[WSBARP] Excise tax exemption LLC to member of LLC Member

[John J. Sullivan]

Nestor:

Whatever it takes in terms of structuring the form of the transaction, there is no way anything more than the $10 per affidavit processing fee should be paid, assuming pro rats distribution to the Members and no additional consideration. 

From your description, the title holding LLC is a disregarded entity (assuming both are taxed as partnerships).  Essentially this is a liquidating distribution to the individual members, right?

If so, wouldn’t it be exempt under IRC Section 731, and therefore under WAC 458-61A-212(2)(f)?

If you distribute the downstream Member unit to the individual Members you file an entity level return with the DOR and it’s exempt. Then you deed the property to the Members and it’s also exempt. 

Worst case you have two steps instead of one, but there should be no REET. 

John J. Sullivan 

Sent from my iPhone

> On Aug 19, 2021, at 3:45 PM, Nestor Gorfinkel <esq at gorfinkel-law.com> wrote:
> 
> 
> As it stands now, it doesn’t appear on its face to be exempt from Excise tax.
>  
>  
> Nestor Gorfinkel, Attorney at Law
> Licensed in Florida & Washington State
> Florida Civil-Law (International) Notary
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> From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Nestor Gorfinkel
> Sent: Thursday, August 19, 2021 6:38 PM
> To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
> Subject: Re: [WSBARP] Excise tax exemption LLC to member of LLC Member
>  
> I See your point or if we simply assign the membership interest in the Member LLC directly to the individual members.
>  
> I am not sure why there is a second layer for the LLC, and I requested that they ask their financial advisor or CPA, before I start mucking up the works.
>  
>  
> Nestor Gorfinkel, Attorney at Law
> Licensed in Florida & Washington State
> Florida Civil-Law (International) Notary
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> From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Athena Dickerson
> Sent: Thursday, August 19, 2021 6:19 PM
> To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
> Subject: Re: [WSBARP] Excise tax exemption LLC to member of LLC Member
>  
> Maybe a 2 step process, the first transfer to the member LLC using the exemption and the 2nd being a move to its members using the same exemption?  I assume the “members” of both LLC’s are the same and in the same percentages.  
>  
> Athena Makratzakis Dickerson
> DETHLEFS SPARWASSER
> REICH DICKERSON PLLC
> 100 Second Avenue South, Suite 190  I  Edmonds, WA 98020
> P  425.776.1352  I  F 425.776.2467
> athena at detsparlaw.com
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> From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Nestor Gorfinkel
> Sent: Thursday, August 19, 2021 2:57 PM
> To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
> Subject: [WSBARP] Excise tax exemption LLC to member of LLC Member
>  
> An LLC owns a house where its only member is an LLC, and the transfer is going to individual members of the “LLC member”.
>  
> Is this exempt under WAC 458-61A-211(2)? I am looking to see where this scenario falls (b) or (d) fall short.
> None of the exemption appear to apply even though the end result is no change in beneficial interest.
>  
> Nestor Gorfinkel, Attorney at Law
> Licensed in Florida & Washington State
> Florida Civil-Law (International) Notary
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> ATTENTION - This e-mail message and any attachment to this e-mail message may contain confidential information that is legally privileged. If you are not the intended recipient, you must not review, retransmit, convert to hard copy, copy, use or disseminate this e-mail or any attachments to it. If you have received this e-mail in error, please notify us immediately by return e-mail or by telephone at the phone numbers provided herein and delete this message. Please note that if this e-mail message contains a forwarded message or is a reply to a prior message, some or all of the contents of this message or any attachments may not have been produced by the sender.
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