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