Historically, did a no-consideration transfer of unencumbered commercial property from its sole owner to the owner's LLC owe more than minimum documentary stamp tax?

Plain-English summary

This ruling is obsolete and should not be used as current Florida documentary-stamp-tax guidance. The Department added an official notice directing readers to Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005).

Historically, TAA 04B4-004 concluded that only the minimum documentary stamp tax applied when one owner transferred improved, unencumbered Florida commercial property to a Florida LLC that the same owner wholly owned.

The proposed transfer had three central facts:

• The property had no mortgage or other encumbrance.
• The LLC paid no consideration.
• The LLC issued no membership interest in exchange for the deed.

The Department's former reasoning

Section 201.02 taxed deeds based on consideration, including money, discharged obligations, mortgages, liens, or other encumbrances. The Department relied on Kuro, Inc. v. Department of Revenue, where a transfer of unencumbered property to a solely owned corporation was treated as having no consideration because beneficial ownership remained the same and no shares were issued.

Applying that reasoning, the 2004 advisement said the deed to the wholly owned LLC was subject only to minimum tax.

Why the page does not give a current answer

The Department later marked the TAA obsolete and named the 2005 Crescent Miami Center decision. The obsolete banner means the historical Kuro-based conclusion cannot safely answer whether a similar transfer is taxable today.

What this means for you

Property owners and LLCs

Do not use this TAA to record a current transfer. Obtain current documentary-stamp-tax advice based on the deed, debt, consideration, ownership structure, and current authorities.

Title companies and closing professionals

The absence of a mortgage or cash payment does not make this obsolete ruling a valid current exemption source. The official warning should control any reliance decision.

Accountants and tax professionals

The page is useful only as historical context showing the Department's pre-Crescent position. It is not affirmative guidance for present transactions.

Common questions

Q: What did the 2004 TAA originally conclude?
A: Only minimum documentary stamp tax applied on the stated no-consideration, unencumbered transfer.

Q: Did the LLC issue a membership interest for the property?
A: No. The favorable historical conclusion expressly assumed it did not.

Q: Is that conclusion still reliable?
A: No. The official PDF labels the TAA obsolete and cites Crescent Miami Center.

Q: Does this page decide the current tax on a similar deed?
A: No. Current treatment requires current-law analysis.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax on deeds and consideration
• Fla. Admin. Code rr. 12B-4.013(7), 12B-4.014(2) — rules cited in the advisement
• Kuro, Inc. v. Department of Revenue, 713 So. 2d 1021 (Fla. 2d DCA 1998) — historical authority used by the TAA
• Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005) — case named in the official obsolete notice
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04B4-004

Original ruling text

Obsolete: See Crescent Miami Center, LLC v. Department of Revenue,
903 So.2d 913 (Fla. 2005)

SUMMARY

QUESTION: Will a transfer of unencumbered commercial
property by the sole member to the LLC be subject to tax?

ANSWER - Based on Facts Below: In light of the ruling of
Kuro, the transfer will only be subject to minimal
documentary stamp tax.

Mar 15, 2004

Re: Technical Assistance Advisement No. 04B4-004
Documentary Stamp Tax-Conveyance of Unencumbered Property
Section 201.02(1), F.S.
Rule 12B-4.014(2) and 12B-4.013(7), F.A.C.
XXX (hereinafter Taxpayer)
XXX (hereinafter LLC)

Dear :

Your letter requesting a Technical Assistance Advisement
has been referred to this office for response. The specific
scenario for which advice has been requested is summarized
below.

Facts as Presented by Petitioner

The Taxpayer is the sole owner of improved and unencumbered
commercial property in Florida. The Taxpayer is the sole member
of a Florida limited liability company and intends to transfer
the properties to the limited liability company without
consideration.

Request for Advisement

A ruling is requested (a) based upon the facts as set forth
above and (b) the case of Kuro, Inc. v. Department of Revenue,
713 So.2d 1021 (1998), that the transfer of the properties will
not be subject to Florida documentary stamp tax, or any
documentary stamp surtax, other than the minimum tax imposed
under Chapter 201 of the Florida Statutes.

Provisions of Law and Discussion

Section 201.02, (1), F.S, imposes tax on deeds that convey
real property or interest in real property. The consideration
for the deed includes, but is not limited to, money paid or to
be paid, discharge of an obligation, mortgage, purchase money
mortgage lien or other encumbrance on the property conveyed. If
the consideration is property other than money, the
consideration is presumed to be equal to the fair market value
of the real property being conveyed.

In the case of Kuro, Inc. v. Department of Revenue, 713
So.2nd 1021 (Fla. 2nd DCA 1998), the court ruled there was no
consideration for the transfer of unencumbered real estate from
a father and son to their solely owned corporation. No shares
of stock were issued in exchange for the real property conveyed
by the deed. The court reasoned that the beneficial interest in
the property remained the same. The court decided that the deed
was only subject to minimal documentary stamp tax.

Position of the Department

In light of the ruling of Kuro, the transfer of
unencumbered property from the Taxpayer to the limited liability
company, of which the Taxpayer is the sole member, will only be
subject to the minimum tax. This assumes that no membership
interests in the LLC were issued in exchange for the property.

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, F.S. 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 than
expressed in this response.

You are further advised that this response, your request
and related backup documents 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,

Celestine Grantham
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Office of General Counsel

CG/mh