Did deeds transferring property from a general partnership to the same partnership after conversion to limited-partnership form owe tax based on fair market value?

Plain-English summary

Only minimum Florida documentary stamp tax was due on the deeds transferring property from the general partnership to the converted limited partnership. The revised ruling treated a partnership converted under section 620.8902 as the same entity that existed before the conversion.

The result was conditional. Every statutory conversion requirement had to be satisfied, and the general partnership had to hold fee-simple title to the real property immediately before converting. If those conditions were met, the deeds were not taxed based on fair market value.

This revised advisement corrected the transaction description in the earlier TAA 99B4-009: the deeds ran from the general partnership to the limited partnership after conversion.

What this means for you

The minimum-tax result did not apply merely because related parties used a partnership deed. It depended on a valid statutory conversion of the same entity and continuous fee-simple ownership immediately before that conversion.

Common questions

Q: Was deed tax based on the property's fair market value?
A: No. The Department imposed only minimum tax under the stated conversion facts.

Q: Why did only minimum tax apply?
A: Florida law treated the properly converted partnership as the same entity that existed before conversion.

Q: What conditions did the Department impose?
A: Full compliance with section 620.8902 and fee-simple ownership by the general partnership immediately before conversion.

Q: What did the revision change?
A: It described the deeds as running from the general partnership to the converted limited partnership; the earlier ruling had stated the direction differently.

Citations and references

• Fla. Stat. § 201.02(1) — documentary stamp tax on deeds
• Fla. Stat. § 620.8902 — partnership conversion
• Fla. Stat. § 620.8904(2)(a) — transfer of real-property title to the converted entity
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B4-009R

Original ruling text

SUMMARY

Question: Is a deed from a general partnership to the
limited partnership, for real property that was owned by
the general partnership prior to the conversion, subject
only to the minimum tax and not taxed based on the fair
market value?

Answer - Based on Facts Below: A partnership converted is
for all purposes the same entity that existed before the
conversion. When all requirements for the conversion are
satisfied, only minimum tax is due.

Revises TAA 99B4009

             Dec 20, 1999

Re: Technical Assistance Advisement No. 99(B)4-009 REVISED
Documentary Stamp Tax - Deed Pursuant to Partnership
Conversion
Section 201.02(1), F.S.
XXX (hereinafter Partnership)

Dear :

Your letter requesting a Technical Assistance Advisement
has been referred to this office for response. The specific
scenario for which advice has been requested is summarized
below.

       FACTS AS PRESENTED BY PETITIONER

The general partnership was organized in 1954, and sometime
thereafter acquired title to certain real property in Florida.
In 1997, each of the partners of the partnership contributed his
or her proportionate share of a 1% interest in the general
partnership to a corporation in exchange for XXX shares of stock
in the corporation. The shares of stock were distributed to the
partners in accordance to their proportionate interest in the

Page 2

partnership. The general partnership was thereafter converted to
a limited partnership pursuant to s. 620.8902, F.S., with the
corporation serving as the sole general partner. The limited
partnership agreement was filed with the Department of State.
All partners maintained their respective partnership interests
after the conversion.

         REQUEST FOR ADVISEMENT

You request advisement that the deed(s) from the general
partnership to the limited partnership, for real property that
was owned by the general partnership prior to conversion, will
be subject only to minimum tax, and will not be taxed on the
fair market value.

           PROVISIONS OF LAW

Section 201.02(1), F.S., imposes tax on deeds which convey
real property or an interest in real property at the rate of 70
cents for each $100 of the consideration given for the real
property or interest in real property conveyed. Consideration
includes, but is not limited to, the money paid or agreed to be
paid; the discharge of an obligation; and the amount of any
mortgage, purchase money mortgage lien, or other encumbrance,
whether or not the underlying indebtedness is assumed. When
consideration for the real property interest includes property
other than money, it is presumed that the consideration is equal
to the fair market value of the real property interest.

A partnership that has been converted pursuant to the
provisions of s. 620.8902, F.S., is for all purposes the same
entity that existed before the conversion. The statutes further
provide in s. 620.8904(2)(a), F.S., that when a conversion takes
effect, title to all real property owned by the converting
partnership shall be transferred by deed to the converted
entity.

        POSITION OF THE DEPARTMENT

When a partnership is converted pursuant to s. 620.8902,
F.S., the converted partnership is the same entity that already

Page 3

existed before the conversion. Based on the law and facts
presented, it is the position of the Department that only
minimum documentary stamp tax, under s. 201.02, F.S., is due on
the deeds from the general partnership to the limited
partnership. This only applies, however, if all of the
requirements for conversion, set forth in s. 620.8902, F.S., are
complied with. Furthermore, it only applies if the general
partnership held fee simple title to the real property
immediately before the conversion to a limited partnership.

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, your request
and related backup documents are public records under Chapter
119, F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

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

CG/mh