Would Florida residents owe intangible tax after contributing their publicly traded stock to a New York general partnership with no Florida situs?

Plain-English summary

The residents owed tax on the stock until they contributed it to the New York general partnership; afterward, neither the partnership nor their general-partner interests were taxable on the stated facts.

The partnership's books, records, bank accounts, offices, and meetings were all in New York, so it had no Florida taxable situs. Florida also treated the residents' general-partner interests as exempt under section 199.185(1)(c).

What this means for you

The ruling distinguished direct ownership of taxable stock by Florida residents from ownership of an exempt general-partnership interest in an entity with no Florida situs.

Common questions

Q: Was the stock taxable before contribution? A: Yes.

Q: Was the New York partnership taxable in Florida? A: No.

Q: Were the taxpayers' general-partner interests taxable? A: No.

Citations and references

• Fla. Stat. §§ 199.052(1) and 199.175 — filing duty and Florida taxable situs
• Fla. Stat. § 199.185(1)(c) — general-partner interest exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-002

Original ruling text

Jan 19, 1995

Re: Technical Assistance Advisement No. 95(C)2-002 Intangible Tax - Taxable Situs Sections 199.052 and 199.175, F.S. XXX (Taxpayers)

Dear :

Your letter requesting a Technical Assistance Advisement has been received by this office. The request deals with the taxation of intangible property transferred to a non-Florida entity. The specific transaction is described as follows:

Taxpayers are residents of Florida and own approximately 30% of the stock of a publicly-traded corporation listed on the New York Stock Exchange. Taxpayers will form a New York General Partnership. The partnership will not be registered with the Securities and Exchange Commission (SEC), nor will it be regulated by the SEC. Taxpayers will contribute all their stock in the corporation to the New York Partnership in exchange for a partnership interest in the New York Partnership. The books, records, bank accounts and offices of the partnership will be maintained in New York. Partnership meetings will be held in the State of New York.

Provision of Law

Section 199.052(1), F.S., requires that every person domiciled in this state that owns, manages or controls intangible property having a business situs in the state, must file an intangible tax return. Section 199.175, F.S., states that intangible property shall have a taxable situs in this state when it is owned by a person domiciled in this state or it arose out of business transacted in this state by employees, agents or representatives of any kind from a location within this state or with customers in this state. Section 199.185(1)(c), F.S., provides that the interest of a general

partner in any partnership is exempt from the intangible tax.

Discussion of Law

Until Taxpayers transfer the corporate stock they are subject to the intangible tax. The partnership that will be formed in New York will not be subject to Florida's intangible tax, as it will have no taxable situs in Florida. Taxpayers as general partners of a New York partnership will have no tax liability for their interest in the partnership. Therefore, the transaction as structured will result in no intangible tax liability for the New York Partnership, and the Taxpayers will have no tax liability after the corporate stock is transferred to the New York Partnership.

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 the confidentiality of such information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or the response.

Sincerely,

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

JVP/mh