Is a deed required when a Florida general partnership converts to a limited partnership taxed on the property's fair market value?

Plain-English summary

The Florida Department of Revenue concluded that a deed recorded as part of the described conversion from a general partnership to a limited partnership was subject only to the minimum documentary stamp tax. The tax was not based on the real property's fair market value.

Ordinarily, section 201.02(1) taxes deeds transferring an interest in Florida real property at 70 cents per $100 of consideration. If consideration is not money, the statute presumes consideration equals the property's fair market value. But the conversion statute said that, for all purposes, the resulting partnership was the same entity that existed before the conversion.

Although section 620.8904(2)(a) required the general partnership to execute and deliver a deed in the resulting limited partnership's name, the Department treated the deed as documenting the same entity's conversion rather than a fair-market-value transfer to a different owner.

What this means for you

Partnerships converting legal form

For the transaction described, continuity of the partnership entity controlled the documentary stamp tax result. The required deed did not create a fair-market-value tax base because the conversion statute treated the post-conversion limited partnership as the same entity.

Real-estate owners and advisers

The conclusion was tied to a statutory partnership conversion carried out under the cited provisions. A deed in a different restructuring, or one involving a transfer to a legally different entity, was not decided by this advisement.

Accountants and tax professionals

The ruling did not make the deed entirely tax-free. It distinguished the minimum documentary stamp tax from tax measured by fair market value. Confirm that the transaction follows the same statutory conversion structure before applying the reasoning.

Common questions

Q: Was the conversion deed exempt from all documentary stamp tax? A: No. The Department said the deed was taxable for the minimum documentary stamp tax.

Q: Why was tax not based on fair market value? A: Section 620.8902 treated the resulting partnership as the same entity that existed before the conversion, even though another provision required a deed in the resulting limited partnership's name.

Q: What rate did the ruling describe for an ordinary taxable deed? A: It quoted section 201.02(1) as imposing 70 cents per $100 of consideration. The Department nevertheless concluded that this conversion deed was subject only to minimum tax.

Q: Does this cover every transfer from a general partnership to a limited partnership? A: No. The advisement addressed the specific statutory conversion and facts presented. It did not decide other restructurings or deeds to a different legal owner.

Q: Can another partnership rely on this TAA? A: Not automatically. The advisement states that it binds the Department only under the facts and circumstances described in the request, and later legal changes or court interpretations may produce a different result.

Citations and references

• Fla. Stat. § 201.02(1) (documentary stamp tax on deeds and consideration)
• Fla. Stat. § 620.8902 (same-entity treatment after conversion)
• Fla. Stat. § 620.8904(1), (2)(a) (effect of conversion and required deed)
• Fla. Stat. § 213.22 and Fla. Admin. Code r. 12-11.003 (technical assistance advisements)
• Fla. Stat. ch. 119 (public records)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96B4-017

Original ruling text

Dec 20, 1996

Re: Technical Assistance Advisement No. 96(B)4-017 Documentary Stamp Tax; Deeds to Limited Partnership s. 201.02, F.S. XXX (General Partnership) XXX (Limited Partnership)

Dear :

You have petitioned for a Technical Assistance Advisement pursuant to s. 213.22, F.S., and Rule 12-11.003, F.A.C.

Issue

Whether a deed from the General Partnership to the Limited Partnership, as a result of the General Partnership's conversion to the Limited Partnership, as provided under ss. 620.8904(1) and (2)(a), F.S., is taxable based on the fair market value of the real property transferred.

Background

The Partners intend to convert the General Partnership to a Florida Limited Partnership pursuant to the provisions of the Florida Revised Uniform Partnership Act of 1995 and the Florida Revised Uniform Limited Partnership Act of 1986. Three of the general partners of the General Partnership, as described in the partnership agreement, will form a Florida corporation to act as the General Partner of the Limited Partnership. Each will contribute one-third percentage point general partner interest in the General Partnership to the General Partner of the Limited Partnership, in exchange for one hundred common shares each of the General Partner. The general partners of the Limited Partnership will execute the Limited Partnership Agreement and file with the Florida Department of State the requisite documents to convert the General Partnership to the Limited Partnership as provided in s. 620.8902, F.S. Further, as required by s. 620.8904(2)(a), F.S., the General Partnership

will execute and deliver a deed to and in the name of the resulting Limited Partnership. The deed will be recorded in the appropriate public records.

Your position is that the deed from the General Partnership to the Limited Partnership is exempt as provided in s. 620.8904(1), F.S., as the resulting Limited Partnership is for all purposes the same entity that existed before the conversion.

Discussion and Law

The tax levied by s. 201.02(1), F.S., is an excise tax on deeds, instruments, or writings transferring any interest in real property. The tax shall be 70 cents per each $100 of consideration. For purposes of this section, consideration includes money paid or to be paid, the discharge of any obligation, the amount of any mortgage, purchase money mortgage, or other encumbrance. If the consideration is other than money, the consideration shall be presumed to be the fair market value of the real property being transferred.

However, s. 620.8902, F.S., specifically provides that for all purposes the resulting partnership is the same entity that existed before the conversion.

Department's Position

Therefore, even though a deed is required under s. 620.8904(2)(a), F.S., the deed is taxable for only the minimum documentary stamp tax and is not taxable based on the fair market value of real property.

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,

James E. Silvey
Tax Law Specialist
Tax Policy and Dispute Resolution
Office of General Counsel

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