[WSBARP] Gift or sale? REET

Thu Sep 28 11:43:05 PDT 2017

I'm curious, has anyone ever formally made this argument? It is the classic
hypothetical: A "gift" between family members (the use of quotation marks
is, to me, telling) that is reciprocated with another "gift."

If anyone has ever formally argued that each "gift" truly was not an
exchange for value, I'd love to hear how it went. I have a hard time seeing
it as being well received by any adjudicator. But perhaps I am naive.

Craig

Craig Blackmon, Attorney at Law
Seattle Real Estate Lawyer <http://www.seattlepropertylawyer.com/>
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On Thu, Sep 28, 2017 at 10:42 AM, Bryce Dille <BryceD at cdb-law.com> wrote:

> In the scenario presented there was no agreement to exchange so absent an
> agreement it could reasonably be claimed a gift unless there was an
> obligation
>
> That was to be assumed by the transferee
>
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> *Bryce H. Dille* | Attorney at Law
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> *From:* wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.
> wsbarppt.com] *On Behalf Of *John McCrady
> *Sent:* Thursday, September 28, 2017 10:33 AM
> *To:* WSBA Real Property Listserv
> *Subject:* Re: [WSBARP] Gift or sale? REET
>
>
>
> I have to agree with Mr. Blackmon’s take
>
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> John McCrady
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> Puget Sound Title Company
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> *From:* wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.
> wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com>] *On Behalf Of *Craig
> Blackmon
> *Sent:* Thursday, September 28, 2017 9:46 AM
> *To:* WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
> *Subject:* Re: [WSBARP] Gift or sale? REET
>
>
>
> 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
>
> Seattle Real Estate Lawyer <http://www.seattlepropertylawyer.com/>
>
> 92 Lenora St. (The Makers Space, a shared work environment)
>
> Seattle WA 98121
>
> Office/Cell: (206) 369-5949   Fax: (206) 770-7328
>
> @LawyerBroker <https://twitter.com/LawyerBroker>
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> How to Buy Without an Agent
> <http://www.seattlepropertylawyer.com/blog?category=Buy+without+an+Agent>
>  | How to Sell FSBO
> <http://www.seattlepropertylawyer.com/blog?category=Sell+FSBO> | RE
> Glossary
> <http://www.seattlepropertylawyer.com/blog?category=Real+Estate+Glossary>
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> CONFIDENTIALITY NOTICE: This communication is a private, confidential
> electronic communication encompassed by 18 USC 2510. It is for the sole use
> of the intended recipient and receipt by anyone other than the intended
> recipient does not constitute a loss of its confidential or privileged
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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>
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