[WSBARP] Transfer of commercial property from corporation to LLC

[Rich Holland]

You probably already found the answer on this but it is "NO".  There is a specific exemption in the WAC code for this.

WAC 458-61A-211

Agency filings affecting this section<http://app.leg.wa.gov/WAC/registerfiling.aspx?cite=458-61A-211>

Mere change in identity or form-Family corporations and partnerships.

(1) Introduction. A transfer of real property is exempt from the real estate excise tax if it consists of a mere change in identity or form of ownership of an entity. This exemption is not limited to transfers involving corporations and partnerships, and includes transfers of trusts, estates, associations, limited liability companies and other entities. If the transfer of real property results in the grantor(s) having a different proportional interest in the property after the transfer, real estate excise tax applies.
(2) Qualified transactions. A mere change in form or identity where no change in beneficial ownership has occurred includes, but is not limited to:
(a) The transfer by an individual or tenants in common of an interest in real property to a corporation, partnership, or other entity if the entity receiving the ownership interest receives it in the same pro rata shares as the individual or tenants in common held prior to the transfer. (See also WAC 458-61A-212<http://app.leg.wa.gov/WAC/default.aspx?cite=458-61A-212>, Transfers where gain is not recognized under the Internal Revenue Code.)
(b) The transfer by a corporation, partnership, or other entity of its interest in real property to its shareholders or partners, who will hold the real property either as individuals or as tenants in common in the same pro rata share as they owned the corporation, partnership, or other entity. To the extent that a distribution of real property is disproportionate to the interest the grantee partner has in the partnership, it will be subject to real estate excise tax.
(c) The transfer by an entity of its interest in real property to its wholly owned subsidiary, the transfer of real property from a wholly owned subsidiary to its parent, or the transfer of real property from one wholly owned subsidiary to another.
(d) The transfer by a corporation, partnership or other entity of its interest in real property to another corporation, partnership, or other entity if the grantee owner(s) receives it in the same pro rata shares as the grantor owner(s) held prior to the transfer.
(e) Corporate mergers and consolidations that are accomplished by transfers of stock or membership, and mergers between corporations and limited partnerships as provided in chapters 25.10<http://app.leg.wa.gov/RCW/default.aspx?cite=25.10> and 24.03<http://app.leg.wa.gov/RCW/default.aspx?cite=24.03> RCW.
(f) A transfer of real property to a newly formed, beneficiary corporation from an incorporator to the newly formed corporation, provided:
(i) The proper real estate excise tax was paid on the original transfer to the incorporator; and
(ii) It was documented on or before the original transfer that the incorporator received title to the property on behalf of that corporation during its formation process.
This tax exemption does not apply to a transaction in which a property owner acquires title in his or her own name and later transfers title to the corporation upon its formation.
(g) A transfer into any revocable trust.
(h) A conveyance from a trustee of a revocable trust to the original grantor or to a beneficiary if no valuable consideration passes, or if the transaction is otherwise exempt under this chapter (for example, a gift or inheritance). A sale of real property by the trustee to a third party, or to a beneficiary for valuable consideration, is subject to the real estate excise tax




Thank you,

Rich Holland

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Jeanne Dawes
Sent: Friday, January 23, 2015 9:25 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Transfer of commercial property from corporation to LLC

Think about creating a LLC and then merging the corp with the LLC, or converting the corp to an LLC.

Jeanne

Jeanne J. Dawes
Attorney at Law
Gore & Grewe, P.S.
103 E. Indiana Avenue, Suite A
Spokane, WA 99207-2317
Voice:  509-326-7500
Fax:      509-326-7503
jjdawes at goregrewe.com<mailto:jjdawes at goregrewe.com>
INFORMATION CONTAINED IN THIS E-MAIL TRANSMISSION IS PRIVILEGED AND CONFIDENTIAL.

From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of PrestonFoskey
Sent: Friday, January 23, 2015 9:05 AM
To: WSBA Real Property Listserv
Subject: [WSBARP] Transfer of commercial property from corporation to LLC

Listmates:
                Client has small family corporation that owns real property with small apartment complex.  Client wants to form LLC and transfer real property from corporation to LLC.
                Will client be required to pay excise tax on transfer from corporation to LLC when owners of corporation are same individuals as members of LLC?
                Thanks in advance.

Preston L. Foskey, Attorney at Law
WSBA # 12509
Preston L. Foskey, P. S.
8248 East D Street
Tacoma, Washington 98404-1042
Phone:  253.535.5829  Fax:  253.535.9391
E-Mail:  preston at plfps.comcastbiz.net<mailto:preston at plfps.comcastbiz.net>

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