I own two of four contiguous parcels individually, and my wholly-owned corporation owns the other two. All four are being sold together to one buyer under a single contract for $1.2 million, with consideration allocated separately to each parcel so that neither I nor my corporation would individually receive $1 million or more. Are my corporation and I treated as separate transferors for New York's Real Property Transfer Gains Tax, so our considerations aren't aggregated?

Plain-English summary

This tax no longer exists. New York's Real Property Transfer Gains Tax (former Article 31-B of the Tax Law) was a 10% tax on the GAIN from transferring New York real property where consideration was $1 million or more. It was repealed for any transfer occurring on or after June 15, 1996. This 1987 opinion is preserved here for historical and research value, not as current law.

John Malasky, individually, owned two of four contiguous tracts of land in Claverack, New York; his wholly-owned corporation, John Malasky, Inc. (a mobile-home retailer that also bought and sold real estate), owned the other two. Under a single contract, a buyer agreed to purchase all four parcels together for a combined $1.2 million. The contract allocated the price across parcels based on each one's configuration, frontage, and development suitability, with the allocation among three of the four parcels left to Malasky's own reasonable estimate. Structured this way, Malasky individually would receive $850,000 (for two parcels) and the corporation would receive $350,000 (for the other two) -- each below the $1 million exemption threshold on its own.

Malasky argued that he and his corporation were legally distinct transferors, and that the regulation protecting SEPARATE owners of contiguous parcels from having their considerations aggregated (former 20 NYCRR § 590.43(b)) should apply -- especially since all four parcels were originally acquired between 1973 and 1979, years before the gains tax was even enacted in 1983, so there could be no plan to structure the deal around a tax that didn't yet exist. The Department rejected this. The whole point of the "several transferors" aggregation exception is to protect genuinely INDEPENDENT owners of adjoining land who happen to be selling to the same buyer -- not to let a single person split ownership between his own name and his 100%-owned corporation to multiply the $1 million exemption. Because Malasky owned all of the corporation's stock, the Department applied its "look-through" principle (a consistent theme across the gains tax's administration) to treat him as the single, unified owner of all four parcels -- directly as to two, and indirectly (through his wholly-owned corporation) as to the other two. The Department also flatly rejected the pre-tax-enactment acquisition timing as relevant -- since the mutuality-of-ownership analysis doesn't depend on tax-avoidance motive, when or why the parcels were originally acquired doesn't change whether the SAME PERSON effectively owns contiguous land through different vehicles today. With Malasky deemed one transferor of all four parcels, the combined $1.2 million had to be aggregated, exceeding the $1 million threshold.

What this means for you

Sole owners of a corporation who also personally own adjoining real estate

Under this now-repealed tax, splitting ownership of contiguous parcels between your own name and your wholly-owned company didn't multiply your exemption -- the Department looked through the corporate form to the underlying economic owner.

Real estate attorneys structuring multi-parcel sales involving related individual and corporate sellers

This opinion is the clearest statement in this corpus of the "look-through" aggregation principle applied to a sole shareholder -- a useful contrast with TSB-A-93(10)R and TSB-A-90(6)R in the same corpus, which analyze aggregation among UNRELATED or family co-owners rather than a single person wearing two hats.

Accountants evaluating whether pre-tax-era acquisition timing helps avoid aggregation

The opinion explicitly forecloses the argument that acquiring parcels years before the gains tax existed, without any tax-motivated structuring, is relevant to the aggregation analysis -- contiguity and common ownership are what matter, not acquisition history or intent.

Common questions

Q: Does this look-through aggregation principle still matter today?
A: Not under this specific tax -- it was repealed for transfers on or after June 15, 1996. Current New York real estate taxes have their own separate rules for related-party and multi-entity sales.

Q: Why didn't the "no tax-avoidance intent" argument work?
A: Because the aggregation rule for common/mutual ownership doesn't turn on WHY the ownership structure exists or WHEN it was created -- it turns on whether the same person, directly and indirectly, actually owns the contiguous parcels being sold together.

Q: Would the answer have been different if Malasky owned less than 100% of the corporation?
A: Likely yes to some degree -- the "look-through" principle recognizes ownership "to the extent" a person owns real property directly and through an entity, suggesting a partial ownership stake could support only partial aggregation, though this opinion didn't need to reach that scenario since Malasky owned the corporation outright.

Q: Can another sole owner in a similar multi-parcel sale rely on this exact ruling?
A: No, apart from the repeal -- an Advisory Opinion binds the Department only as to the petitioner and facts presented, though the look-through principle itself was described as consistently applied throughout the tax's administration.

Citations and references

Statutes and regulations:

• former Tax Law § 1440.7 (aggregation of partial or successive transfers, unless the transferor(s) can show they weren't part of a plan to avoid the gains tax's coverage)
• former 20 NYCRR § 590.43(b) (consideration paid to SEVERAL, genuinely separate and distinct transferors of contiguous or adjacent parcels sold to one transferee is NOT aggregated, even under a single contract)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/real_prop_tran_ao_1987.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/real_property/a87_9r.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-87 (9) R
Real Property Transfer
Gains Tax
October 26, 1987

