Were Florida residents' interests in a non-SEC-registered limited partnership exempt, and did the partnership itself have Florida intangible-tax situs?

Plain-English summary

Florida found both that the residents' limited-partnership interests were exempt and that the partnership itself lacked Florida taxable situs.

Florida residents planned to contribute stocks and bonds for limited-partnership interests. An out-of-state corporation would be the sole general partner, and its sole shareholder and president would make all investment and management decisions outside Florida. The partnership's principal place of business and annual meetings also would be outside Florida.

The Department applied the exemption in section 199.185(1)(c) because the partnership would not be registered with the Securities and Exchange Commission. It separately concluded that the partnership was managed and controlled outside Florida and had an out-of-state business location, so it did not have Florida situs under section 199.175(1).

What this means for you

• The partners' exemption and the partnership's own situs were separate questions with separate grounds.
• The Florida residents were only limited partners; they were not owners, officers, directors, or employees of the corporate general partner.
• The ruling depended on management, control, meetings, and the principal business location remaining outside Florida.

Common questions

Q: Were the Florida residents' partnership interests exempt?
A: Yes. The Department relied on the exemption for an interest in a partnership not registered with the SEC.

Q: Did the partnership owe Florida intangible tax?
A: No. Its principal place of business, management, and control were outside Florida.

Q: Can another partnership rely on this TAA?
A: Not automatically. The advisement binds the Department only on the specific facts and structure described in the request.

Citations and references

• Fla. Stat. § 199.175(1) — taxable situs of intangible personal property
• Fla. Stat. § 199.185(1)(c) — exemption for an interest in a partnership not registered with the SEC
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-077

Original ruling text

Aug 29, 1996

Re: Technical Assistance Advisement No. 96(C)2-077
Intangible Tax; Limited Partnership Interest - Taxable
Situs
Sections 199.175, 199.185 F.S.
XXX (the "General Partner")
XXX (the "Partnership")
XXX ("Florida residents")
XXX ("New York Resident", "Sole Shareholder")

Dear :

This is in response to your recent request for a Technical
Assistance Advisement.

Facts

A XXX resident plans to form a XXX corporation.
Subsequently, the XXX resident's parents (Florida residents)
will form the Partnership.

The XXX resident will contribute cash to the Corporation in
exchange for XX% of its stock, and will be the sole shareholder.
Subsequently, the Corporation will contribute cash to the
Partnership in exchange for a XX% general partnership interest.
The Corporation will be the sole General Partner of the
Partnership and its XX% interest will represent XX% of the total
value of assets contributed to the Partnership. The Florida
residents' will contribute publicly traded stocks and bonds, as
well as bonds issued by various state and local governments, to
the Partnership in exchange for XX% limited partnership
interests in the Partnership.

The sole shareholder of the Corporation, its president,
will maintain an office in the State of XXX, where it will have
a telephone line, receive mail and maintain its books and
records.

The Corporation will not conduct any business in the State
of Florida, and the president will make all investment decisions
for the Partnership.

The Partnership will not be registered with the Securities
and Exchange Commission nor subject to any of its regulations.
Annual meetings will be held outside the State of Florida by the
Partnership, and will be attended by the Partners.

The Florida residents' only involvement with the
Partnership will be in their capacities as limited partners.
They will not be shareholders, officers, directors nor employees
of the Corporation. All management decisions concerning the
Partnership will be made by the Corporation, as general partner
of the Partnership, and such decisions will be made by the
president, outside the State of Florida.

Requested Advisement

1. The partnership interests in the Partnership owned by
   the Florida residents are exempt from Florida
   intangible personal property tax.
2. The Partnership is exempt from Florida intangible
   personal property tax.

Law and Discussion

The interests of the Florida residents in the Partnership
are exempt from Florida intangible personal property tax, since
the exemption under s. 199.185(1)(c), F.S., applies. This
section exempts any interest in a partnership which is not
registered with the Securities and Exchange Commission.

Section 199.175(1), F.S., provides that intangible personal
property has a taxable situs in this state when it is owned,
managed or controlled by any person domiciled in this state on
January 1 of the tax year. Included within the definition of
person is a partnership. According to Section XXX of the
Partnership agreement, the Partnership's principal place of
business shall be XXX. Therefore, since the Partnership will be
managed and controlled outside the State of Florida and have a

business location outside of Florida, it will not have a taxable
situs in Florida, and will not be subject to Florida intangible
personal property 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,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Tax Policy and Dispute Resolution
Office of General Counsel

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