Did a Florida resident or an out-of-state partnership owe intangible tax after the resident contributed stock for partnership interests?

Plain-English summary

Florida found no intangible-tax liability for the resident, the contributed stock, the out-of-state partnership, or the partnership interests on the stated facts.

The Florida resident contributed publicly traded stock to an out-of-state limited partnership in exchange for both general- and limited-partner interests. On January 1, the partnership owned, managed, and controlled the stock. Its books, records, and office manager were outside Florida, and it was not registered or regulated by the SEC.

The resident no longer owned, managed, or controlled the contributed stock, so the resident was not taxed on it. The partnership's stock lacked Florida taxable situs. Section 199.185(1)(c) also exempted the resident's partnership interests because the limited partnership was not SEC registered.

What this means for you

• Transferring ownership removed the contributed stock from the resident's personal holdings.
• The partnership's out-of-state management and records supported its no-situs result.
• The partnership-interest exemption depended on the limited partnership not being SEC registered.

Common questions

Q: Did the resident owe tax on the contributed stock? A: No.

Q: Did the out-of-state partnership owe Florida tax on the stock? A: No.

Q: Were the resident's partnership interests taxable? A: No, provided the partnership was not registered with the SEC.

Citations and references

• Fla. Stat. § 199.032 — annual intangible tax
• Fla. Stat. § 199.175 — taxable situs
• Fla. Stat. § 199.185(1)(c) — partnership-interest exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-057

Original ruling text

May 13, 1996

Re: Technical Assistance Advisement No: 96(C)2-057 Intangible Tax - Partnership Interest XXX (Petitioner) XXX (Partnership)

Dear :

This is in response to your letter dated February 28, 1996 requesting a technical assistance advisement on the transfer of stock to a partnership in exchange for partnership interest.

Statement of Facts

The Petitioner resides in the state of Florida and owns various stock interests in publicly-traded companies. The Petitioner contributed its stock to its out-of-state limited partnership in exchange for the General Partner's interest and a Limited Partner's interest in the partnership. As of January 1, 1996, the stock was owned, managed and controlled by the out-ofstate partnership. The Partnership is not registered or regulated by the Securities and Exchange Commission ("SEC"). The Partnership's books and records are maintained in the office outside the State of Florida. There is an employee in the office who serves as the office manager.

Advisement

You request that the Department confirm the fact that after the transfer of the stock to the partnership, neither the Petitioner nor the Partnership will be liable for intangible tax on either the stock or the partnership interest.

Provision of the Law

Section 199.032, F.S., imposes an annual tax of 2 mills on all intangible property that is owned, managed or controlled by a person domiciled or having a taxable situs in Florida.

Section 199.175, F.S., provides that intangible personal property shall have taxable situs in this state when it is owned, managed, or controlled by any person domiciled in this state.

Regarding the taxability of any interest in a Partnership, s. 199.185 (1)(c), F.S., provides that a partner's interest in a partnership, whether general or limited, is exempt, with the exception of any interest as a limited partner in a limited partnership registered with the SEC, pursuant to the Securities Act of 1933.

Conclusion

Once the stock is transferred to the out-of-state Partnership, the Petitioner will no longer have ownership, management or control of the transferred assets. Therefore, the Petitioner will not be subject to the tax on the stocks which were transferred to the Partnership. In addition, the Partnership will not be liable for tax on the stocks because such stocks have no taxable situs in this State. Finally, providing the Partnership is not registered with the SEC, the Petitioner's interest in the Partnership will not be subject to the Florida intangible tax.

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,

Celestine Grantham
Senior Tax Specialist
Tax Policy and Dispute Resolution
Office of General Counsel

CG/mh