Ezel / Tax Rulings / CT
CT Ruling 89-279 Controlling Interest Transfer Tax 1989-12-14

Did transferring all shares of a Panama corporation holding Connecticut real estate to a commonly owned Barbados corporation trigger transfer taxes?

Short answer: Yes. DRS treated the share transfer as one for consideration and subject to controlling-interest transfer taxes. The ruling also said that if the Panama corporation were domesticated into Delaware through an F reorganization, the reorganization deed appeared not to be exempt from real estate conveyance taxes.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1989 Connecticut Department of Revenue Services Ruling applying controlling-interest and real-estate-conveyance taxes to one foreign-corporation ownership structure. The result depended on common ownership, Connecticut real property, transfer of all shares, and the described reorganization; later legal changes or different facts can change the answer, so another taxpayer should not assume it applies. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A trustee solely owned a Panama corporation holding Connecticut real property and also solely owned a Barbados corporation. The trustee transferred all Panama-corporation shares to the Barbados corporation.

DRS ruled that the share transfer was for consideration and subject to Connecticut controlling-interest transfer taxes.

The ruling also addressed a possible domestication. If the Panama corporation reorganized under 26 U.S.C. § 368(a)(1)(F) and became a Delaware corporation, the deed used in that reorganization appeared not exempt from real estate conveyance taxes.

What this means for you

The historical ruling looked through a commonly owned foreign-corporation structure to tax the transfer of the entity holding Connecticut real property. It also warned that a federal F reorganization did not appear to exempt the related deed from conveyance tax.

Common questions

Did common ownership make the share transfer tax-free? No.

Was the share transfer treated as consideration? Yes.

Did the ruling definitively call the reorganization deed exempt? No. It said the deed appeared not to be exempt.

Citations and references

  • 26 U.S.C. § 368(a)(1)(F).

Source

Original ruling text

Ruling 89-279, Controlling Interest Transfer Tax

Ruling 89-279

Controlling Interest Transfer Tax

It is represented in your letter that a trustee is the sole shareholder of a Panama corporation. The Panama corporation owns real property in Connecticut. The trustee transfers all of the shares in the Panama corporation to a Barbados corporation of which the trustee is the sole shareholder. The transfer of the shares in the Panama corporation by the trustee to the Barbados corporation is a transfer for consideration and is subject to the controlling interest transfer taxes.

If the Panama corporation is domesticated in a reorganization described in 26 U.S.C. § 368(a)(1)(F), becoming a corporation organized under the laws of the State of Delaware, the deed pursuant to the reorganization would appear not to be exempt from real estate conveyance taxes.

LEGAL DIVISION

December 14, 1989

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