Were shares of a business-trust fund exempt from Florida intangible tax when its portfolio held only tax-exempt assets?

Subject

Valuation - Business Trust

Plain-English summary

The fund shares were exempt if the portfolio held only assets that were themselves exempt. The proposed investments were Florida municipal securities, U.S. government or agency obligations, territorial obligations, and cash or cash equivalents.

What this means for you

The ruling's all-exempt-asset condition was absolute. Introducing a nonexempt portfolio asset would present different facts.

Common questions

Did the trust's Massachusetts form prevent exemption? No.

What controlled the result? The portfolio consisting solely of exempt assets.

Citations and references

• Fla. Stat. §§ 199.103(2), 199.185(1)(i), and 213.22
• Fla. Admin. Code r. 12C-2.010(1)(i)-(j)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94C2-012

Original ruling text

Jun 10, 1994

Re: Technical Assistance Advisement No. 94(C)2-012 Intangible Tax - Valuation - Business Trust Sections 199.103(2) & 199.185(1)(i), F.S. Rule 12C-2.010(1)(j), F.A.C. XXX (Trust) XXX (Fund)

Dear :

Your letter requesting a technical assistance advisement has been referred to this office.

Trust was created under the laws of the Commonwealth of Massachusetts under an agreement and declaration of trust commonly know as a "Massachusetts business trust." The Trust's objectives are to provide shareholders a high level of tax exempt income through investment in a portfolio of investment securities, the interest and dividends of which are exempt from federal income tax and Florida intangible tax. The Trust intends to achieve its objectives by investing in a portfolio of tax-exempt securities of the State of Florida, its political subdivisions and authorities. The Trust may also invest in obligations of the U.S. Government, its agencies, territories and possessions.

Based upon the statements and documents received you have requested a ruling of the taxability of the Fund based upon substantially the following question:

Will the shares of the Fund be exempt from the intangible tax if the portfolio of assets is invested solely in Florida Municipal Bonds, U.S. Government or its agency securities, territorial obligations and cash or cash equivalents?

This question is answered in the positive. Shares in this type of Fund are exempt from tax under Florida law if the

trust's portfolio of assets consists solely of assets that are exempt from tax [see s. 199.185(1)(i), F.S. and Rule 12C-2.010(1)(i), F.A.C.].

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 and your request are public records under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your name, address, and any other details which might lead to identification of the taxpayer must be deleted by the Department before disclosure. In an effort to protect confidential information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or this response.

Sincerely,

J.V. Parramore, Jr.
Tax Law Specialist
Technical Assistance

JVP/mh