Tax questions pertaining to the Maine Capital Corporation

MAINE STATE LEGISLATURE The following document is provided by the LAW AND LEGISLATIVE DIGITAL LIBRARY at the Maine State Law and Legislative Reference Library http://legislature.maine.gov/lawlib Reproduced from scanned originals with text recognition applied (searchable text may contain some errors and/or omissions) Jerome F. C'-0ldberg, Esq. Bernstein, Shur, Sawyer & Nelson 1 !vbnunent Square Portland, ME 04101 Dear Jerry: August 31, 1979 Subject to the qualifications set forth in Steven Wright's ~~t 6, 1979 letter to you as to the expression of this office's views on your questions pertaining to the Maine Capital Corporation, I am replying to the two tax questions posed in your June 28, 1979 letter. You restated the first tax question as follows: whether persons other than subscribers of original issue stock will be entitled to the tax credit set forth in Title 36. There are three sections in the Maine Incare Tax Law directly applicable to credits allowed against the Maine Inccrne Tax for the anount of any investment in the Maine Capital C'.orporation, to wit; 36 M.R.S.A. § 5129 (the credit allowed resident individuals), 36 M.R.S.A. § 5167 (the credit allowed a resident estate or trust), and 36 M.R.S.A. § 5202 (the credit allowed taxable corporations). Subsection 2, Paragraph C of each of these cited sections reads: "The credit allowed tmder this section shall be available only to subscribers in the ccmoon stock of the Maine Capital Corporation." There are several definitions of a subscriber to stock. It Appears that the definition in Latimer v. Bennett, 139 S.E. 570 (1927), of .~ subscriber is applicable. "A subscriber is one who becanes bound by subscription to the capital stock of a corporation." Id (!572 'Subscription' in tum. has been defined :In reference to c,q_pital stock as: "A written contract by which one engages to take and pay for capital stock of a corporation, ... 11 Black's Law Dictionary, 4th Ed. , P. 1596 -2- In lir,ht of these definitions, I have concluded that a transferee purchasing stock fran a subscriber is not a subscr:Lber, and thus, the credit carmot extend to transferees. I would note that your question as restated refers to original issue stock. I have assured that you rrean by the tenn "orip:inal issue stock" any issue of canm::m stock to be issued by the Maine Capital Corporation for which subscriptions are to be made, and that you are not referring only to the first issue of corrmon stock of the Maine Capital Corporation for which subscriptions are made. If my assuription is correct, niy anmver to your question as restated is that no persons other than subscribers of original issue stock can be entitled to the tax credit set forth in Title 36. In respect to your second tax question as to whether an estate succeeds to the interest of a deceased in:vestor for any remaining available tax credit, it is my view an estate does not so succeed. The only tax credits available to estates and trusts are those in ¼hich a resident estate or trust is the subscriber to the ca.TI:OCJn stock of the }1aine Capital Corporation. 36 M.R.S.A. § 5167, sub-§ 2, , C. I trust the foregoing may be of assistance to you. Sincerely, Jerome S. 't-'fab.1S Assistant Attorney C'reneral JSM:cc