Did documentary stamp tax apply when an individual transferred stock in corporations that had acquired Florida real property before July 1, 2009?

Plain-English summary

Florida ruled that an individual's transfers of majority stock interests in two corporations were not subject to documentary stamp tax under the entity-interest transfer provision.

One corporation had acquired a Florida office building in July 2002, and the other had acquired a Florida shopping plaza in February 2000. Full documentary stamp tax had been paid when each deed was recorded. Both properties were mortgaged when the shareholder later transferred stock.

The cited provision applied when an entity acquired Florida real property after July 1, 2009, and a compensated ownership-interest transfer occurred within three years. Because both corporations acquired their properties before that date, the stock transfers were outside the provision.

What this means for you

Entity-interest transfer tax requires a timeline analysis. Identify when the entity acquired Florida property, when ownership interests moved, whether consideration passed, and whether the transfer falls inside the statutory period.

Common questions

Did the existing mortgages make the stock transfers taxable? No, under this ruling.

Why was no tax due? Both property acquisitions predated July 1, 2009.

Citations and references

• Fla. Stat. § 201.02(1)(b), as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09B4-009

Original ruling text

SUMMARY
QUESTION: Is Florida’s documentary stamp tax as imposed under paragraph 201.02(1)(b), F.S., due
on a specific transfer of an individual’s stock interests in a legal entity.
ANSWER: It is determined that documentary stamp tax as imposed under paragraph 201.02(1)(b),
F.S., is not due on the subject transfers of the stock interests in the legal entity.
December 24, 2009

Re:

Technical Assistance Advisement No. 09B4-009
Documentary Stamp Tax – Transfer of stock
Paragraph 201.02(1)(b), F.S.
XXX (“CORP A”)
XXX (“CORP B”)

To whom it may concern:
This is in response to XXX’s letter dated XXX requesting a Technical Assistance Advisement
regarding application of Florida’s documentary stamp tax as imposed under paragraph 201.02(1)(b),
Florida Statutes (F.S.), on the transfer of stock interest in corporations that own encumbered Florida
real property. This response to your request constitutes a Technical Assistance Advisement under
Chapter 12-11, Florida Administrative Code (F.A.C.), and is issued to you under the authority of s.
213.22, F.S.
Facts as Presented by Petitioner
CORP A owns a commercial office building in XXX County, Florida, which it acquired for
consideration in July, 2002. Documentary stamp tax based on the full purchase price was paid at the
time the deed that transferred the property to CORP A was recorded.
CORP B owns a commercial shopping plaza in XXX County, Florida, which it acquired for
consideration in February, 2000. Documentary stamp tax based on the full purchase price was paid at
the time the deed that transferred the property to CORP B was recorded.
On XXX, the individual that owned the majority stock interest in CORP A and CORP B, transferred
his stock interests in the entities to XXX. At the time of the transfers, the properties were subject to
mortgages.
Copies of the deeds that transferred the real properties to CORP A and CORP B were provided
for review. The deed that transferred property to CORP A was witnessed and notarized on XXX, and
the deed that transferred property to CORP B was witnessed and notarized on XXX.
Request for Advisement

You request a determination by the Department of Revenue whether documentary stamp tax as
imposed under paragraph 201.02(1)(b), F.S., is due on the XXX,
transfers of the individual’s stock interests in CORP A and CORP B.
Law and Discussion
Paragraph 201.02(1)(b), F.S., imposes documentary stamp tax on the transfer of an interest in a
legal entity when the interest was transferred for consideration, the legal entity owns Florida real
property that it acquired after July 1, 2009, and the transfer of the interest in the legal entity occurred
within 3 years of the date the legal entity acquired the real property.
Position of the Department
It is determined that documentary stamp tax as imposed under paragraph 201.02(1)(b), F.S., is
not due on the subject transfers of the stock interests in CORP A and CORP B, since the real properties
were acquired by the legal entities before July 1, 2009.
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. We understand from
XXX’s letter of November 25, 2009, that only the names, addresses and taxpayer identification
numbers need to be deleted from the request for Technical Assistance Advisement, the backup material
and this response.

If additional deletions are required, please 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,

Charles T. Phillips
Revenue Program Administrator
Technical Assistance and Dispute Resolution
CTP/tlg
Record ID:73300