[WSBARP] REET tax and change of cotnrolling interest

[Eric Nelsen]

I read WAC 458-61A-101<https://app.leg.wa.gov/WAC/default.aspx?cite=458-61A-101> to mean that the focus of the tax is on what total percentage is transferred from the grantor, and it doesn't matter what the resulting grantee interests are. If the grantor transfers less than 50%, then there is no transfer of a controlling interest and there is no tax. If the grantor transfers a total of 50% or more, then the tax is triggered, even if the grantor transfers that 50% in small amounts to a dozen different grantees such that no grantee gains a controlling interest.

Note also that the tax is determined based on a total of all transfers from a particular grantor that occur within a 36-month period. Also consider the effect of the "acting in concert" rules under WAC 458-61A-101(2)(e) for when multiple grantors would be considered in the aggregate for purposes of analyzing whether 50% has been transferred.

In your example, if parents hold 48%, and transfer away all 48% to the kids in equal shares, I think no tax is triggered because the total interest transferred is less than 50% (even if mom and dad are "acting in concert").

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Josh Grant
Sent: Thursday, June 2, 2022 11:09 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] REET tax and change of cotnrolling interest


Happy to Rod...
More simply,  When less than 50% minority members assign their membership interest to kids (who are also minority members); and after assignment kids are still all minority members, and it is a gift... not a sale...  I assume there is no requirement to file a controlling interest REET affid. and/or pay REET taxes?
thanks
Josh
Joshua F. Grant
[advocates]
P. O. Box 619
Wilbur, WA 99185
509 647 5578

From: Rod Harmon
Sent: Thursday, June 02, 2022 9:14 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] REET tax and change of cotnrolling interest

Joshua, I am not following your math.  Could you clarify?

Rod Harmon

RODNEY T. HARMON
       Attorney at Law
         P.O. Box 1066
      Bothell, WA   98041
     Tel:   (425) 402-7800
     Fax:  (425) 458-9096
    www.rodharmon.com<http://www.rodharmon.com>
   rodharmon at msn.com<mailto:rodharmon at msn.com>




From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Josh Grant
Sent: Wednesday, June 1, 2022 3:48 PM
To: wsbar <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] REET tax and change of cotnrolling interest

Mom and dad own 48% (25% each) of an LLC with a $1,000,000 parcel of real estate. The kdis own the rest.
Mom and Dad gifted their 48% to the kids so now the kids each own 25% of the LLC each.
No sale all gifts.
Please confirm that the Controlling Interest Transfer, in this case where there is no sale.. is not triggered.
Thanks
Joshua F. Grant
[advocates]
P. O. Box 619
Wilbur, WA 99185
509 647 5578
________________________________
***Disclaimer: Please note that RPPT listserv participation is not restricted to practicing attorneys and may include non-practicing attorneys, law students, professionals working in related fields, and others.***

_______________________________________________
WSBARP mailing list
WSBARP at lists.wsbarppt.com<mailto:WSBARP at lists.wsbarppt.com>
http://mailman.fsr.com/mailman/listinfo/wsbarp
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20220602/2991e968/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 7674 bytes
Desc: image001.png
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20220602/2991e968/image001.png>