[WSBARP] Gift or sale? REET

[Craig Blackmon]

So is that all it takes? Call it a "gift" and it's tax free?

If Brother B decided to forego his "gift," would Brother A have any problem
with that? The answer should shed some light on whether this is an exchange
of gifts (in which case A won't care), or an exchange for value.

I don't see this as a gift. It is an exchange for value, and therefore is
taxable. Sometimes you gotta pay the Tax Man...

Craig

Craig Blackmon, Attorney at Law
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On Wed, Sep 27, 2017 at 8:02 PM, Bryce Dille <BryceD at cdb-law.com> wrote:

> If it's a gift it's exempt regardless of percentage transferred
>
> Sent from my iPhone
>
> On Sep 27, 2017, at 3:00 PM, Josh Grant <jgrant at accima.com> wrote:
>
> Two brothers own (1) 50% value of real property each and (2) brother “A”
> owns 1/7th and brother “ B” owns 3/7ths interest in S corp which owns other
> real estate only.
>
> The two brothers want to transfer by gift their undivided interests to
> each other without paying REET.  There will be no legal agreement requiring
> them to do a mutual transfer.
>
> If Brother B gives his brother A an undivided interest of land ; and then
> simultaneously A gives his 1/7th of S corp stock to brother B (so that B
> now owns a controlling interest), again as a gift...  Will Department of
> Revenue want excise tax on either/each transfer?  (based on the assessed
> value of the real estate)
> My guess is yes. although I have seen different answers on this on the
> list serve recently.
>
> Assume all the above but the land interest is “gifted”  in 2017 and the
> transfer of the S corp takes place over a year later.. then is the answer
> “no”?
>
> *WAC 458-61A-101 in part says *
> 3) *In general.* In order for the tax to apply when the controlling
> interest in an entity that owns real property is transferred, the following
> must have occurred:
> (a) The transfer or acquisition of the controlling interest occurred
> within a twelve-month period.
>
> (I also wonder if “the controlling interest” means that over 50% is
> transferred or it means that any interest like 1/7th is transferred which
> ends up shifting the controlling interest???)
>
>
> IN THE ALTERNATIVE Then I am wondering IF by waiting a year, that will
> strenghthen the argument that theses were just gifts, no “consideration
> for” the transfers...  and also because of the above WAC concerning
> controlling interest,  exempts the transfer.  Each has acquired their
> present interests in the S corp longer than a year ago.
>
> thanks
>
> Josh Grant
>
> Joshua F. Grant, PS
> Attorney at Law
> P. O. Box 619
> Wilbur, WA 99185
> tel 509 647 5578 <(509)%20647-5578>
> fax 509 647 2734 <(509)%20647-2734>
>
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