Did gifts of unencumbered property between nonprofit nonstock corporations require deed tax?

Subject

Conveyances of Real Property

Plain-English summary

The revised advisement concluded that the proposed deeds were not subject to documentary stamp tax. It replaced the earlier TAA 00B4-008 dated May 22, 2000. The deeds transferred three unencumbered Florida farm properties as charitable gifts between nonprofit nonstock corporations under common denominational control.

The recipient would issue no money, stock, promissory notes, obligations, or other consideration. The grantors' net worth would decrease rather than receiving a new or increased ownership interest.

What this means for you

The result depended on both absence of encumbrances and absence of consideration. Nonprofit status alone did not supply the analysis; the ruling examined what the grantors received and whether any debt burden accompanied the property.

Common questions

Q: Were the deeds taxable? No.

Q: Did the recipient issue stock or notes? No.

Q: Were the properties encumbered? No.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax on real-property conveyances
• Fla. Admin. Code r. 12B-4.014(2)(a) — gift of unencumbered realty
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00B4-008R

Original ruling text

SUMMARY

QUESTION: Is the conveyance of unencumbered real property
between nonprofit corporations subject to the documentary
stamp tax?

ANSWER - BASED ON FACTS BELOW: When the conveyance of
unencumbered property is being made from one nonprofit,
nonstock corporation to another as a gift, it is not
subject to the documentary stamp tax. The taxation of a
deed under s. 201.02(1), F.S., is based upon the
consideration given in exchange for real property or any
interest therein. In the case of nonprofit, nonstock
corporations, there is no consideration being given in
exchange for the properties.

             Jul 12, 2000

Re: Technical Assistance Advisement 00B4-008 Revised
Documentary Stamp Tax; Conveyances of Real Property
Section 201.02(1), F.S.
Rule 12B-4.014(2)(a), F.A.C.
XXX (hereinafter Corp. A)
XXX (hereinafter Corp. B)
XXX (hereinafter Corp. C)
XXX (hereinafter the three properties)

Dear :

This is in response to your request for a revised Technical
Assistance Advisement dated June 8, 2000, requesting technical
advice regarding the documentary stamp tax implications of
certain conveyances of real property in Florida.

     FACTS PRESENTED BY THE PETITIONER

XXX is a hierarchical denomination that generally holds its
United States investment real property through nonprofit,

Page 2

nonstock, nonmembership corporations, principally Corp. A and
Corp. C. XXX has recently decided generally to consolidate its
farm and ranch investment property in Corp. C. This
consolidation will include charitable gifts to Corp. C of
several Florida farm investment properties (the three
properties), currently held by Corp. A and Corp. B.

Corp. B and Corp. C are affiliated with XXX in that the
board of trustees of each corporation is appointed by and serves
at the pleasure of XXX. Corp. A is a non-Florida corporation
sole. The "incumbent" or XXX of Corp. A is the XXX of XXX.
Corp. A and Corp. B will remain in existence and have
substantial assets and operations after the proposed
conveyances. Corp. A, Corp. B, and Corp. C constitute "sister
corporations" under the common control of XXX.

Each of Corp. A, Corp. B, and Corp. C is exempt from
federal income tax and qualifies as an "integrated auxiliary" of
XXX. No stock, promissory notes, or monetary or other
consideration is being issued by Corp. C in return for the real
estate to be conveyed to it by Corp. A and Corp. B.

Deeds will be recorded to transfer the three properties.
You have enclosed copies of the deeds with your request. Some
minor changes to the deeds may be required prior to recording.

             RULING REQUESTED

XXX requests a determination that the proposed conveyances
of the three properties will not be subject to the documentary
stamp tax, since they are gifts of unencumbered realty from one
nonprofit, nonstock corporation to another without
consideration.

             DISCUSSION AND LAW

Section 201.02(1), F.S., states:

On deeds, instruments, or writings whereby any lands,
tenements, or other real property, or any interest therein,
shall be granted, assigned, transferred, or otherwise

Page 3

conveyed to, or vested in, the purchaser or any other
person by his or her direction, on each $100 of the
consideration therefor the tax shall be 70 cents. When the
full amount of the consideration for the execution,
assignment, transfer, or conveyance is not shown in the
face of such deed, instrument, document, or writing, the
tax shall be at the rate of 70 cents for each $100 or
fraction thereof of the consideration therefor. For
purposes of this section, consideration includes, but is
not limited to, the money paid or agreed to be paid; the
discharge of an obligation; and the amount of any mortgage,
purchase money mortgage lien, or other encumbrances,
whether or not the underlying indebtedness is assumed. If
the consideration paid or given in exchange for real
property or any interest therein includes property other
than money, it is presumed that the consideration is equal
to the fair market value of the real property or interest
therein.

Rule 12B-4.014(2)(a), F.A.C., provides "[a] conveyance of
unencumbered realty as a gift is not taxable."

In the case of the three properties, the grantor companies
will receive no stock or other intangible property interest.
This situation differs from the situation where an individual
conveys property to a corporation in exchange for either newly
issued stock or an increase in the value of his stock as a pre-
existing stockholder. The net worth of Corp. A and Corp. B will
be diminished, not increased, as a result of the conveyances.

          DEPARTMENT DETERMINATION

In this instant case, the conveyances are being made from
one nonprofit, nonstock corporation to another as a gift. The
taxation of a deed under s. 201.02(1), F.S., is based upon the
consideration given in exchange for real property or any
interest therein. The entities involved in the conveyances are
nonprofit corporations, and there is no consideration being
given in exchange for the properties. Thus, the deeds are not
subject to the documentary stamp tax under s. 201.02, F.S.

Page 4

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice, as specified in s. 213.22. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment from that
which is expressed in this response.

You are further advised that this response, your request
and related backup are public records under Chapter 119, F.S.,
and are subject to disclosure to the public under the conditions
of s. 213.22, F.S. Confidential information must be deleted
before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter

Sincerely,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Technical Assistance and Dispute Resolution
Office of the General Counsel

JE/mh