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<div>If it's a gift it's exempt regardless of percentage transferred<br>
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Sent from my iPhone</div>
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On Sep 27, 2017, at 3:00 PM, Josh Grant <<a href="mailto:jgrant@accima.com">jgrant@accima.com</a>> wrote:<br>
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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>
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<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>
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<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>
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<div><font face="Times New Roman"><font style="FONT-SIZE: 13.6pt"><strong>WAC 458-61A-101 in part says
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<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>
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<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>
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