Did Nevada family partnerships and their corporate general partners acquire Florida situs because their Florida-resident president made investment decisions from Florida?

Plain-English summary

Florida found no intangible-tax situs for the Nevada partnerships or their Nevada corporate general partners, despite investment decisions made by their Florida-resident president.

The entities kept their only offices, permanent books and records, paid employee, check authority, correspondence, and board meetings in Nevada. A majority of corporate officers and directors were not Florida residents. The Florida resident could make investment decisions from Florida, but implementation occurred in Nevada or through his assistant in Illinois.

The Department concluded that the entities' actions were carried out at their out-of-state principal places of business. The partnerships and corporate general partners therefore did not owe Florida intangible tax.

The individual result was different. As a Florida resident, he had to file and report taxable intangible property he owned directly or through his revocable living trust, including stock in the two corporate general partners. His limited-partnership interests were exempt because the partnerships were not registered with the SEC.

What this means for you

• A Florida officer's investment decisions did not create entity situs where operations and implementation remained outside Florida.
• Entity-level situs and the Florida resident owner's personal reporting were separate questions.
• The partnership-interest exemption depended on the limited partnerships not being SEC registered.

Common questions

Q: Did the Nevada entities have Florida taxable situs?
A: No, on the described office, management, records, and implementation facts.

Q: Did the Florida resident have to report the corporate stock?
A: Yes, including stock held through his living trust.

Q: Were his limited-partnership interests taxable?
A: No. The Department applied the exemption for interests in non-SEC-registered limited partnerships.

Citations and references

• Fla. Stat. § 199.042 — tax payment with the return
• Fla. Stat. § 199.052 — Florida resident return and reporting requirement
• Fla. Stat. § 199.185(1)(c) — exemption for limited-partnership interests in partnerships not registered with the SEC
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-073

Original ruling text

Jul 31, 1996

Re: Technical Assistance Advisement 96(C)2-073
Taxable Situs - Foreign Partnerships & Corporations
XXX (Individual A)
XXX (Partnership A)
XXX (Partnership B)
XXX (Partnership C)
XXX (Corporation #1)
XXX (Corporation 2)

Dear:

This is the response to your correspondence of May 29,
1996, requesting a Technical Assistance Advisement regarding the
taxable situs of certain non-resident limited partnerships and
their corporate general partners. Our response to your request
is contained in the following paragraphs.

FACTS

Individual A became a Florida resident during 1995. Three
family limited partnerships, Partnership A, Partnership B and
Partnership C are organized under the laws of the State of
Nevada. Corporation #1 is the sole general partner of
Partnership A. Corporation #1 is both incorporated and domiciled
in the State of Nevada and it is solely owned by Individual A's
living trust (a revocable inter vivos trust created by
Individual A) and his wife. The limited partnership interests of
Partnership A are owned by Individual A's living trust and
various family trusts and partnerships that have been previously
organized. Corporation #1 is also the sole general partner of
Partnership C. The limited partnership interest of Partnership
C is held by various family trusts and partnerships that have
been previously organized.

The sole general partner of Partnership B is Corporation

2. The latter is both incorporated and domiciled in the State

of Nevada. Individual A's living trust is the sole shareholder

of Corporation #2. The limited partnership interests of
Partnership B are held by Individual A's living trust and
various family trusts and partnerships that have been previously
organized.

Corporation #1, Partnership A, Corporation #2, Partnership
B, and Partnership C will maintain their only office in the
State of Nevada. The Treasurer of Corporation #1 and
Corporation #2 will be a paid Nevada employee; she will maintain
the books and records of the two Nevada corporations and the
three limited partnerships; she will also have check-signing
authority for these entities. Checks over a specified dollar
amount will require a second signature. Individual A will have
no check-signing authority whatsoever. Correspondence relating
to the assets and liabilities of the two corporations and the
three limited partnerships will be received at the entities'
Nevada office. A majority of the officers and directors of the
two corporations will be non-Florida residents. All meetings of
the board of directors of these entities will be held in Nevada.
Individual A and his wife will be the only Florida residents who
are directors or officers of these corporations.

Individual A is the President and chief executive officer
of Corporation #1 and Corporation #2, the corporate general
partners. He will not receive any wages from any of the
corporations or partnerships. As the President of Corporation

1 and Corporation #2 (the general partners), Individual A may

make investment decisions in Florida for the three family
limited partnerships, Partnership A, Partnership B and
Partnership C, respectively. Such decisions will be based on
advice from paid professional investment advisors. Individual A
will communicate these decisions as investment instructions to
his assistant in Illinois by mail, facsimile, or telephone from
Florida. All decisions made by Individual A will be implemented
by or on behalf of the appropriate entity at its business
location in Nevada or at the office of his assistant in
Illinois. All other operations of the corporations and limited
partnerships will be accomplished at each entity's office in
Nevada.

Copies of each entity's mail will be sent to Individual A

in Florida. Individual A will also keep records regarding each
entity. These papers are not the permanent records of the
entity, but are for Individual A's personal use.

REQUESTED RULINGS

Based upon the scenario described above, you have requested
technical assistance advisement on the following issues:

• 1. Whether the family limited partnerships (Partnership
     A, Partnership B and Partnership C) and the corporate
     general partners (Corporation #1 and Corporation #2) will
     be required to file a Florida Intangible Personal Property
     Tax Return?
• 2. Whether Individual A will be required to file an
     intangible tax return and list all taxable intangible
     property owned directly by him and all taxable intangible
     property held by his living trust, including the value of
     his stock in Corporation #1 and Corporation #2?
• 3. Whether the interests in the family limited
     partnerships, owned by Individual A's living trust and the
     family trusts and partnerships, will be exempt from Florida
     Intangible Personal Property Tax?

CONCLUSION OF LAW

Based upon the information provided, both the family
limited partnerships and the corporate general partners have no
intangible tax taxable situs in Florida. Even though Individual
A makes decisions about investments as the officer of both
corporations, which in turn make investments as the general
partners of the family limited partnerships, the actions of the
corporate partners and those of the family limited partnerships
are carried out at the principal place of business for these
entities.

Section 199.052, F.S., requires that every resident of this
state that owns intangible property shall file a return and list
all taxable intangible property owned by the resident. The

payment of tax must accompany the return when filed. (See s.
199.042, F.S.) Individual A, a resident of Florida, must file
an intangible tax return and list all taxable intangible
property owned by him, including the property held in his living
trust, namely, his stock in both Corporation #1 and Corporation

2.

As for the interests in the family limited partnerships,
owned by Individual A's living trust, and the family trusts and
partnerships, there is no intangible tax due on these interests.
Only an interest as a limited partner in a limited partnership,
registered with the Securities and Exchange Commission (SEC), is
subject to tax. Limited partnership interests in limited
partnerships not registered with the SEC are exempt from the
intangible tax. (See s. 199.185(1)(c), F.S.)

In summary, the corporate general partners and the family
limited partnerships are not subject to the Florida intangible
tax. Individual A will be required to report the stock he owns
in the two corporations, the general partners. Individual A's
interests in the family limited partnerships are not subject to
the 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,

Moses O. Daramola
Senior Tax Specialist
Tax Policy & Dispute Resolution
Office of General Counsel

MOD/md