Did a Florida resident owe intangible tax after contributing an investment portfolio to a non-SEC-registered out-of-state limited partnership?

Plain-English summary

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

The Florida resident planned to contribute some or all of a personal investment portfolio to an out-of-state limited partnership. The partnership would keep its books and records and hold annual meetings outside Florida.

After the contribution, the resident no longer owned the contributed assets, so those assets did not create personal liability. The resident's limited-partnership interest was exempt because the partnership was not registered with the SEC. The Department also found no Florida liability for the partnership's portfolio.

What this means for you

• The contribution shifted ownership of the portfolio from the individual to the partnership.
• The partnership-interest exemption depended on the partnership not being SEC registered.
• The partnership's out-of-state records and meetings supported its no-liability result.

Common questions

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

Q: Was the limited-partnership interest taxable? A: No.

Q: Did the partnership owe Florida intangible tax? A: No, on the submitted facts.

Citations and references

• Fla. Stat. § 199.052(1) — return requirement
• 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 96C2-061

Original ruling text

May 31, 1996

Re: Technical Assistance Advisement 96(C)2-061 Intangible Tax - Taxable Situs Sections 199.052 & 199.175, F.S. XXX (Taxpayer) XXX (Partnership)

Dear :

Your letter requesting a Technical Assistance Advisement has been received and examined by this office. The following information was contained in the request:

Taxpayer is a resident of Florida. Partnership will be formed as a XXX limited partnership with Taxpayer and one other individual being limited partners and an individual being the general partner. Taxpayer will contribute part or all of a personal portfolio of investments to Partnership in exchange for a limited partnership interest in Partnership.

Partnership will maintain its books and records in XXX. Partnership meetings will be held annually outside the State of Florida.

Statutory Provisions

Section 199.052(1), F.S., requires that every person who owns, manages or controls intangible property that has a taxable situs in this state must file an intangible tax return.

Section 199.175, F.S., provides that intangible property shall have a taxable situs in this state when it is owned, managed or controlled by a person domiciled in this state. Intangible property will have a taxable situs in this state when it arises out of or is issued in connection with business transacted in this state.

Section 199.185(1)(c), F.S., exempts from the intangible tax all interest in a partnership except the interest of a limited partner in a limited partnership that is registered with the Securities and Exchange Commission.

Ruling Requests and Responses

1. Will the Taxpayer be subject to the Florida intangible
   tax on the portfolio of assets that will be contributed to Partnership in XXX?

Response: Taxpayer will have no ownership of the assets contributed to Partnership. Therefore, Taxpayer will have no tax liability associated with the contributed assets.

2. Will Taxpayer be subject to the Florida intangible tax
   in their interest in Partnership?

Response: The statue specifically exempts interest in limited partnerships that are not registered with the Securities and Exchange Commission. Therefore, Taxpayer has no tax liability for its interest in the XXX limited partnership.

3. Will Partnership be subject to the Florida intangible
   tax on the portfolio of assets that will be contributed by Taxpayer?

Response: Partnership will have no liability for Florida's intangible tax based upon the information submitted for consideration.

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
Tax Policy and Dispute Resolution
Office of General Counsel

JVP/mh