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<DIV><FONT size=4>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.</FONT></DIV>
<DIV><FONT size=4></FONT> </DIV>
<DIV><FONT size=4>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.</FONT></DIV>
<DIV><FONT size=4></FONT> </DIV>
<DIV><FONT size=4>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)</FONT></DIV>
<DIV><FONT size=4>My guess is yes. although I have seen different answers on
this on the list serve recently.</FONT></DIV>
<DIV><FONT size=4></FONT> </DIV>
<DIV><FONT size=4>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”?</FONT></DIV>
<DIV><FONT size=4></FONT> </DIV>
<DIV><FONT face="Times New Roman"><FONT style="FONT-SIZE: 13.6pt"><STRONG>WAC
458-61A-101 in part says </STRONG></FONT></FONT></DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
face=Helvetica><FONT style="FONT-SIZE: 12pt">3) <SPAN
style="TEXT-INDENT: 0.25in"><STRONG>In general.</STRONG></SPAN> 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:</FONT></FONT></DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
face=Helvetica><FONT style="FONT-SIZE: 12pt">(a) The transfer or acquisition of
the controlling interest occurred within a twelve-month
period.</FONT></FONT></DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=3 face=Helvetica></FONT> </DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=3 face=Helvetica>(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???)</FONT></DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=3 face=Helvetica></FONT> </DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=3 face=Helvetica></FONT> </DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=3 face=Helvetica></FONT><FONT style="LINE-HEIGHT: normal; TEXT-INDENT: 0pt"
size=4>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.</FONT></DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=4></FONT> </DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=4>thanks</FONT></DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=4></FONT> </DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=4>Josh Grant</FONT></DIV>
<DIV style="MARGIN-LEFT: 0in; LINE-HEIGHT: 1.3; TEXT-INDENT: 0.25in"><FONT
size=4></FONT> </DIV>
<DIV style="FONT-SIZE: 14pt; FONT-FAMILY: 'Calibri'; COLOR: #000000">Joshua F.
Grant, PS<BR>Attorney at Law<BR>P. O. Box 619<BR>Wilbur, WA 99185<BR>tel 509 647
5578<BR>fax 509 647 2734<BR></DIV></DIV></DIV></BODY></HTML>