As a developer, I acquired and re-subdivided an entire tract of land into a plaza, and I've been selling off individual parcels to different buyers over several years, with each sale under $1 million on its own. I'm willing to swear that I'm not selling this way to dodge the gains tax. Does my sworn no-avoidance-intent statement let me avoid aggregating all these sales together for New York's Real Property Transfer Gains Tax's $1 million threshold?

Plain-English summary

This tax no longer exists. New York's Real Property Transfer Gains Tax (former Article 31-B of the Tax Law) was a 10% tax on the GAIN from transferring New York real property where consideration was $1 million or more. It was repealed for any transfer occurring on or after June 15, 1996. This 1988 opinion is preserved here for historical and research value, not as current law.

Earltown Corp., a real estate developer, assembled an entire tract of land in Glens Falls -- bordered by Montcalm, Broad, Fielding, and Mission Streets -- over an extended period, then re-subdivided the whole tract into what became Broad Street Plaza. As the Plaza developed, Earltown progressively sold off individual parcels: Parcel #1 in August 1985 for $319,800 (to the City of Glens Falls Industrial Development Agency, on behalf of a professional-center partnership that leased the property back), Parcel #2 in December 1986 for $386,200 (similarly, to the IDA on behalf of a second related partnership), and Parcel #3 in June 1987 for $209,216 to Glens Falls National Bank and Trust Company. Parcels #1 and #2 were contiguous to each other; Parcel #3 wasn't contiguous to either. Earltown now proposed selling yet another parcel -- located between Parcels #2 and #3 -- to a completely different buyer.

Earltown argued there was no plan, written or oral, to structure these sales in a way designed to avoid the gains tax, and offered to submit a sworn statement to that effect, which the statute permits as a mechanism for avoiding aggregation of "partial or successive transfers." The Department rejected the argument on two grounds. First, citing binding Tax Appeals Tribunal and court precedent, it explained that the aggregation statute does NOT require proof of an actual intent to evade the tax -- a sworn statement isn't a magic bullet; the Department independently examines the transferor's pattern of conduct and the surrounding facts and circumstances to determine whether transfers were made "pursuant to a plan." Second, and decisively, the facts here spoke for themselves: Earltown had assembled the tract, actively re-subdivided it into a coherent development, and then sold off the resulting parcels in a relatively compressed timeframe -- exactly the pattern the aggregation rule is designed to catch. Because Earltown itself was the SUBDIVIDER (not merely a series of independent owners who happened to sell adjoining land), the Department held the relative contiguity or physical adjacency of each specific parcel at the time of its sale was irrelevant -- every sale carved out of the subdivided tract had to be aggregated together to test the $1 million threshold, with gains tax questionnaires due at least 20 days before each parcel sale, and tax owed retroactively across all prior sales once cumulative consideration crossed $1 million.

What this means for you

Developers subdividing and progressively selling off a single tract

Under this now-repealed tax, breaking a large development into individually-sold parcels over several years didn't dodge the $1 million aggregation threshold just because each sale, standing alone, stayed under it -- and a sworn statement of good faith wasn't enough to override a pattern that plainly showed a subdivision-and-sell plan.

Real estate attorneys advising developers on phased land sales

This opinion is a clear confirmation that the aggregation exception for "several transferors of contiguous or adjacent parcels" (used successfully in other opinions in this corpus, like TSB-A-93(10)R's aggregation analysis) simply doesn't apply when there's only ONE transferor who is ALSO the original subdivider -- contiguity between the parcels becomes irrelevant once that's established.

Accountants preparing gains-tax questionnaires for a phased development

The opinion's closing reminder -- that questionnaires must be filed at least 20 days before EACH parcel sale, and that tax becomes due RETROACTIVELY across all prior sales once the cumulative threshold is crossed -- is a critical compliance mechanic for any developer selling off a subdivided tract in stages.

Common questions

Q: Does this subdivider-aggregation rule still matter today?
A: Not under this specific tax -- it was repealed for transfers on or after June 15, 1996. Current New York real estate taxes have their own separate aggregation rules for phased developments.

