Did Florida deed tax apply when two partnerships converted and merged under Delaware law without deeds?

Plain-English summary

Florida documentary stamp tax did not apply if the conversions and merger vested the real property by operation of Delaware law without any deed. The two Florida general partnerships planned to convert into Delaware limited partnerships and then merge, with one surviving entity.

The conclusion required full compliance with the governing conversion and merger statutes. It also assumed the partnerships held fee-simple record title before conversion and that the merger documents made Delaware law govern the survivor.

What this means for you

The result turned on whether a deed was legally required. A statutory conversion or merger that automatically vests property was treated differently from a transaction requiring execution and delivery of a deed.

Common questions

Q: Did recording merger documents trigger deed tax? No, on the approved facts, because title vested by operation of law without a deed.

Q: Would the result apply if governing law required deeds? No. The ruling made absence of a deed requirement an express condition.

Q: Did record ownership matter? Yes. The Department assumed both partnerships held fee-simple record title before conversion.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax on deeds
• Fla. Stat. §§ 620.8902, 620.8904-620.8906, 620.204 — Florida partnership provisions
• Delaware Revised Uniform Limited Partnership Act §§ 17-211, 17-217 — governing statutes cited
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B4-013

Original ruling text

SUMMARY

QUESTION: Is the documentary stamp tax imposed on deeds due
upon conversion of the Partnerships into separate nonFlorida limited partnerships pursuant to non-Florida
Revised Uniform Limited Partnership Act, also on the merger
of those entities pursuant to non-Florida Revised Uniform
Limited Partnership Act, or on recordation of the
conversion and merger documents?

ANSWER - Based on Facts Below: The conversion of
Partnerships into separate non-Florida limited
partnerships, and also the merger of those entities, and
recordation of the merger documents are not subject to tax
if the laws of the jurisdiction which govern the surviving
entities do not require deeds to transfer title to the real
property to the converted and merged entities. That is,
tax will not be due if the real property of the converting
and merging entities becomes the real property of the
surviving entity by operation of the law of the
jurisdiction which governs the surviving entity, without
any need to execute and deliver a deed.

Sep 13, 1999

Re: Technical Assistance Advisement No. 99(B)4-013
Documentary Stamp Tax; Mergers of General Partnerships
ss. 201.02, 620.8902 and 620.8904, F.S.
XXX (Partnership I)
XXX (Partnership II)

Dear :

This is in response to your recent request for a Technical
Assistance Advisement in which you ask if the Florida
documentary stamp taxes imposed by s. 201.02, F.S., are due on
the conversion of Florida partnerships into Delaware limited
partnerships and then on the merger of these partnerships.

Transaction Proposed by Petitioner

Partnership I and Partnership II both own real property
located in the State of Florida encumbered by certain financing
agreements. Under the proposed transaction, Partnership I and
Partnership II, each a Florida general partnership, would be
converted into Delaware limited partnerships. Immediately
following the conversions, Partnership I and Partnership II,
which will now be organized as Delaware limited partnerships,
will be merged or consolidated. The surviving limited
partnership will be Partnership I.

In order to effectuate the consolidation, the partnerships
will rely on laws of Delaware.

Requested Ruling

Petitioner respectfully requests a binding opinion as
follows:

Is the documentary stamp tax that is imposed on deeds by s.
201.02, F.S., due upon conversion of the Partnerships into
separate Delaware limited partnerships pursuant to section
17-217 of the Delaware Revised Uniform Limited Partnership
Act, on the merger of those entities pursuant to section
17-211 of the Delaware Revised Uniform Limited Partnership
Act, or on recordation of the conversion and merger
documents?

Discussion and Law

The tax levied by s. 201.02(1), F.S., is an excise tax on
deeds, instruments, or writings that transfer any interest in
real property. The tax rate is 70 cents per $100 of
consideration. Consideration is not limited to money paid or to
be paid, the discharge of an obligation and the amount of any
mortgage, purchase money mortgage, or other encumbrance. When
the consideration is other than money, the consideration is
presumed to be equal to the fair market value of the real
property being transferred.

Section 620.8902, F.S., provides for conversion of a
partnership to a limited partnership. Section 620.8904(2)(a),
F.S., provides that when a conversion takes effect, title to
all real property owned by the converting partnership shall be
transferred by deed to the converted entity. However,
s.620.8904(1)(a), F.S., provides that a partnership that has
been converted to a limited partnership is for all purposes the
same entity that existed before the conversion.

Pursuant to Section 17-217 of the Delaware Revised Uniform
Limited Partnership Act, a general partnership may convert to a
Delaware limited partnership, in accordance with the procedures
prescribed therein. The surviving partnership resulting from
the merger or consolidation must file a certificate of merger or
consolidation in the office of the Delaware Secretary of State.
Upon the merger or consolidation becoming effective, all of the
real property owned by converting partnership is vested in the
converted limited partnership. The statute does not express any
requirement for a deed.

Sections 620.201(2), 620.8905 and 620.8906, F.S., which
permit the merger of Florida general partnerships and Florida
limited partnerships, do not specifically address which
jurisdiction_s laws will govern the vesting of title in the
surviving entity when an out of state entity is involved in the
merger. Section 620.8905, F.S., states that pursuant to a plan
of merger, a partnership may be merged with one or more
partnerships or limited partnerships. According to s.
620.8906(1)(b), F.S., title to all real property owned by each
of the merged partnerships or limited partnerships must be
transferred by deed to the surviving entity. See also s.
620.204(1)(b).

Pursuant to Section 17-211 of the Delaware Revised Uniform
Limited Partnership Act, one or more limited partnerships may
merge or consolidate with or into one or more other Delaware
limited partnerships in accordance with the procedures
prescribed therein. The surviving partnership resulting from the
merger or consolidation must file a certificate of merger or
consolidation in the office of the Delaware Secretary of State.

In connection with such a merger or consolidation, the rights or
interests in the limited partnerships that are constituent
parties to the merger or consolidation may be exchanged for, or
converted into cash, property, rights or securities of, or other
interests in their surviving or resulting partnership. Upon the
merger or consolidation becoming effective, all of the real
property owned by each of the limited partnerships that is a
party to the transaction is vested in the surviving or resulting
partnership. The Delaware statute does not state that a deed is
required.

Department's Response

Based on the foregoing authorities and the facts presented,
the conversion of Partnership I and Partnership II into separate
Delaware limited partnerships pursuant to section 17-217 of the
Delaware Revised Uniform Limited Act, the merger of those
entities pursuant to section 17-211 of the same Act, and
recordation of the merger documents, are not subject to tax
under s. 201.02, F.S., if the laws of the jurisdiction which
govern the surviving entities do not require deeds to transfer
title to the real property to the converted and merged entities.
That is, tax will not be due if the real property of the
converting and merging entities becomes the real property of the
surviving entity by operation of the law of the jurisdiction
which governs the surviving entity, without any need to execute
and deliver a deed. Each of the requirements of the applicable
conversion and merger statutes must have been complied with.

This conclusion is based on the assumption that the real
property at issue was owned in fee simple, as shown by record
title, by Partnership I and Partnership II prior to the
conversions, and that the documents of merger state that the
surviving entity is to be governed by Delaware law.

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 advise 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,

Baldan E. Sulker
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Office of General Counsel

BES/mh