Was Florida documentary stamp tax due when a foreign corporation's Florida real estate passed to a foreign partnership by statutory merger?

Plain-English summary

Florida found no documentary stamp tax due because the real estate transferred by operation of Delaware merger law and no deed or other conveyance instrument would be recorded in Florida.

The Massachusetts corporation owned two Florida commercial real-estate projects and proposed to merge into a Delaware limited partnership, which would survive. The cited Delaware statutes automatically vested the corporation's real estate in the surviving partnership without a deed.

Florida's rules treated a statutory merger transfer to a surviving entity as nontaxable unless a deed was given. Because the stated transaction required no Florida conveyance instrument, the Department found no documentary stamp tax.

What this means for you

The result depended on the mechanics of the governing merger statute and the absence of a deed. It was not a general exemption for every merger involving Florida real estate.

Common questions

Q: Did the foreign entities own Florida property? Yes. The corporation owned two commercial projects in Florida.

Q: Would a deed have changed the analysis? The cited Florida rules specifically said a deed triggers a presumption based on the property's fair-market value.

Q: Did Florida require a deed solely because the property was in Florida? Not for the statutory transfer described.

Citations and references

• Fla. Stat. § 201.02(1) — tax on instruments conveying an interest in Florida real property
• Fla. Admin. Code rr. 12B-4.013(31) and 12B-4.014(8) — statutory merger transfers
• Del. Code Ann. tit. 8, § 259 and tit. 6, § 17-211 (1998) — cited Delaware merger provisions
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00B4-003

Original ruling text

SUMMARY

Question: Is there a requirement to file a deed in Florida
and pay documentary stamp taxes in connection with the
merger of a foreign corporation into a foreign limited
partnership?

Answer - BASED ON FACTS BELOW: In this situation, the
transfer of property occurs by operation of law and no
instruments are required to be filed in Florida.
Therefore, no documentary stamp tax will be due on the
proposed transaction.

Mar 08, 2000

Re: Technical Assistance Advisement No. 00(B)4-003
Documentary Stamp Tax on Merger of Foreign Corporation into
Foreign Limited Partnership pursuant to Foreign Statute
Section 201.02(1), F.S.; Rules 12B-4.013(31) and 12B4.014(8), F.A.C.
XXX (Foreign Limited Partnership)
XXX (Foreign Corporation)

Dear:

This is in response to your recent request for a Technical
Assistance Advisement in which you request an advisement as to
whether documentary stamp tax will be due on the transfers of
Florida real property by operation of law incident to the
proposed merger of a foreign corporation into a foreign limited
partnership pursuant to the statutes of a foreign jurisdiction.

Facts Presented by the Petitioner

The Foreign Limited Partnership was formed under the laws
of the state of Delaware. The Foreign Corporation was formed
under the laws of Massachusetts. The Foreign Corporation owns
two commercial real estate projects in the state of Florida.

The Foreign Limited Partnership proposes to merge with the
Foreign Corporation, pursuant to the laws of the state of
Delaware. After the merger, the Foreign Limited Partnership
will be the surviving entity. Under Delaware law, all real
estate owned by the Foreign Corporation will be vested in the
surviving entity, the Foreign Limited Partnership, without the
necessity of recording a deed. No deed will be recorded in the
state of Florida transferring the Foreign Corporation's real
property to the Foreign Limited Partnership.

Requested Ruling

Provided that the Foreign Corporation's merger with the
Foreign Limited Partnership complies with Delaware law, no
documentary stamp tax will be due in connection with the
transfer of the Florida real property pursuant to a statutory
merger when the real property is transferred by operation of the
Delaware merger statutes.

Discussion and Law

Section 201.02(1), F.S., imposes a tax at the rate of 70
cents on each $100 of consideration on instruments conveying an
interest in real property.

Rules 12B-4.013(31) and 12B-4.014(8), F.A.C., each provide
that the transfer of real property to a surviving corporation,
partnership, limited liability company or other business entity
resulting from the operation of an applicable statute governing
the merger or consolidation of such business entities is not
taxable unless a deed is given in which case the consideration
is presumed to be equal to the fair market value of the real
property interest being transferred.

The Delaware General Corporation Law and the Delaware
Revised Uniform Limited Partnership Act provides for the merger
of a limited partnership and a corporation. Del. Code Ann. tit.
8, sec 259 and Del. Code Ann. tit. 6, sec. 17-211 (1998).

The Delaware General Corporation Law and the Delaware
Revised Uniform Limited Partnership Act provides that all

rights, title and interest to real estate that is owned by the
merging corporation is automatically vested in the surviving or
resulting limited partnership. Neither statute requires the
filing of any deed by the parties. Del Code Ann. tit. 8 sec.
259 and Del. Code Ann. tit. 6, sec 17-211 (1998)

Determination

Florida Law requires the payment of documentary stamp tax
on instruments conveying real property. In this instant case,
the transfer of the real property between the two foreign
entities occurs by operation of law.

In this situation, no instruments will be recorded in the
State of Florida. Thus, no documentary stamp tax will be due on
the proposed transaction.

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. 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 from that
which is expressed in this response.

You are further advised that this response, your request
and related backup 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,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Technical Assistance and Dispute Resolution
Office of the General Counsel

JBE/mh