Did Florida deed tax apply when two mergers under another state's law vested Florida real property in the surviving entities without deeds?

Plain-English summary

Florida documentary stamp tax did not apply when the two foreign-law mergers vested Florida real property by operation of law without deeds. A Florida corporation merged into a foreign corporation, which then merged into a foreign limited liability company.

The conclusion required the surviving entities' governing jurisdiction to transfer title automatically without execution and delivery of a deed. It also assumed the named merger parties held fee-simple record title and that the merger documents selected the foreign jurisdiction's law.

What this means for you

The tax result depended on the law governing title vesting, not merely on calling a transaction a merger. If Florida law governed or any deed was legally required, the analysis could differ.

Common questions

Q: Were deeds recorded in Florida? No. The transactions vested title without deeds.

Q: Did the entities' governing law matter? Yes. The exemption applied only because foreign law governed and required no deed.

Q: Did record ownership matter? Yes. The Department assumed the merger parties held fee-simple record title.

Citations and references

• Fla. Stat. § 201.02(1) — deed documentary stamp tax
• Fla. Stat. §§ 607.1101, 607.1108, 607.1109, 607.11101 — merger provisions
• Fla. Admin. Code r. 12B-4.013(31) — mergers
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B4-011

Original ruling text

SUMMARY

Question: Will documentary stamp tax be due on either of
the transfers of real property (by operation of law)
incident to the merger of a Florida corporation into a
foreign corporation pursuant to the statutes of another
state's jurisdiction; or the subsequent merger of the
surviving foreign corporation into a limited liability
company also governed by the laws of another state?

Answer - Based on Facts Below: Transfers of real property
(by operation of law) incident to mergers are not taxable
for the purpose of the Florida documentary stamp tax unless
the merger is governed by the laws of this State and
providing the jurisdiction which governs the surviving
entity does not require the execution and delivery of a
deed.

Jul 30, 1999

Re: Technical Assistance Advisement No. 99(B)4-011
Documentary Stamp Tax - Corporate Mergers
s. 201.02(1), F.S., & Rule 12B-4.013(31), F.A.C.
XXX (hereinafter Taxpayer)

Dear :

This is in response to your recent letter requesting a
Technical Assistance Advisement in which you ask if the Florida
documentary stamp taxes imposed by s. 201.02, F.S. are due on a
deed upon the mergers of a Florida corporation into a foreign
corporation.

Proposed Transaction

A Florida corporation proposes to merge with a foreign
corporation. The foreign corporation will be the surviving
entity. No deeds will be recorded in Florida regarding the

transfer of Florida real property. Following the first merger,
the foreign corporation will merge with a foreign limited
liability company. The limited liability company will survive
the foreign corporation. All the real estate from the foreign
corporation will be vested in the limited liability company
without the recording of a deed. The laws of the state
governing the foreign corporation and the limited liability
company provide that all rights, title and interests to real
estate owned by the merging corporation are vested in the
surviving corporation or limited liability company without
necessity of a deed.

Request for Advisement

You request an advisement as to whether documentary stamp
tax will be due on either of the transfers of real property (by
operation of law) incident to the proposed transactions: 1.) the
merger of a Florida corporation into a foreign corporation
pursuant to the statutes of a foreign jurisdiction (State); and
2.) the subsequent merger of the surviving foreign corporation
into a foreign limited liability company pursuant to the
statutes of a foreign jurisdiction (State).

Provision of Law

The tax levied by s. 201.02(1), F.S., is an excise tax on
deeds, instruments, or writings that transfer any interest in
real property. The tax is 70 cents for each $100 of
consideration. Consideration includes, but is not limited to,
money paid or to be paid, the discharge of an obligation, and
the amount of any mortgage, purchase money mortgage, or other
encumbrance. If the consideration is other than money, the
consideration is presumed to be equal to the fair market value
of the real property being transferred.

Sections 607.1101, 607.1108, 607.1109 and 607.11101, F.S.,
which permit the merger of Florida corporations and limited
liability companies, do not specifically address which
jurisdiction's laws will govern the vesting of title in the
surviving entity when an out-of-state entity is involved in the
merger. Sections 607.1101, and 607.1108, F.S., state that

pursuant a plan of merger one or more corporations may merge
with or into one or more corporations or other business
entities, (ie. limited liability company). According to s.
607.11101(2), F.S., title to all real property owned by each
corporation or business entity party to the merger is vested in
the surviving entity without reversion or impairment. Title to
the property shall be conveyed by recording of a deed with
payment of applicable taxes thereon.

Position of the Department

Based on the foregoing authorities and facts presented, it
is the current position of the Department that the mergers are
not taxable for purposes of the Florida documentary stamp tax
unless the merger is governed by the laws of this State. This
only applies if the laws of the jurisdiction which govern the
surviving entities do not require deeds to transfer title to
real property owned by the merged entities. That is, this only
applies if the real property of the merging entities becomes the
real property of the surviving entity, by operation of the law
of the jurisdiction which governs the surviving entity, without
any need to execute and deliver a deed.

The conclusion is based on the assumption that the real
property at issue was owned in fee simple, as shown by record
title, by the named entities that are parties to the merger, and
that the documents of the merger, corporation and limited
liability company state that they are to be governed by the laws
of the out-of-state jurisdiction.

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