Q: Why wasn't the sworn no-avoidance-intent statement enough on its own?
A: Because binding precedent established that the aggregation rule doesn't require proof of actual intent to evade the tax -- the Department looks at the transferor's overall conduct and the objective facts and circumstances, not just a self-serving affidavit of good intentions.

Q: Why didn't it matter that Parcel #3 wasn't contiguous to Parcels #1 and #2?
A: Because the contiguity-based aggregation exception only protects genuinely SEPARATE, independent transferors of adjoining land -- since Earltown was a single transferor who had subdivided the entire tract itself, the "several transferors" exception simply didn't apply, making contiguity between individual parcels irrelevant to the analysis.

Q: Can another developer selling off a similarly subdivided tract rely on this exact ruling?
A: No, apart from the repeal -- an Advisory Opinion binds the Department only as to the petitioner and facts presented, and this result depended on the specific pattern of Earltown's acquisition, subdivision, and progressive sales.

Citations and references

Statutes and regulations:

• former Tax Law § 1440.7 (aggregation of partial or successive transfers, unless the transferor(s) furnish a sworn statement that the transfers aren't pursuant to a plan to avoid the gains tax's coverage; subdividing real property is generally subject to aggregation, with a narrow exception for subdivided residential parcels)
• former 20 NYCRR § 590.43(a) (when sales by one transferor to multiple transferees are pursuant to a plan or agreement, consideration is aggregated to test the $1 million threshold; whether a plan exists depends on the transferor's intent as shown by conduct and surrounding facts)
• former 20 NYCRR § 590.43(g) (subdividing real property is generally subject to aggregation under former § 1440.7, except for subdivided parcels improved with residences used for residential purposes, other than cooperative/condominium plan transfers)
• former 20 NYCRR § 590.68(a), (b) (gains tax questionnaires must be filed at least 20 days before each parcel sale; once aggregate consideration from all sales within the tract reaches $1 million, gains tax is due based on the gain from all previous sales and each subsequent transfer)
• Matter of Thomas Iveli and Robert Sigmund, Tax App. Trib. Dec., February 23, 1988 (aggregation doesn't require proof of intent to evade the tax)
• Matter of Cove Hollow Farms, Inc. v. State Tax Comm'n, Sup. Ct., Albany County, October 1, 1987, McDermott, J. (same)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/real_prop_tran_ao_1988.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/real_property/a88_4r.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-88 (4) R
Real Property
Transfer Gains Tax
December 20, 1988

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M881011A

On October 11, 1988, a Petition for Advisory Opinion was received on behalf of Earltown
Corp., a New York Corporation located at 1 Broad Street Plaza, Glens Falls, New York, 12801.
The issue raised concerns the application of the Real Property Transfer Gains Tax imposed
by Article 31B of the Tax Law, (the gains tax) in the case of transfers of certain parcels of real
property and specifically the application of the aggregation clause found at section 1440.7 of such
Article in the case of such transfers.
The facts as presented by Petitioner are that Petitioner is engaged in real property
development and construction. Over an extended period of time, Petitioner acquired various parcels
of real estate which are shown on the survey map attached to the petition. The acquired parcels
essentially comprise the entire tract of land bordered by Montcalm St., Broad St., Fielding St., and
Mission St., as indicated on the survey map, with the tract of land known as Broad Street Plaza.
Also, as indicated by the survey map, Petitioner has re-subdivided the acquired tract of land.
Over a period of time since the acquisition of the land comprising Broad Street Plaza,
Petitioner has sold three parcels to other entities as the Plaza has progressed. The three conveyances
to date and consideration paid for each are as follows:
1)

Petitioner transferred parcel #1 to the City of Glens Falls Industrial Development
Agency by deed dated August 1, 1985. The transfer to the Industrial Development
Agency was made on behalf of Broad Street Professional Center General Partnership
I which simultaneously leased back the property. The consideration paid to Petitioner
for this transfer was $319,800.

2)

Petitioner transferred parcel #2 to the City of Glens Falls Industrial Development
Agency by deed dated December 18, 1986. The transfer to the Industrial
Development Agency was made on behalf of Broad Street Professional Center
General Partnership II which simultaneously leased back the property. The
consideration paid to Petitioner for this transfer was $386,200.

3)

Petitioner transferred parcel #3 to Glens Falls National Bank and Trust Company by
deed dated June 25, 1987 for consideration of $209,216.

