Would Florida residents owe intangible tax after contributing their securities portfolio to an out-of-state limited partnership not registered with the SEC?

Plain-English summary

The Department answered the requested rulings in the affirmative: the transferred portfolio, the taxpayers' partnership interests, and the partnership's assets were not subject to Florida intangible tax in the ways proposed.

The Florida residents planned to contribute stock and bonds to an out-of-state limited partnership that would maintain its office and annual meetings outside Florida and would not be registered with the SEC. Once the residents no longer owned, managed, or controlled the contributed portfolio, the ruling said that portfolio would not be subject to Florida intangible tax.

The residents' interests in the foreign partnership were exempt because the partnership was not registered with the SEC. The partnership's assets also would not be attributed back to the residents for Florida intangible-tax purposes.

What this means for you

The result depended on a completed transfer of ownership, management, and control to the foreign partnership, as well as the partnership's SEC-registration status and out-of-state operations.

Common questions

Q: Did the securities remain taxable to the Florida residents after contribution? A: No, once the portfolio was transferred and was no longer owned, managed, or controlled by them.

Q: Were their limited-partnership interests taxable? A: No. The foreign partnership was not registered with the SEC.

Q: Were the partnership's assets attributed back to the Florida residents? A: No, under the facts presented.

Citations and references

• Fla. Stat. ch. 199 — intangible personal property tax
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-023

Original ruling text

Jul 25, 1995

Re: Technical Assistance Advisement No. 95(C)2-023 Intangible Personal Property Tax; Interest in a Foreign Limited Partnership XXX (Taxpayers)

Dear :

This is in response to your recent request for a technical assistance advisement.

Facts

The Taxpayers are residents of Florida who currently own stock and bonds issued by various publicly-traded corporations as well as tax-exempt bonds issued by various state and municipal governments. It is proposed that an out-of-state limited partnership be formed by the Taxpayers. The partnership will not be registered with the Securities and Exchange Commission (SEC), nor will it be subject to any regulation by the SEC. Taxpayers will contribute part or all of their portfolio to the limited partnership in exchange for partnership interests. The partnership will maintain office space and telephone service in an out-of-state location. Partnership meetings will be held annually outside Florida and attended by the partners.

Requested Advisement

It is requested that the Department of Revenue stipulate that the Taxpayers' portfolio will not be subject to Florida intangible tax once it is transferred to the limited partnership. Further, the Department is asked to stipulate that the taxpayers' interest in the limited partnership is not subject to Florida intangible tax and that the assets owned by the out-of-state limited partnership will not be attributed to the Taxpayers for Florida intangible tax purposes.

Discussion and Law

Chapter 199, F.S., provides that every person who on January 1 owns, controls, or manages intangible personal property which has a taxable situs in this state must file an intangible tax return. Intangible personal property has a taxable situs in Florida when it is owned, managed, or controlled by any person domiciled in this state on January 1 of the tax year.

Interest in a partnership either general or limited, other than the interest of a limited partner in a limited partnership registered with the Securities Exchange Commission, is exempt from the intangible tax.

Once Taxpayers' portfolio is transferred to the limited partnership, in a state other than Florida, and is no longer owned, managed, or controlled by the Taxpayers it would not be subject to the Florida intangible tax. Further, since the foreign partnership is not registered with the SEC, Taxpayers' interest in the partnership would not subject to the Florida intangible tax. Assets owned by a foreign limited partnership will not be attributed to the Taxpayers for Florida intangible tax purposes.

Conclusion

Based upon statutory provisions and the information in your letter, your requested advisement is answered in the affirmative.

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,

Nadine C. Posey
Senior Tax Specialist
Technical Assistance

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