thlr deSl.nltloa ~88 rormulated vith rompret tht vrluatlcm oi real woptrty, ve think 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 tht bOtrd 8qWlit@tiOfk in 88Mrt~illi&% the I'881 OC latrlnrlo vrlw 0r ptrrontlty. *4 4
MV8rd8, 986t ynablt to 8af_ to vhrt rxtant,~ir at all, ex- diture8 for labor, *to., will, la a prrtioular ca80, enter value of rob1 or la- - to a 6otar8laatloa either Of wrkrt ralw. It 18 pO88ibl0 VI ftti, t0 pO8it 8 8itWtiolr u vhloh 8uoh l Xptaditurtr rod4 b8 hl&lr 8i@kifiO@Iit~ eontrar;- iB vhioh ruch tXptnd;- vita, 000 OAI tt8ill i.M~iM 8 8itWtiOn ~~08 would have an l xtromoly nogli(llbla l rre0t upon the valua- (100 of tha truble px-operty, ~OOrt8btie8 8uOh 88 tb80, to- vhlah the VblWtlOll of propertg 18 a pther with the extent (U88tlOa 0s snot, prertnt our giviag a more detailed a8var to P~r rirrt iaquirr.
With rtrpeot to your reoond quartion, Article 7147 de- finer 'per8onal ptiopert~” for purporrr 0s taxatioa a8 lnoladlng, inter 8118:
II . . all rontyr At lntrrrrt, lthtr 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."
lit underrtaad from your ltttrrr that the trxpryer in quertlon olalu that it 18 entitled to dtduot the amount Of it8 fedtral lnoo8e and *xc088 profit8 trxer for tho prectdlrrg par f'ro~ it8 ooount8 8Pd bill8 racelvable la datarmlnlng the usount of it8 t8xablr ~r8onal property. If the taxpayer 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~ gaIn8t taxpayer, although the aorm811~ art a praftrred lI~blllt~, 8UCh tu88 are not E lad Of llablllt~ vhloh our OOlU't8 bad there ia othtr juri8dlOtlOn8 htr aonrldertd a8 an lndebtednerr. In Aopubllo In8. Go. v. E$hland Park ndont Sohool Dl8trlOt of Dallar County, et
'# 102 9. W. (2d7el&, the Supreu Court rtatrdr
,' 'Wo do think taxer are 'deduotlbla a8 a debt uhder Art1010 7147, R. 8. 1925. Se* uthorltio8, AbOW Olttd, AId th0 Oalt TU Corrri88iOn V. Hat- ~lonal J4elleablt Carting Cospaa
144 N. B. 604, 55 A. L R. 1448; :ki :%::io:!” IQ a 8Ub8eqUelkt 8Uit bttveen thr 8OY ptrtit8, l’t- rt od 18 162 3. Y. (24) (r8Ter8ed on other groundr, 1‘71 3, W. r 24)
5% 01~11 Appt818 rtiborated upon ihlr Vt aoaoludr taxer do not oorutltut8 80 ‘lrrd.bt.dat88’ within 9UrVl.V Of hPtlOh 7147 R. 8. ‘A8 obllgatlon t0 98J tUt8 do88 not Port upon any ooatraot rxprarr or Impllrd, or upoa the OOa8Wt 0s tht taxpapr, a tu not a debt In thr ordlnar~ 8t118t 0s VOrdJ althoryh a llabllIt~ obligation, **a.( 61 C. J. Taxation, 9. 70 1 4. A998llao~8 tu ro88rvta are therrfore 88888able until exempted b x9rt88 rrfrroaoo I.8 a debt rtatuta 8uoh a8 Art. 71 7.’
Conrrqu8atlf, in l n8ver to vour rroond quertlon, JOU 8hould bo per- 6p8 r88p@OtfUll~ ,bdVl884 that the t8xppr &ted drduot tht amount owed for foderrl lnoome and xct88 pafit taxer from it8 boOOUnt8 bti bill8 rroolvablo in dtter- dairy the mount 0s it8 taxable ptrronal proprrty.
Trurtlag that the foregoing 8atl8r8otorlly 8OIV0l’l lour lnqulrla8, v8 are
Ver7 truly 70~8 e:& T?FG
c.1. .:-‘::li cl.::’ ,.. ,.I. .
R. %an Woorhead A88irtUkt 2DNrdb Bnolorurr