Did converting a Florida general partnership into a limited partnership trigger deed, renewal-note, or nonrecurring intangible tax?

Plain-English summary

Florida treated the limited partnership produced by the statutory conversion as the same entity that existed before the conversion. The deed required to place title in the converted partnership therefore did not transfer the real-property interest from one entity to another and was not subject to documentary stamp tax.

The converted entity also remained the original obligor on the existing debt. Renewal notes and mortgages executed after conversion were exempt from documentary stamp tax if all requirements of section 201.09(1) were met, including no new obligors, renewal of only the unpaid balance, prior payment of tax, and attachment of the original tax-paid note.

No additional nonrecurring intangible tax was due if the original note was not satisfied and no additional money was advanced.

What this means for you

Partnerships converting under Florida law

A statutory conversion can preserve entity identity for these taxes. The result depends on using the conversion provisions and keeping the existing obligations continuous.

Lenders and closing professionals

The debt-renewal exemption was conditional. Confirm that the renewal adds no obligor or principal and that the original tax-paid note is attached as required.

Common questions

Was the conversion deed taxable? No. The TAA found no transfer between different entities.

Was the renewed note or mortgage taxable? Not if every requirement of section 201.09(1) was satisfied.

Was additional nonrecurring intangible tax due? No, provided the original note remained outstanding and no new money was advanced.

Citations and references

• Fla. Stat. § 199.133
• Fla. Stat. § 201.02(1)
• Fla. Stat. § 201.08(1)
• Fla. Stat. § 201.09(1)
• Fla. Stat. §§ 620.8902, 620.8904
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99M-002

Original ruling text

SUMMARY

QUESTION: Is documentary stamp tax due on a deed conveying
Florida real property and given by a general partnership to

a limited partnership as a result of a conversion pursuant

to s. 620.8902, F.S., and is documentary stamp tax or
nonrecurring intangible taxes due on the renewal of the

existing note and mortgage by the resulting converted

limited partnership where proper taxes were paid on the

original note and mortgage?

ANSWER - Based on Facts Below: No documentary stamp tax is
due on the deed conveying interest in Florida real property

from a general partnership to a limited partnership since

the resulting limited partnership is considered the same

entity that existed prior to the conversion. No

documentary stamp tax is due on the renewal of the existing

note and mortgage, assuming all the requirements of s.

201.09(1), F.S., are met. No additional nonrecurring

intangible tax is due on the renewal note if the original

note is not satisfied and there are no additional monies

advanced.

Jun 23, 1999

Re: Technical Assistance Advisement No. 99(M)-002
Documentary Stamp Tax and Nonrecurring Intangible Tax
Conversion of Partnership to Limited Partnership
ss. 199.133, 201.02, 201.08, 201.09, 620.8902, and
620.8904, F.S.

XXX (Taxpayer)

Dear:

This is in response to your letter dated May 4, 1999,
requesting a Technical Assistance Advisement regarding the
applicability of documentary stamp and nonrecurring intangible

taxes under the facts as set forth herein.

Facts Presented by Petitioner

Taxpayer is a general partnership formed under the laws of
Florida. The deed as to which advice is requested is a deed to
be given pursuant to s. 620.8904(2)(b), F.S., in connection with
a conversion of a general partnership, the Taxpayer, to a
limited partnership under s. 620.8902, F.S. The property to be
transferred is subject to a mortgage. The conversion is to be

carried out in six steps.

Step one. Partners of Taxpayer will organize a new entity

to be the General Partner of the resulting limited partnership.

Step two. Partners of Taxpayer will amend the General
Partnership Agreement to approve the conversion under s.
620.8902(2), F.S., and to otherwise meet requirements for the

conversion.

Step three. The Certificate of Limited Partnership will be
executed and filed with the Secretary of State and will conform
with ss. 620.108 and 620.8902(3)(a),(b), and (c), F.S.

Step four. A limited warranty deed will be executed by
Taxpayer to the resulting limited partnership. The deed will
state than no consideration is given and that the deed is given
solely to comply with the requirement of s. 620.8904, F.S. The
deed will not contain a statement to the effect that the grantee
will assume or agree to pay the debt secured by the mortgage.
The deed will be recorded in XX, Florida. A properly completed
Form DR-219 will be filed.

Step five. A Notice of Conversion will be given to the

partners in compliance with s. 620.8902(6), F.S.
Step six. The original partners will give to the mortgagee
an instrument ratifying their guaranties of the debt secured by

the real property.

Request for Advisement

The Taxpayer requests the Department of Revenue issue a
ruling that the deed, if executed and recorded in the
transaction as described, is not subject to documentary stamp
tax under s. 201.02, F.S., and that no other taxes are imposed

on the transaction under Chapters 199 or 201, F.S.

Provisions of Law

Section 201.02(1), F.S., imposes an excise tax on

instruments that transfer any interest in Florida real property.

Section 620.8904(1), F.S., provides that a partnership
resulting from a conversion pursuant to s. 620.8902, F.S., is
for all purposes the same entity that existed before the

conversion.

Section 620.8904(2)(a), F.S., provides that title to all
real property owned by a converting partnership must be

transferred by deed to the converted partnership.

Section 201.08(1), F.S., imposes an excise tax on written
obligations to pay money, such as promissory notes, and on
mortgages recorded in Florida, and on the renewal of all such

instruments.

Section 201.09(1), F.S., exempts renewal notes and
mortgages if there are no new obligors, only the unpaid balance
is renewed, tax was paid on the original note, and the original

note evidencing tax paid is attached to the renewal.

Section 620.8904(2)(b), F.S., provides that all obligations
of the converting partnership continue as obligations of the

converted entity.
Section 199.133, F.S., imposes a one-time nonrecurring
intangible personal property tax on debt obligations secured by

a mortgage upon Florida real property.

Position of the Department

The converted limited partnership is treated, for all

purposes, as the same entity that existed before the conversion.
Thus, the deed does not convey the real property interest from
one entity to another. No documentary stamp tax is required on
the deed to the converted limited partnership. The converted
entity is considered the original obligor and no documentary
stamp tax is due on the renewal of the converting partnership's
notes and mortgages executed by Taxpayer after the conversion,
assuming all the requirements of s. 201.09(1), F.S., are met.

No additional nonrecurring intangible tax is due on the note if

the original note is not satisfied and there are no additional

monies advanced.

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,

Charles T. Phillips
Senior Tax Specialist
Technical Assistance and Dispute Resolution

Office of General Counsel

CTP/mh