[WSBARP] Real Estate Excise Tax Exemptions

[Jan Kelly]

Happy Friday afternoon. I would appreciate some guidance on the following
situation. My read of the WAC (458-61A-211) requires real estate excise tax
to be paid, but I would love to tell the clients that no tax is due.

*Situation*: LLLP owns a number of real estate parcels. There are 6 members
in the partnership. Partnership wishes to convey one parcel to 2 of its
members in exchange for their interest in the partnership. One member is an
irrevocable trust and the other member, an individual; however, the
individual will be taking only a life estate in the property.

Pursuant to 456-61A-211(b) reads in part "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." A
life estate is disproportionate to the existing interest, as the member's
interest in the LLLP is not so limited.  As background FYI, the individual
taking the life estate is the mother of the 2 kids whose share is held in
the irrevocable trust.

*Changing the facts slightly*, if the individual taking only a life estate
were to take a full interest, so that the individual and irrevocable trust
own the parcel as tenants in common, would the tax exemption apply? I still
think tax is due, as the ownership of the parcel is different after the
transfer (Prior to exchange the property owned by partnership with 6
members (one of which is the trust and another is the individual); after
the exchange property would be owned by the trust and that individual).

Thank you in advance!

-- 


*Jan Kelly, JD/MBA*Attorney at Law

JK Law
PO Box 1964
Poulsbo, WA 98370
Direct Line (702) 338-6733
Facsimile (360) 779-2265

*Licensed in Nevada and Washington*.

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