What did now-obsolete Florida TAA 99B4-015 say about a trust's deed to its limited partnership?

Plain-English summary

The Florida Department of Revenue now marks this ruling obsolete. The official text directs readers to Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005), so the original holding should not be treated as current guidance.

The original 1999 ruling concluded that a deed from a revocable trust to a limited partnership was taxable on the property's full fair market value. It reasoned that the partnership was a separate entity, the grantor no longer owned the specific real property after the transfer, and the partnership interests increased in value.

What this means for you

This page preserves the historical ruling but flags the Department's own obsolescence notice. A present-day trust-to-partnership deed requires analysis under the later case and current law, not reliance on this TAA's original conclusion.

Common questions

Q: Is the original fair-market-value holding current? The official source says the ruling is obsolete, so it should not be relied on as current guidance.

Q: Why did the 1999 ruling tax the deed? It treated the partnership as separate from its partners and the increase in partnership-interest value as consideration.

Q: What later authority does the source identify? Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005).

Citations and references

• Fla. Stat. § 201.02(1) — deed tax applied in the original ruling
• Fla. Admin. Code r. 12B-4.013(10) — real-property contributions to partnerships
• Fla. Stat. §§ 620.149, 620.156, 620.186, 620.8201, 620.8501 — partnership law cited
• Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005) — later authority named by the official obsolescence notice
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B4-015

Original ruling text

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

SUMMARY

QUESTION: Is the documentary stamp tax imposed on deeds due
upon conveying the property from the trust to the
partnership? If so, would documentary stamps be due on the
percentage of the partnership interests or would
documentary stamps be due on the full fair market value of
the real property conveyed?

ANSWER - Based on Facts Below: The deed to the partnership
is taxable, and the amount of the tax is based on the fair
market value of the property.

Sep 24, 1999

Re: Technical Assistance Advisement No. 99(B)4-015
Documentary Stamp Tax/Transfer of Real Property to a
Partnership
Section 201.02(1), F.S., and Rule 12B-4.013(10), F.A.C.

Dear :

This is in response to your recent request for a Technical
Assistance Advisement in which you ask if the documentary stamp
taxes imposed by s. 201.02, F.S., apply to a deed conveying real
property from a trust to a limited partnership.

Facts Presented by Petitioner

Certain real property located in the State of Florida is
owned by a revocable living trust. The trustee is the sole
beneficiary.

For purposes of privacy and convenience, the trust desires
to hold title to the property in the name of a limited
partnership. As a result, it contemplates conveying the property
to the partnership. No consideration in the form of money is to
be paid by the partnership.

Under the partnership agreement, the trust is the general
partner and owns a 99.9% interest in the partnership. The
individual who is the trustee and sole beneficiary of the trust
is the sole limited partner, and personally owns the remaining
interest in the partnership.

The partnership was formed in 1997, and is to continue
until the earliest of certain events described in the
partnership agreement. According to the partnership agreement,
the partnership is to engage in the business of owning and
operating a mobile home park in the State of Florida.

The partners have contributed capital in proportion to the
partnership interests. An individual capital account is to be
maintained for the general partner and the limited partner. The
capital of each partner consists of that partner's original
contribution of capital, increased by additional capital
contributions and by that partner's share of partnership income,
and decreased by distributions in reduction of partnership
capital and by that partner's share of partnership losses, all
in a manner consistent with the Internal Revenue Code. Net
profits of the partnership are to be allocated between the
partners, and net losses are to be borne proportionately as
follows: the trust, X%, and the individual beneficiary, X%.

Requested Ruling

The trust requests a binding opinion as follows:

Is the documentary stamp tax imposed on deeds by s. 201.02,
F.S., due upon conveying the property from the trust to the
partnership?

Considering that the trust grantor owns X% of the limited
partnership grantee, would only minimum documentary stamps be

due? Or, would documentary stamps be due on X% of the fair
market value of the property, since the individual limited
partner owns only X% of the partnership interests? Or, would
documentary stamps be due on the full fair market value of the
real property conveyed?

Discussion and Law

Section 201.02(1), F.S., imposes an excise tax on deeds and
other written instruments that convey any interest in real
property. The amount of the tax is 70 cents on each $100 of the
consideration for the real property interest. Furthermore, the
statute provides that consideration is not limited to money,
obligations discharged, or the amount of mortgages or other
encumbrances (whether or not the underlying indebtedness is
assumed). When there is consideration other than money,
consideration is presumed to equal the fair market value of the
real property interest conveyed.

Rule 12B-4.013(10), F.A.C., provides that a conveyance of
real property by a partner in exchange for an interest in a
partnership, or where the value of the partner's interest in the
partnership is increased by the conveyance, is taxable. There
is a presumption that the consideration is equal to the fair
market value of the real property interest conveyed.

A limited partnership is an entity separate and distinct
from its partners. Sections 620.186, and 620.8201, F.S.
Furthermore, s. 620.156, F.S., states that property brought into
or acquired by a limited partnership is property of the limited
partnership. Partnership property is owned by the partnership as
an entity, and not by the partners as co-owners. A partner has
no interest in specific partnership property. Sections 620.186,
and 620.8501, F.S. A partner's interest in the limited
partnership is personal property. Section 620.149, F.S.

In Re: the Petition of Helen Gladman, DOR No. 96-002 DS,
per curiam affirmed, 693 So.2d 34 (Fla. 1st DCA 1997), held that
a deed of unencumbered real property to a limited partnership
was supported by consideration, where that deed was executed in
consideration for the issuance of a partnership interest and/or

resulted in an increase in the value of that partnership
interest. Similarly, Dean v. Pinder, 538 A.2d 1184 (Md.1988),
held that actual consideration included the increase in the
value of the ownership interest of the sole owner of a separate
legal entity.

Determination

It is clear from the above law, and all the facts and
circumstances, that the deed at issue is taxable under s.
201.02(1), F.S., based upon the fair market value of the real
property conveyed by the deed. The deed conveys an interest in
real property to the limited partnership, which is an entity
separate and distinct from its partners. (Note that, by
statute, the partners have no interest in this specific
partnership property.) The conveyance is not in the nature of a
gratuitous transaction, whereby the grantor makes a purely
charitable donation, for example, to a not-for-profit entity,
and whereby the grantor's economic net worth declines. Rather,
the grantor conveys real property, and in exchange an increase
in the value of the partnership interests (personal property) is
received. The amount of the increase in value of personal
property received in exchange for the real property is the fair
market value of the property. There is no requirement that the
consideration for the conveyance go directly or only to the
grantor of the real property interest.

The result does not change if, because the trust is a
revocable living trust, the trust settlor is considered to be
the owner of real property prior to the deed at issue. The
analysis and result is the same because the partnership is also
a separate legal entity from the trust settlor. The trust
settlor has no interest in the specific partnership property.
After the conveyance, the trust settlor would own no interest in
the real property conveyed. Instead, as above, the grantor
conveys real property, and in exchange an increase in the value
of the partnership interests (personal property) is received.

Therefore, the deed to the partnership is taxable, and the
amount of the tax is based on the fair market value of 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,

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