NOVEMBER 28, 2011 UPDATE
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Gutter Chaves Josepher Rubin Forman Fleisher Law Firm
May 28, 2011, 4:12:23 PM5/28/11
to Tax & Business Update
May 28, 2011
An Electronic Newsletter of Gutter Chaves Josepher Rubin Forman
Fleisher P.A.
Charles (Chuck) Rubin, Editor/Author (except as otherwise noted) ©
2011
**************************************
CONTENTS:
1. HOMESTEAD WAIVER CASE WITHDRAWN [FLORIDA]
2. ARE YOU CHECKING FOR DOCUMENTARY STAMP TAXES ON TRANSFER OF ENTITY
INTERESTS [FLORIDA]?
3. APPLICABLE FEDERAL RATES–JUNE 2010
4. FUTA SURTAX EXPIRING SOON
5. FIRM ANNOUNCEMENTS
6. ABOUT OUR FIRM
**************************************
1. HOMESTEAD WAIVER CASE WITHDRAWN [FLORIDA]
On March 19, 2010, we commented on the Habeeb case. In that case, a
Florida appellate court ruled that the entry of a spouse into a deed
that transferred the spouse's ownership interest in a homestead to the
other spouse was sufficient for that spouse to waive his remaining
homestead rights in the property.
We commented that for various reasons, this appeared to be a
questionable conclusion, due to Florida requirements for written
waivers of homestead rights and fair disclosure of assets for a valid
waiver.
The Habeeb opinion has now been withdrawn. Perhaps for the reasons we
mentioned, perhaps for other reasons. Until a subsequent opinion is
issued, or some other court addresses a similar issue, things are now
back to where they were before the Habeeb case.
**************************************
2. ARE YOU CHECKING FOR DOCUMENTARY STAMP TAXES ON TRANSFER OF ENTITY
INTERESTS [FLORIDA]?
Florida recently issued emergency rules relating to the imposition of
documentary stamp taxes on the transfer of conduit entity interests.
The rules do not greatly expand on the statutory rules, but are a
useful reminder of the broad reach of the conduit rules. I would wager
a significant sum that there are many transactional attorneys and
business persons that are not routinely reviewing the potential
application of Florida documentary stamp taxes on the transfer of
interests in corporations, partnerships, LLC’s, and other entities.
Florida imposes documentary stamp taxes at the rate of $0.70 per $100
of consideration paid for Florida real property. Some counties impose
an additional surtax. In recent years, Florida law has developed to
allow or acknowledge that oftentimes real property can be transferred
to an entity without incurring the tax. This has opened the door to
planning whereby taxpayers would transfer real property free of tax to
an entity, and then sell the entity to a third party buyer (instead of
selling the real property directly) to avoid documentary stamp taxes
on that sale.
In 2009, Florida sought to close the door on this type of planning. It
revised Fla.Stats. §201.02 to impose tax on transfers of interests in
“conduit entities.” Generally, a tax will be imposed if (a) real
property is conveyed to a conduit entity, (b) within 3 years of the
conveyance, and (c) all or a portion of the grantor's direct or
indirect ownership interest in the conduit entity is subsequently
transferred for consideration. If the entity owns assets other than
real property, then the tax will be prorated. A “conduit entity” is a
legal entity to which real property is conveyed without full
consideration by a grantor who owns a direct or indirect interest in
the entity, or a successor entity.
Exceptions exist. Transfers of interests in a conduit entity that are
in the nature of a gift (that is, they are without consideration), are
not taxable. Transfers of interests in publicly traded entities are
also exempt. A transfer of an interest to an irrevocable grantor trust
is exempt – this appears directed at exempting sales to defective
grantor trusts. A transfer of an entity interest at death generally
should not be subject to tax since there is usually an absence of
consideration paid.
The new emergency rules clarify that if the transfer to the entity was
subject to documentary stamp taxes, then the transfer of the interest
in the entity is not taxable as to that real property. They also have
an example that makes clear that the buyer of an interest in the
conduit entity will not be subject to tax on a subsequent resale of
that interest, since the buyer was not the original “grantor.” The
rules also provide that that tax is due on the earliest of the 20th
day of the month following the month the ownership interest is
transferred or the date that an instrument evidencing the transfer is
filed or recorded in Florida.
Thus, any time there is a transfer of an interest in any nonpubicly
traded entity for consideration, the question needs to be asked if
Florida real property was transferred to it within 3 years by the
seller (including indirect transfers through entities). This is
similar to another set of tax rules that can relate to transfers of
entities that is often overlooked – Code §1445 withholding on
dispositions by foreign persons of interests in entities that are U.S.
real property interests by reason of ownership of U.S. real property.
Florida Administrative Code §12BER11-2 (May 13, 2011)
**************************************
3. APPLICABLE FEDERAL RATES–JUNE 2010
Please go to http://goo.gl/590YP for the table and graph.
**************************************
4. FUTA SURTAX EXPIRING SOON
Employers pay federal unemployment taxes on employee wages at the rate
of 6.2%. 6% is the permanent rate, and 0.2% is a "temporary" surtax.
Perhaps the temporary tag is a misnomer - it has been in place since
1976.