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M870901D

On September 1, 1987, a Petition for Advisory Opinion was received on behalf of John
Malasky and John Malasky, Inc., located at Route 23, Claverack, New York 12513.
The issue raised is whether John Malasky, Inc. and John Malasky, individually, are to be
treated as separate transferors in determining if the transaction described below will be taxable under
Article 31-B of the Tax Law (the "gains tax").
The facts as presented are that the Petitioner, John Malasky, Inc. is a domestic business
corporation organized in 1948, engaged primarily in the retail sales of mobile and modular homes.
The corporation also engages in the purchase and sale of real property. John Malasky, is the owner
of all issued and outstanding shares of stock in the corporation, John Malasky, Inc.
Under contract of sale, the Gillman Organization, Ltd. is to purchase four contiguous tracts
of land for $1.2 million. Two of the four parcels, hereinafter Parcel 1 and Parcel 3, are owned by Mr.
Malasky individually. The remaining two parcels, hereinafter Parcel 2 and Parcel 4, are owned by
John Malasky, Inc.
Under the terms of the contract, because of its configuration, road frontage and suitability for
immediate subdivision (i.e., connection to public water and sewer), $750,000 of the total $1.2
million consideration is allocated to Parcel 1. Based upon their acreage and improvements, the
balance of $450,000 is by estimation of Petitioner allocated among the remaining three parcels, as
follows: Parcel 2 $50,000, Parcel 3 $100,000 and Parcel 4 $300,000. The allocation among the three
parcels is not determined by the contract of sale. However, Petitioner argues that any reasonable
allocation of the $450,000 would result in receipt by each of the transferors of total consideration
of less than $1 million. Therefore, Petitioner states that upon the closing of title, anticipated to occur
on or about January 15,1988, John Malasky, Inc. will receive a total consideration of $350,000for
Parcel 2 and Parcel 4, and John Malasky, individually, will receive a total consideration of $850,000
for Parcel 1 and Parcel 3.
John Malasky acquired title to Parcel 1 through two deeds, both dated March 26, 1973. In
the following year, he conveyed the property in an arm's length transaction to a development
corporation taking back a mortgage to secure the financing. After five years of ownership, the
development corporation, in lieu of foreclosure, reconveyed the parcel to Mr. Malasky by deed dated
September 5, 1979.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

FRANK J. PUCCIA, DIRECTOR

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER

-2­
TSB-A-87 (9) R
Real Property Transfer
Gains Tax
October 26, 1987

John Malasky, Inc. took title to Parcel 2 by deed dated December 24, 1975. Subsequently,
in two contingent purchases from related grantors, John Malasky individually acquired title to Parcel
3 and simultaneously, John Malasky, Inc. took title to Parcel 4.
Petitioner contends that the four parcels involved in the present contract were acquired and
held, and are to be conveyed, by two separate entities, John Malasky individually and the
corporation, John Malasky, Inc. Moreover, Petitioner states that it is self-evident that the parcels
were so acquired for reasons purely apart from any contemplation of tax consequences under Article
31-B, for the reason that all acquisitions took place between 1973 and 1979, whereas Article 31-B
was not enacted until 1983. Inasmuch as Article 31-B by its provisions is not applied retroactively,
Petitioner states that it would be improper to view the present transaction as having been structured
so as to avoid the gains tax.
Based on the foregoing, it is Petitioner's contention that John Malasky and the corporation,
John Malasky, Inc., are separate entities and should be considered separate transferors in accordance
with the discussion contained in Gains Tax Regulation 590.43(b), and that the gains derived from
the sale now under contract are not taxable under Article 31-B of the Tax Law.
Whether the consideration received from transfers of real property is to be aggregated
depends on whether the transferor is subject to the aggregation clause for partial or successive
transfers provided for in § 1440.7 of the Tax Law, which states, in pertinent part, that:
".. .[t]ransfer of real property shall also include partial or successive
transfers, unless the transferor or transferors furnish a sworn
statement that such transfers are not pursuant to an agreement or plan
to effectuate by partial or successive transfers a transfer which would
otherwise be included in the coverage of this article, and the transfer
of real property by tenants in common, joint tenants or tenants by the
entirety, provided that the subdividing of real property and the sale of
such subdivided parcels improved with residences to transferees for
use as their residences, other than transfers pursuant to a cooperative
or condominium plan, shall not be deemed a single transfer of real
property. . . ."
Gains Tax Regulation 590.43 states, in pertinent part, as follows:
"Q.

How is the aggregation clause of § 1440.7 of the Tax Law...
applied in the case of:

b.

Several transferors, each owning a separate parcel of land,
each parcel contiguous with or adjacent to the others, one
transferee?

-3­
TSB-A-87 (9) R
Real Property Transfer
Gains Tax
October 26, 1987

A.

The consideration is not aggregated, even if there is a clause
in each contract that conditions the sale of each parcel on the
ability of the transferee to acquire the other contiguous or
adjacent parcels. The consideration paid to each transferor is
not aggregated even in the case of one contract between the
transferee and the several transferors.

The intent of this regulation was to not aggregate consideration paid to separate and distinct
transferors merely because they negotiated to sell contiguous or adjacent property to a single
transferee. Where contiguous or adjacent interests in real property are owned by a person in his
individual capacity and also through his ownership of an entity, the mutuality of ownership in the
real property is recognized, and such person is treated as one transferor to the extent that he owns
the real property directly and through his ownership interest in the entity that owns the real property.
This position is consistent with the "look through" principle which has been applied throughout the
administration of the gains tax.
Moreover, the fact that the properties were acquired at different times prior to the effective
date of Article 31-B and not pursuant to a prearranged plan is irrelevant in determining the contiguity
or adjacency of the properties, and whether the consideration is to be aggregated.
Accordingly, based on the foregoing, it is concluded that since John Malasky, Inc. is owned
100% by John Malasky, the transfer of real property by John Malasky, individually, and by the
corporation John Malasky, Inc. will be deemed to be by a single transferor. Therefore, the
consideration received from such sales is required to be aggregated.

DATED: October 26, 1987

s/ANDREW F. MARCHESE
Chief of Advisory Opinions

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.