Was more than minimum Florida documentary stamp tax due when family members contributed 17 unencumbered parcels to a partnership in unchanged ownership proportions?

Plain-English summary

Florida required only minimum documentary stamp tax when the family contributed 17 unencumbered parcels to a family limited partnership without changing anyone's proportionate ownership.

The parent first proposed giving each of two children an undivided interest in the real and personal property. The children and parent would then contribute their respective interests to the partnership. After contribution, each partner's partnership percentage would match that person's percentage interest in the property immediately before the transfer.

The ruling also relied on these facts:

• the Florida parcels had no mortgage or lien;
• no purchaser was involved under the cited Kuro decision;
• no additional partnership units would be issued because of the conveyances; and
• the deeds would state nominal and other good and valuable consideration.

Why encumbrances mattered

Section 201.02(1) imposed tax based on consideration for a real-property conveyance. Its quoted definition of consideration included money, discharge of an obligation, and any mortgage, purchase-money lien, or other encumbrance, whether or not the recipient assumed the debt.

Because these parcels were unencumbered and the partners' economic percentages stayed the same, the Department found the transfers within the Kuro decision's parameters and imposed only minimum tax.

What this means for you

This result was tied to both continuity of ownership and absence of debt. A family partnership transfer that shifts percentages, issues additional interests, includes a purchaser, or moves mortgaged property does not match the facts approved here.

Common questions

Q: Did contributing the parcels to the partnership trigger tax based on their appraised value?
A: No. On the stated facts, only minimum documentary stamp tax applied.

Q: Why was the family gift step important?
A: It established the ownership percentages that the partners then carried into the partnership unchanged.

Q: Were the parcels mortgaged?
A: No. All 17 parcels were unencumbered by a mortgage or lien.

Q: Did the partnership issue new units for the transfer?
A: No. The ruling expressly stated that no additional units would be issued.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax and the definition of consideration
• Kuro v. State of Florida, Department of Revenue, 713 So. 2d 1021 (Fla. 2d DCA 1998) — cited parameters for a conveyance without a purchaser

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04B4-010

Original ruling text

SUMMARY
QUESTION: Will documentary be owed on the conveyances to a family limited partnership in the case where both real
and personal property are being transferred where the resulting ownership percentage for each partner will be the
same as prior to the transfer? Three Partners, A, B and C, Partner C will transfer an undivided interest in certain
assets, including 17 parcels of land, to Partners A and B, resulting in each partner then owning a pro rate interest in
the partnership in the same proportion as their interests in the real and personal property immediately prior to the
transfer.
ANSWER - Based on Facts Below: Since the properties are not encumbered, and, once the conveyances from
Partner C to Partners A and B occur, the properties will be owned by the partners in the same percentage prior to the
conveyances and will be transferred into the partnership in the same proportions, the conveyances are only subject to
minimum tax.

December 2, 2004

Re: Technical Assistance Advisement No. 04B4-010
Documentary Stamp Tax
Transfer of Real Estate to Family Limited Partnership
Section 201.02(1), F.S.
XXX ("Taxpayers/Partners A, B, and C")
XXX ("Partnership")
Dear:
This is in response to your request for a Technical Assistance Advisement dated November 1, 2004, as to the
taxability of a conveyance of Property from Taxpayers to their family limited partnership.
Facts Presented by the Petitioner
Partner A, Partner B, and Partner C are individuals. Partners A and B are the children of Partner C. Partner C
owns assets having a value of approximately $XX million, which includes seventeen parcels of Florida real estate that
are unencumbered by any mortgage or lien and are appraised at a cumulative total of approximately $XX million.
Partner C proposes to gift an undivided interest in all such assets, to include an undivided interest in each Florida
parcel, to Partners A and B. Thereafter, Partners A and B will transfer the above described gifted undivided interests,
and Partner C shall transfer her retained undivided interests, in the assets to the Partnership. Upon transfer, each
Partner shall hold a pro rata interest in the Partnership in the same proportion as their interests in the real and
personal property immediately prior to the transfer. Specifically, Partners A and B, each of whom owns a .5% interest
as general partner and a .05% interest as limited partner in Partnership, will each contribute their interests in the
properties that are valued at approximately $XX to the Partnership and Partner C will transfer the real and personal

property as her 98.9% interest therein. There is no purchaser involved, as such term is defined in the case of Kuro v.
State of Florida, Department of Revenue, 713 So.2d 1021 (Fla. 2nd DCA 1998). No additional units will be issued as a
result of such conveyance. The deeds of conveyance will recite that the transfer is made in consideration of the sum
of $XX and other good and valuable consideration. Accordingly, it is your clients’ intention to pay minimum
documentary stamp tax in the amount of $.70 per $100 per deed.
Requested Ruling
Taxpayer requests the Department's advice as to whether documentary stamp tax will be owed on the
conveyances described herein in an amount greater than the above referenced minimum tax.
Law and Discussion
Section 201.02(1), F.S., provides in pertinent part:
On deeds, instruments, or writings whereby any lands, tenements, or other real property, or any interest therein, shall
be granted, assigned, transferred, or otherwise 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 fractional part 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 encumbrance, whether or not the underlying indebtedness is assumed. If the consideration paid or given in
exchange for real property or 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.
Conveyances of real property are generally taxable per s. 201.02(1), F.S. The above described transfers of
properties into the family limited partnership fall within the parameters of the Kuro decision, supra.
Department's Position
Since the properties are not encumbered, and, once the conveyances from Partner C to Partners A and B occur,
the properties will be owned by the Partners in the same percentage prior to the transfers and will be transferred into
Partnership in the same proportions, the conveyances are only subject to the minimum tax.
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,
Joy. B. Eldred, CPA
Tax Law Specialist
Technical Assistance and Dispute Resolution
JBE/mh