Ezel / Tax Rulings / FL
FL TAA 05B4-004 Documentary Stamp Tax 2005-06-23

Did a deed transferring unencumbered real property for no consideration between two sister LLCs with identical 50/50 owners owe more than minimum documentary stamp tax?

Short answer: No. The deed was subject only to minimum documentary stamp tax because the property was free and clear, the sister LLCs had the same two 50/50 owners, and no consideration or other exchange of value accompanied the transfer.

Apply this to your situation

This page answers the general question as of 2005. Ezel answers yours, under current Florida tax law, with citations.

Currency note: this ruling is from 2005
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 Technical Assistance Advisement of the Florida Department of Revenue, issued to requesters under section 213.22, Florida Statutes, on the facts and circumstances described in the request. Its standard closing says it binds the Department only on those facts and that later law, rule, or judicial changes may produce a different result. Identifying details are redacted. The result depended on identical ownership, unencumbered property, and no exchange of value; confirm current law, ownership proportions, debt, and all consideration before transferring property. This summary is informational only and is not legal or tax advice. Consult a licensed Florida tax professional about your specific facts.
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

The Florida Department of Revenue concluded that the deed between the two related LLCs was subject only to minimum documentary stamp tax. The transfer changed the legal form holding the property but did not change the owners' economic interests or involve an exchange of value.

LLC 1 and LLC 2 were sister companies. The same two taxpayers owned each company in equal 50/50 shares. LLC 1 planned to transfer real estate to LLC 2 without consideration, and the property was free and clear of any mortgage.

Identical ownership and no value exchanged controlled

Section 201.02 imposed documentary stamp tax on instruments transferring real-property interests. The Department applied the Florida Supreme Court's recent decision in Crescent Miami Center.

That decision stated that changing the form of property ownership without an exchange of value did not constitute consideration. It held that a transfer between a grantor and wholly owned grantee, absent value exchanged, was not subject to value-based documentary stamp tax.

The Department found this transfer analogous because both LLCs had identical owners in the same proportions and no consideration passed. The deed therefore owed only minimum tax.

What this means for you

Owners reorganizing related LLCs

Minimum-tax treatment may be available when property moves between entities with identical proportional ownership and no money, debt relief, ownership shift, or other value changes hands.

Real-estate and closing professionals

Confirm that the property is unencumbered and document the ownership of both entities immediately before and after the transfer. A mortgage or different ownership percentages can change the analysis.

Accountants and tax professionals

Focus on economic substance. The ruling treated a pure change in legal form differently from a transfer that gives someone a new or increased economic interest.

Common questions

Q: Who owned the two LLCs?
A: The same two taxpayers, each holding 50% of both companies.

Q: Was the property mortgaged?
A: No. It was held free and clear.

Q: Did LLC 2 pay LLC 1?
A: No. The transfer was for no consideration.

Q: What tax treatment did the Department approve?
A: Minimum documentary stamp tax on the deed.

Q: What case controlled the result?
A: Crescent Miami Center, LLC v. Department of Revenue, Florida Supreme Court Case No. SC03-2063, issued May 19, 2005.

Citations and references

  • Fla. Stat. § 201.02(1) — documentary stamp tax on instruments transferring real-property interests
  • Crescent Miami Center, LLC v. Department of Revenue, Florida Supreme Court Case No. SC03-2063 (May 19, 2005) — no consideration when ownership form changes without an exchange of value
  • Kuro, Inc. v. Department of Revenue, 713 So. 2d 1021 (Fla. 2d DCA 1998) — authority raised by the requester for minimum-tax treatment

Source

Original ruling text

SUMMARY
QUESTION: Is a transfer of unencumbered real property between two related Limited Liability Company, be subject to
tax?
ANSWER - Based on Facts Below: In light of the ruling of Crescent Miami, the transfer will only be subject to
minimum documentary stamp tax.

June 23, 2005

Re: Technical Assistance Advisement No. 05B4-004
Documentary Stamp Tax/Transfer of Real Property
Section 201.02(1), F.S.
XXX (LLC 1)
XXX (LLC 2)
XXX (Taxpayer 1)
XXX (Taxpayer 2)
Dear:
This is in response to your letter of March 1, 2005, requesting an opinion from this office whether or not
documentary stamp taxes imposed by s. 201.02(1), F.S., are due on a transfer of unencumbered real property
between two related companies.
Facts as Presented by Petitioner
LLC 1 is the sister company of LLC 2. Both companies are wholly owned in equal shares (50/50) by Taxpayers 1
and 2. LLC 1 intends to transfer some of its realty to LLC 2, for no consideration. The property is held free and clear,
with no mortgage outstanding.
Request for Advisement
A ruling is requested based upon (a) the facts as set forth above and (b) the case of Kuro, Inc. v. Department of
Revenue, 713 So.2d 1021 (1998). It is your opinion that the transfer of the property should only be subject to minimal
documentary stamp tax, as was the case in Kuro, in that the companies are both wholly owned by the same parties
(Taxpayers 1 and 2) in equal shares (50/50), and there is no consideration passed as a result of the transfer.
Law and Position of the Department
Section 201.02(1), F.S., imposes documentary stamp tax on deeds, instruments, or writings that convey, grant, or

transfer any interest in real property.
In the case of Crescent Miami Center, LLC v. Department of Revenue, SC03-2063, the Florida Supreme Court
issued an opinion on May 19, 2005, stating that "A change in the form of ownership of the property, without any
exchange of value, does not constitute consideration." The Court has concluded "that the transfer of property between
a grantor and its wholly owned grantee, absent any exchange of value, is without consideration or a purchaser and
thus not subject to the documentary stamp tax in section 201.02(1), F.S." The court decided that the deed was only
subject to minimal documentary stamp tax.
The facts in this situation are analogous to those of Crescent Miami. The deed effecting the described transfer of
real estate from LLC 1 to LLC 2 will only be subject to minimum documentary stamp tax.
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 interpretation 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 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 & Dispute Resolution
BES/mh

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