Parcels #1 and #2 as described above are contiguous with one another but not with parcel #3.

TP-9 (9/88)

-2­
TSB-A-88 (4) R
Real Property
Transfer Gains Tax
December 20, 1988
At the present time, Petitioner is proposing to transfer the parcel of land between parcels #2
and #3 to a transferee other than the transferees of parcels #1, #2, and #3.
Petitioner contends that there was and is no plan, written or oral, to transfer these parcels in
such a manner so as to avoid imposition of the gains tax. Petitioner is willing to submit a sworn
statement that the transfers were not made pursuant to a plan or agreement. Thus, Petitioner contends
that these transfers should not be aggregated.
Gains Tax regulations section 590.43 states in pertinent part as follows:
Question:
How is the aggregation clause of section 1440.(7) of the
Tax Law, which states in part:
"...Transfer of real property shall also include partial or successive
transfers, unless the transferor or transferors furnish a sworn
statement that such transfers are not pursuant to an agreement or plan
to effectuate by partial or successive transfers a transfer which would
otherwise be included in the coverage of this article, and the transfer
of real property by tenants in common, joint tenants or tenants by the
entirety, provided that the subdividing of real property and the sale of
such subdivided parcels improved with residences to transferees for
use as their residences, other than transfers pursuant to a cooperative
or condominium plan, shall not be deemed a single transfer of real
property."
applied in the case of:
(a)
One transferor, more than one transferee, contiguous or adjacent parcels of
land?
Answer:
When the sales are pursuant to a plan or agreement, the consideration for each
parcel is to be aggregated in determining whether the consideration is $1 million or more.
A transferor may furnish, along with his questionnaire, a sworn statement that the sales are
not pursuant to an agreement or plan to effectuate by partial or successive transfers a transfer
which would otherwise be included in the coverage of Article 31B.
Whether the sales are pursuant to a plan or agreement depends on the intent of the transferor
at the time of each transfer. The department will examine the transferor's intention, as
manifested by his actions and the facts and circumstances surrounding the transfers, to ensure
the transfers should not be aggregated.
Also, gains tax regulations section 5490.43(g) states in pertinent part as follows:

-3­
TSB-A-88 (4) R
Real Property
Transfer Gains Tax
December 20, 1988

Question:
Will the subdividing of real property be subject to aggregation pursuant to
section 1440(7) of the tax Law?
Answer:
Yes. Section 1440(7) of the Tax Law specifically provides that all
subdividing of real property is subject to the aggregation rule, except in the case where the
subdivided property is improved with residences and is used for residential purposes, other
than those pursuant to cooperative or condominium plans.
With respect to the reference to the sworn statement Petitioner is willing to submit, that the
successive transfers were not being made with intent to evade the tax, it must be noted that the
statute does not make an intent to avoid, or evade the gains tax a prerequisite for the aggregation rule
to apply (Tax Appeals Tribunal Decision, In the Matter of the Petition of Thomas Iveli and Robert
Sigmund, February 23, 1988 and Matter of Cove Hollow Farms, Inc. v State Tax Commn., Sup. Ct.,
Special Term, Albany County, October 1, 1987, McDermott, J.).
The facts of this matter cannot support a finding that a plan or agreement does not exist.
Conversely, the facts show that Petitioner, over a relatively short period of time has assembled a tract
of land, has re-subdivided such tract, and has begun to make sales of such subdivided parcels.
Accordingly, the consideration received from the sale of all parcels within the subdivided
tract must be aggregated for the purpose of determining the gains tax $1 million threshold. Since
Petitioner is the subdivider of the tract, the relative contiguity or adjacency of each subdivided parcel
at the time it is transferred has no relevance in determining whether the consideration from the
transfer must be aggregated with the consideration received from the sale of other parcels within the
tract.
Gains tax questionnaires must be filed at least 20 days before the sale of each parcel, and
when the aggregate consideration received from the sale of all such parcels reaches $1 million, gains
tax must be paid based on the gain derived from all previous sales and on the date of all subsequent
transfers (Gains tax regulations section 590.68(a) and (b)).

DATED: December 20, 1988

s/FRANK J. PUCCIA
Director
Technical Services

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.