Did Florida documentary stamp tax apply when four Florida corporations merged into a Delaware corporation and then a Delaware partnership?

Plain-English summary

Florida found no documentary stamp tax due on either step because Delaware law vested the Florida properties in each surviving entity by operation of law without a deed.

First, four Florida subsidiaries owning business parks and distribution centers merged into a surviving Delaware corporation. Second, that corporation merged into a surviving Delaware limited partnership. No Florida deed would be recorded in either transfer.

Florida's rules treated statutory merger transfers as nontaxable unless a deed was given. The Department conditioned its result on each merger complying with the cited Delaware statutes.

What this means for you

A multi-step restructuring requires a separate title analysis for every merger. Each governing statute must automatically vest the property, and the parties must avoid a separate deed if relying on this ruling.

Common questions

Q: Did the Florida corporations' status make the first step taxable? No, under the stated Delaware-law merger facts.

Q: Was the corporation-to-partnership step also exempt? Yes.

Q: What fact was decisive? Automatic vesting without a deed.

Citations and references

• Fla. Stat. §§ 201.02(1) and 607.1107(1) and (4) — documentary stamp tax and foreign mergers
• Fla. Admin. Code rr. 12B-4.013(31) and 12B-4.014(8) — statutory merger transfers
• Del. Code Ann. tit. 8, § 259 and tit. 6, § 17-211 (1998) — cited Delaware provisions
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B4-018

Original ruling text

SUMMARY

QUESTION: Will Florida real property transferred as a
result of a merger of a Florida Corporation with a Delaware
Corporation and the subsequent merger of the Delaware
corporation with a Delaware Limited Partnership be subject
to documentary stamp tax?

ANSWER - Based on Facts Below: Providing that the mergers
comply with Delaware law, which requires no deed to be
given when real property is conveyed, the transactions
would be exempt from documentary stamp tax.

Dec 20, 1999

Re: Technical Assistance Advisement No. 99(B)4-018
Documentary Stamp Tax on Merger of Foreign Entities
pursuant to Foreign Statute
Sections 201.02(1), and 607.1107(1), F.S.; Rules 12B4.013(31) and 12B-4.014(8), F.A.C.
XXX (Parent Corporation)
XXX (Delaware Corporation)
XXX (Delaware Limited Partnership)
XXX (Florida Corporation I)
XXX (Florida Corporation II)
XXX (Florida Corporation III)
XXX (Florida Corporation IV)

Dear :

This is in response to your recent request for a Technical
Assistance Advisement in which 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 four Florida
corporations into a foreign corporation pursuant to the statutes
of a foreign jurisdiction; and (2) the subsequent merger of the
surviving foreign corporation into a foreign limited partnership

pursuant to the statutes of a foreign jurisdiction.

Facts Presented by the Petitioner

Parent Corporation owns four Florida corporations: Florida
Corporation I, Florida Corporation II, Florida Corporation III,
and Florida Corporation IV (collectively the "Florida
Corporations"). The Florida Corporations were formed under the
laws of the State of Florida. The Florida Corporations own
commercial real property developments in the State of Florida,
(e.g., business parks and distribution centers).

As part of a restructuring plan, the Parent Corporation
proposes to merge the Florida Corporations with another one of
its subsidiary corporations formed under the laws of the State
of Delaware, Delaware Corporation, pursuant to the laws of the
State of Delaware. After the merger, the Delaware Corporation
will be the surviving corporation. No deed will be recorded in
Florida transferring the Florida Corporation's real property to
the Delaware Corporation. Under Delaware law, all real estate
owned by the Florida Corporations will be vested in the
surviving entity, the Delaware Corporation, without the
necessity of recording a deed.

Following the first merger, the surviving Delaware
Corporation proposes to merge with a limited partnership formed
under the laws of the State of Delaware, Delaware Limited
Partnership, pursuant to the laws of the State of Delaware. The
Delaware Limited Partnership will be the surviving entity.
Following the proposed merger, no deed will be recorded in the
State of Florida transferring the Florida real property to the
Delaware Limited Partnership. Under Delaware law, all real
estate owned by the Delaware Corporation is vested in the
surviving entity, Delaware Limited Partnership, without the
necessity of recording a deed.

Requested Ruling

1. Provided that the Florida Corporation's merger with the
   Delaware Corporation complies with Delaware law, no
   documentary stamp tax will be due in connection with the

transfer of the Florida real property pursuant to a
statutory merger when the real property is transferred by
operation of the Delaware corporation merger statute.

2. Provided that the Delaware Corporation's Merger with the
   Delaware Limited Partnership complies with Delaware law, no
   documentary stamp tax will be due in connection with the
   transfer of the Florida real property pursuant to a
   statutory merger when the real property is transferred by
   operation of the Delaware limited partnership merger
   statute.

Discussion and Law

Section 201.02(1), F.S., imposes a tax at the rate of 70
cents on each $100 of consideration on instruments conveying an
interest in real property.

Rules 12B-4.013(31) and 12B-4.014(8), F.A.C., both provide
that the transfer of real property to a surviving corporation,
partnership, limited liability company or other business entity
resulting from the operation of an applicable statute governing
the merger or consolidation of such business entities is not
taxable unless a deed is given, in which case the consideration
is presumed to be equal to the fair market value of the real
property interest being transferred.

The Delaware General Corporation Law and the Delaware
Revised Uniform Limited Partnership Act provide that all rights,
title and interests to all real estate that is owned by the
merging corporation are automatically vested in the surviving or
resulting corporation from the merger of a limited partnership
and a corporation. Del. Code Ann. tit. 8, sec. 259 (1998)

The Delaware General Corporation Law and the Delaware
Revised Uniform Limited Partnership Act provide that all rights,
title and interests to real estate that is owned by the merging
corporation are automatically vested in the surviving or
resulting limited partnership. Neither statute requires the
filing of any deed by the parties. Del. Code Ann. tit. 8, sec.
259; Del. Code Ann. tit. 6, sec. 17-211(1998)

Section 607.1107(4), F.S., provides that in the case of the
merger of a foreign corporation with one or more domestic
corporations where the surviving corporation is to be governed
by any laws of a state other than this state, the effect of such
merger shall be the same as in the case of a domestic
corporation except insofar as the laws of such other state
provide otherwise. The Delaware statutes allow for the merger of
a Delaware corporation with a Delaware limited partnership
without the filing of a deed by the parties when real property
is transferred.

Determination

Florida law requires the payment of documentary stamp tax
on instruments conveying real property. However, if the
transfer occurs by operation of another state's laws, the
responses set forth in the following paragraphs are applicable
in this instant case.

Operating under the presumption that the Florida
Corporation's merger with the Delaware Corporation complies with
Delaware law, no documentary stamp tax will be due in connection
with the transfer of the Florida real property pursuant to a
statutory merger when the real property is transferred by
operation of the Delaware corporation merger statute.

Similarly, provided that the Delaware Corporation's merger
with the Delaware Limited Partnership complies with Delaware
law, no documentary stamp tax will be due in connection with the
transfer of the Florida real property pursuant to a statutory
merger when the real property is transferred by operation of the
Delaware limited partnership merger statute.

In this situation, no instruments will be recorded in the
State of Florida. Thus, no documentary stamp tax will be due.

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 from that
which is 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,

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

JBE/mh