The 0.2% portion is set to expire, effective July 1, 2011. In today's
political environment, it would be sheer speculation whether Congress
will act to extend that portion. The President's 2012 budget seeks to
make the 0.2% permanent.
**************************************
5. FIRM ANNOUNCEMENTS
Our attorneys are available for speaking engagements at Bar,
accountant, and other professional organization meetings and seminars
(schedules permitting). Feel free to contact us with any requests.
******************************
6. ABOUT OUR FIRM
Our firm seeks to protect and enhance the individual, family and
business wealth of our clients in the following principal practice
areas: Planning to Minimize Taxes (U.S. & International) • Probate &
Trust Litigation • Estate Planning, Charitable, Marital & Succession
Planning • Business Structuring & Transactions • Trusts & Estates
Administration • Tax Controversies • Creditor Protection.
Please visit our website at http://www.floridatax.com for information
about the firm, our attorneys, articles from recent monthly
newsletters, interesting articles and tax guides, and federal and
Florida tax rates and information. The firm and its attorneys have
been recognized in numerous peer rating guides, such as U.S. News &
World Report law firm rankings, Best Lawyers, Martindale-Hubbell,
Chambers, Who's Who in American Law, Florida Trend's Legal Elite,
Superlawyers, and South Florida Legal Guide Top Lawyers.
******************************
DAILY TAX AND BUSINESS UPDATES AVAILABLE. View prior articles, updates
that we didn't have room for in this newsletter, or read the above
postings when they are first published, by visiting http://www.rubinontax.blogspot.com.
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Having problems receiving this newsletter? Make sure that the E-mail
address "cru...@floridatax.com" is marked as a friend or otherwise set
to clear your spam filters! Subscribe and unsubscribe instructions
should be located at the end of this message - if not, send subscribe
and unsubscribe instructions to cru...@floridatax.com. To be properly
processed, unsubscribe instructions need to come from the applicable
email address or send instructions to cru...@floridatax.com with the
specific address being unsubscribed.
Feel free to forward this newsletter on to anyone who you think may be
interested.
-----------------------------------------------
The Usual Disclaimer: This newsletter summarizes for informational
purposes only information of interest to the clients and friends of
Gutter Chaves Josepher Rubin Forman Fleisher P.A. The information is
condensed from, and a general summary of, legislation, court
decisions, administrative rulings and other information, and should
not be construed as legal advice or opinion, and is not a substitute
for the advice of counsel.
Gutter Chaves Josepher Rubin Forman Fleisher P.A.
Boca Corporate Center
2101 Corporate Blvd., Suite 107
Boca Raton, Florida 33431
561.998.7847
www.floridatax.com
An Electronic Newsletter of Gutter Chaves Josepher Rubin Forman
Fleisher P.A.
Charles (Chuck) Rubin, Editor/Author (except as otherwise noted) ©
2011
**************************************
CONTENTS:
1. HOMESTEAD WAIVER CASE WITHDRAWN [FLORIDA]
2. ARE YOU CHECKING FOR DOCUMENTARY STAMP TAXES ON TRANSFER OF ENTITY
INTERESTS [FLORIDA]?
3. APPLICABLE FEDERAL RATES–JUNE 2010
4. FUTA SURTAX EXPIRING SOON
5. FIRM ANNOUNCEMENTS
6. ABOUT OUR FIRM
**************************************
1. HOMESTEAD WAIVER CASE WITHDRAWN [FLORIDA]
On March 19, 2010, we commented on the Habeeb case. In that case, a
Florida appellate court ruled that the entry of a spouse into a deed
that transferred the spouse's ownership interest in a homestead to the
other spouse was sufficient for that spouse to waive his remaining
homestead rights in the property.
We commented that for various reasons, this appeared to be a
questionable conclusion, due to Florida requirements for written
waivers of homestead rights and fair disclosure of assets for a valid
waiver.
The Habeeb opinion has now been withdrawn. Perhaps for the reasons we
mentioned, perhaps for other reasons. Until a subsequent opinion is
issued, or some other court addresses a similar issue, things are now
back to where they were before the Habeeb case.
**************************************
2. ARE YOU CHECKING FOR DOCUMENTARY STAMP TAXES ON TRANSFER OF ENTITY
INTERESTS [FLORIDA]?
Florida recently issued emergency rules relating to the imposition of
documentary stamp taxes on the transfer of conduit entity interests.
The rules do not greatly expand on the statutory rules, but are a
useful reminder of the broad reach of the conduit rules. I would wager
a significant sum that there are many transactional attorneys and
business persons that are not routinely reviewing the potential
application of Florida documentary stamp taxes on the transfer of
interests in corporations, partnerships, LLC’s, and other entities.
Florida imposes documentary stamp taxes at the rate of $0.70 per $100
of consideration paid for Florida real property. Some counties impose
an additional surtax. In recent years, Florida law has developed to
allow or acknowledge that oftentimes real property can be transferred
to an entity without incurring the tax. This has opened the door to
planning whereby taxpayers would transfer real property free of tax to
an entity, and then sell the entity to a third party buyer (instead of
selling the real property directly) to avoid documentary stamp taxes
on that sale.
