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