[WSBAPT] Department of Revenue Application of WAC 458-61A-101

[Matt Yates]

I have an LLC client and the relationship between the Members has declined over the last 10-15 years.  The existing membership is effectively Person A with a 1/6 interest, Couple B with a 1/3 interest, Person C with a 1/6 interest, and Person D with a 1/3 interest.  Persons C and D have found a potential buyer of 1/3 of the LLC (for sake of discussion, buying Couple B's interest) and C and D are trying to find a way to buy Person A's interest.  None of the persons involved are affiliates of one another (not counting married couple who wants to sell out).  We are trying to figure out if in just this simplified example, the REET is avoided since there is no change in controlling interest.  My initial take is that since what is being sold will not amount to any Member ending up with a Controlling Interest, no REET is due.  WAC 458-61A-101.

To further complicate things, Persons C and D are contemplating bringing in Person E to possibly help buying Person A's interest.  The result still ends up with no Member having bought a controlling interest.

While they Members are all aware of the potential sale and, due to the deteriorating relationship would like to see it happen, they are not really acting in concert to take a controlling interest.

Given the moving parts here and the amount of money at stake, I am looking for any experience that anyone is willing to share dealing with the Department of Revenue and what the Department's take was on any situations similar to this one.  Even war stories are helpful.
Matt

Matthew D. Yates
Attorney at Law
Yates Marshall, PLLC
10000 NE 7th Avenue, Suite 200
Vancouver, WA 98685
Phone: (360) 449-6100
Fax: (360) 449-6111
matt at yatesmarshall.com<mailto:matt at yatesmarshall.com> (New Email Address)
www.yatesmarshall.com

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