Were deeds from three individuals to their indirectly owned limited partnership subject to deed tax?

Plain-English summary

Three brothers each owned one-third of several unencumbered properties as tenants in common. They planned to deed the properties to a limited partnership they wholly owned through separate single-member LLCs holding the general interests and separate revocable trusts holding the limited interests.

Each brother retained the same one-third beneficial interest after the transfer, and no money or other consideration was paid.

Florida found that a conveyance occurred but the consideration element did not. The deeds therefore were not subject to documentary stamp tax beyond the minimum required tax stated in the determination.

What this means for you

Indirect ownership through LLCs, trusts, and a partnership did not create additional tax where the beneficial percentages stayed identical, the property was unencumbered, and no consideration passed.

Common questions

Did the entity structure itself trigger tax? No. Florida looked through the structure to unchanged beneficial ownership and consideration.

Why did unencumbered status matter? The ruling's no-consideration finding rested in part on the properties carrying no debt or other encumbrance.

Was absolutely no stamp tax due? The determination specified no tax under section 201.02 other than the minimum required documentary stamp tax.

Citations and references

• Fla. Stat. § 201.02 (documentary stamp tax on real-property conveyances)
• Crescent Miami Center, LLC v. Department of Revenue, 903 So. 2d 913 (Fla. 2005)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06B4-003

Original ruling text

SUMMARY
QUESTION: Are deeds conveying real property from individuals to their limited partnership involving limited liability
companies and revocable trusts subject to documentary stamp tax?
ANSWER - Based on Facts Below: Multiple parcels of unencumbered property are to be conveyed from three
brothers as tenants in common, to a limited partnership composed of these same three individuals. Each brother owns
a one-third interest in each parcel of land. Each brother is the sole member and manager of his own Florida limited
liability company. Each brother is the sole settler, beneficiary, and trustee of his own revocable trust. The limited
partnership, which is to be the Grantee on each deed, is wholly owned by the Grantors, the three brothers, through
their ownership of each of their limited liability companies owning the general partnership interests and each of their
revocable trusts owning the limited partnership interests. There is no consideration involved in these transfers, and
therefore no documentary stamp tax is due.

May 11, 2006

Re: Technical Assistance Advisement No. 06B4-003
Documentary Stamp Tax - Conveyance from Individuals to Limited Partnership
Section 201.02, F.S.
XXX (hereinafter, A)
XXX (hereinafter, B)
XXX (hereinafter, C)
XXX (hereinafter Limited Liability Company-1)
XXX (hereinafter Limited Liability Company-2)
XXX (hereinafter Limited Liability Company-3)
XXX (hereinafter Trust 1)
XXX (hereinafter Trust 2)
XXX (hereinafter Trust 3)
XXX (hereinafter, Limited Partnership)
Dear:
This is in response to your letter dated March 27, 2006, requesting a Technical Assistance Advisement. Taxpayer
requests confirmation that no documentary stamp tax is due on deeds from three individuals conveying
unencumbered real properties into their limited partnership that they indirectly own through limited liability companies
and revocable trusts.
FACTS AS PRESENTED BY PETITIONER
Three brothers, A, B, and C, own multiple parcels of unencumbered real property in each of their individual names,

as tenants in common, each owning a one-third interest in each parcel. Each brother owns and is the sole member
and manager of his own Florida limited liability company. Each brother has a separate revocable trust. Each brother is
the sole settlor, beneficiary, and trustee of his own revocable trust.
Limited Partnership is owned as follows:
Each limited liability company owns a one-third interest in the 1% general partnership interest. Each of the brothers'
separate revocable trusts owns a one-third interest in the 99% limited partnership interests.
Each parcel of the unencumbered real property is to be conveyed from the three brothers as tenants in common to
the limited partnership. There will be no monies or other consideration paid for the conveyance to the limited
partnership.
The limited partnership, which is to be the Grantee on each deed, is wholly owned by the Grantors, the three
brothers, through their ownership of each of their limited liability companies owning the general partnership interests
and each of their revocable trusts owning the limited partnership interests.
REQUESTED RULING
You request the Department's determination that the documents involved in this request are not subject to
documentary stamp tax.
LAW AND DISCUSSION
Conveyances of real property are subject to documentary stamp tax based on two elements:
First, there must be a conveyance from one person or entity to another;
Second, there must be consideration for the conveyance.
In the case at hand, the brothers owned a one-third interest in each piece of real property. After the conveyances
to the limited partnership, the brothers will still own a one-third beneficial interest in the real property through their
ownership of the limited partnership interests as explained above. Crescent Miami Center, LLC v. Dep't of Revenue,
903 So.2d 913 (Fla. 2005). The properties are unencumbered. No money or other consideration is involved in the
transfers. The first test has been met, in that there will be a conveyance of real property from individuals to their
limited partnership owned through their ownership of limited liability companies and each of their own revocable trusts.
The second test has not been met, in that there is no consideration involved in the conveyance. See Crescent
Miami Center, LLC v. Dep't of Revenue, Id.
The conveyances will not be subject to documentary stamp tax, because the brothers will indirectly hold the
interests in the limited partnership in the same percentage as they now hold the unencumbered real property being
conveyed to the limited partnership. There is no change in the percentage of beneficial ownership of the properties

prior to or after the properties are transferred to the limited partnership, and there was no consideration involved.
DETERMINATION
Therefore, in this situation, the deeds will not be subject to documentary stamp tax under s. 201.02, F.S., other
than the minimum required 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 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,
M. E. Clemens, C.P.A.
Senior Tax Specialist
Technical Assistance and Dispute Resolution
MEC/mh
Record ID: 20438