In 2009, Florida sought to close the door on this type of planning. It
revised Fla.Stats. §201.02 to impose tax on transfers of interests in
“conduit entities.” Generally, a tax will be imposed if (a) real
property is conveyed to a conduit entity, (b) within 3 years of the
conveyance, and (c) all or a portion of the grantor's direct or
indirect ownership interest in the conduit entity is subsequently
transferred for consideration. If the entity owns assets other than
real property, then the tax will be prorated. A “conduit entity” is a
legal entity to which real property is conveyed without full
consideration by a grantor who owns a direct or indirect interest in
the entity, or a successor entity.
Exceptions exist. Transfers of interests in a conduit entity that are
in the nature of a gift (that is, they are without consideration), are
not taxable. Transfers of interests in publicly traded entities are
also exempt. A transfer of an interest to an irrevocable grantor trust
is exempt – this appears directed at exempting sales to defective
grantor trusts. A transfer of an entity interest at death generally
should not be subject to tax since there is usually an absence of
consideration paid.
The new emergency rules clarify that if the transfer to the entity was
subject to documentary stamp taxes, then the transfer of the interest
in the entity is not taxable as to that real property. They also have
an example that makes clear that the buyer of an interest in the
conduit entity will not be subject to tax on a subsequent resale of
that interest, since the buyer was not the original “grantor.” The
rules also provide that that tax is due on the earliest of the 20th
day of the month following the month the ownership interest is
transferred or the date that an instrument evidencing the transfer is
filed or recorded in Florida.
Thus, any time there is a transfer of an interest in any nonpubicly
traded entity for consideration, the question needs to be asked if
Florida real property was transferred to it within 3 years by the
seller (including indirect transfers through entities). This is
similar to another set of tax rules that can relate to transfers of
entities that is often overlooked – Code §1445 withholding on
dispositions by foreign persons of interests in entities that are U.S.
real property interests by reason of ownership of U.S. real property.
Florida Administrative Code §12BER11-2 (May 13, 2011)
**************************************
3. APPLICABLE FEDERAL RATES–JUNE 2010
Please go to http://goo.gl/590YP for the table and graph.
**************************************
4. FUTA SURTAX EXPIRING SOON
Employers pay federal unemployment taxes on employee wages at the rate
of 6.2%. 6% is the permanent rate, and 0.2% is a "temporary" surtax.
Perhaps the temporary tag is a misnomer - it has been in place since
1976.
The 0.2% portion is set to expire, effective July 1, 2011. In today's
political environment, it would be sheer speculation whether Congress
will act to extend that portion. The President's 2012 budget seeks to
make the 0.2% permanent.
**************************************
5. FIRM ANNOUNCEMENTS
Our attorneys are available for speaking engagements at Bar,
accountant, and other professional organization meetings and seminars
(schedules permitting). Feel free to contact us with any requests.
******************************
6. ABOUT OUR FIRM
Our firm seeks to protect and enhance the individual, family and
business wealth of our clients in the following principal practice
areas: Planning to Minimize Taxes (U.S. & International) • Probate &
Trust Litigation • Estate Planning, Charitable, Marital & Succession
Planning • Business Structuring & Transactions • Trusts & Estates
Administration • Tax Controversies • Creditor Protection.
Please visit our website at http://www.floridatax.com for information
about the firm, our attorneys, articles from recent monthly
newsletters, interesting articles and tax guides, and federal and
Florida tax rates and information. The firm and its attorneys have
been recognized in numerous peer rating guides, such as U.S. News &
World Report law firm rankings, Best Lawyers, Martindale-Hubbell,
Chambers, Who's Who in American Law, Florida Trend's Legal Elite,
Superlawyers, and South Florida Legal Guide Top Lawyers.
******************************
DAILY TAX AND BUSINESS UPDATES AVAILABLE. View prior articles, updates
that we didn't have room for in this newsletter, or read the above
postings when they are first published, by visiting http://www.rubinontax.blogspot.com.
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Having problems receiving this newsletter? Make sure that the E-mail
address "cru...@floridatax.com" is marked as a friend or otherwise set
to clear your spam filters! Subscribe and unsubscribe instructions
should be located at the end of this message - if not, send subscribe
and unsubscribe instructions to cru...@floridatax.com. To be properly
processed, unsubscribe instructions need to come from the applicable
email address or send instructions to cru...@floridatax.com with the
specific address being unsubscribed.
Feel free to forward this newsletter on to anyone who you think may be
interested.
-----------------------------------------------
The Usual Disclaimer: This newsletter summarizes for informational
purposes only information of interest to the clients and friends of
Gutter Chaves Josepher Rubin Forman Fleisher P.A. The information is
condensed from, and a general summary of, legislation, court
decisions, administrative rulings and other information, and should
not be construed as legal advice or opinion, and is not a substitute
for the advice of counsel.
Gutter Chaves Josepher Rubin Forman Fleisher P.A.
Boca Corporate Center
2101 Corporate Blvd., Suite 107
Boca Raton, Florida 33431
561.998.7847
www.floridatax.com
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