TO BE PUBLISHED IN THE OFFICIAL REPORTS
 

OFFICE OF THE ATTORNEY GENERAL
 

State of California
 

BILL LOCKYER
 

Attorney General
 

: 

OPINION : No. 98-1203 

: 

of : March 26, 1999 

: 

BILL LOCKYER : 

Attorney General : 

: 

GREGORY L. GONOT : 

Deputy Attorney General : 

: 

THE HONORABLE WESLEY CHESBRO, MEMBER OF THE 

CALIFORNIA STATE SENATE, has requested an opinion on the following question: 

Does the documentary transfer tax apply to the transfer of real property from 

a parent corporation to a wholly-owned subsidiary corporation? 

CONCLUSION 

The documentary transfer tax does not apply to the transfer of real property 

from a parent corporation to a wholly-owned subsidiary corporation when the beneficial 

ownership of the property remains the same. 

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ANALYSIS
 

The Documentary Transfer Tax Act (Rev. & Tax. Code, §§ 11901-11934; 

“Act”)1

 authorizes cities and counties to impose a tax upon the documents by which real 

property interests are conveyed. Section 11911 provides: 

“(a) The board of supervisors of any county or city and county, by an 

ordinance adopted pursuant to this part, may impose, on each deed, instrument, 

or writing by which any lands, tenements, or other realty sold within the 

county shall be granted, assigned, transferred, or otherwise conveyed to, or 

vested in, the purchaser or purchasers, or any other person or persons, by his 

or their direction, when the consideration or value of the interest or property 

conveyed (exclusive of the value of any lien or encumbrance remaining 

thereon at the time of sale) exceeds one hundred dollars ($100) a tax at the rate 

of fifty-five cents ($0.55) for each five hundred dollars ($500) or fractional 

part thereof. 

“(b) The legislative body of any city which is within a county which has 

imposed a tax pursuant to subdivision (a) may, by an ordinance adopted 

pursuant to this part, impose, on each deed, instrument, or writing by which 

any lands, tenements, or other realty sold within the city shall be granted, 

assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or 

purchasers, or any other person or persons, by his or their direction, when the 

consideration or value of the interest or property conveyed (exclusive of the 

value of any lien or encumbrance remaining thereon at the time of sale) 

exceeds one hundred dollars ($100), a tax at the rate of one-half the amount 

specified in subdivision (a) for each five hundred dollars ($500) or fractional 

part thereof. 

“(c) A credit shall be allowed against the tax imposed by a county 

ordinance pursuant to subdivision (a) for the amount of any tax due to any city 

by reason of an ordinance adopted pursuant to subdivision (b). No credit shall 

be allowed against any county tax for a city tax which is not in conformity 

with this part.” 

The question presented for resolution concerns whether the transfer of real property from a 

parent corporation to a wholly-owned subsidiary corporation would be subject to a 

documentary transfer tax imposed under the provisions of section 11911. We conclude that 

1 All unidentified section references hereafter are to the Revenue and Taxation Code. 

2 98-1203 

 

the transfer would not be subject to the tax. 

In analyzing the language of section 11911, we apply well recognized 

principles of statutory construction. “To interpret statutory language, we must ‘ascertain the 

intent of the Legislature so as to effectuate the purpose of the law.’ [Citation.]” (California 

Teachers Assn. v. Governing Bd. of Rialto Unified School Dist. (1997) 14 Cal.4th 627, 632.) 

“Our first step [in determining the Legislature’s intent] is to scrutinize the actual words of 

the statute, giving them a plain and commonsense meaning. [Citations.]” (People v. Valladoli 

(1996) 13 Cal.4th 590, 597.) “[W]e seek to give meaning to every word and phrase in the 

statute to accomplish a result consistent with the legislative purpose. . . .” (Harris v. Capital 

Growth Investors XIV (1991) 52 Cal.3d 1142, 1159.) Finally, a statute is to be interpreted 

in context, examining other legislation on the same subject, to determine the Legislature’s 

probable intent. (Harry Carian Sales v. Agricultural Labor Relations Bd. (1985) 39 Cal.3d 

209, 223; Cossack v. City of Los Angeles (1974) 11 Cal.3d 726, 733.) 

The key phrase of section 11911 requiring our interpretation is “realty sold.” 

Does a transfer of real property from a parent corporation to its wholly-owned subsidiary 

corporation constitute “realty sold” for purposes of section 11911? The statute itself does 

not define the term; however, it has been judicially construed on two occasions. 

In Thrifty Corp. v. County of Los Angeles (1989) 210 Cal.App.3d 881, 886, the 

court concluded that the term “realty sold” as used in section 11911 should be construed to 

mean “change in ownership” as the latter term has been defined by the Legislature for 

purposes of real property taxation: 

“While the Document Transfer Tax Act does not define ‘realty sold’ 

that phrase is sufficiently similar to the phrase ‘change in ownership’ 

contained in the same code and governing an analogous subject, to warrant that 

each phrase be defined to have the same meaning. As we explained in 

Dieckmann v. Superior Court (1985) 175 Cal.App.3d 345, 356: ‘Where the 

same term or phrase is used in a similar manner in two related statutes 

concerning the same subject, the same meaning should be attributed to the 

term in both statutes unless countervailing indications require otherwise.’ ” 

In McDonald’s Corp. v. Board of Supervisors (1998) 63 Cal.App.4th 612, 615-617, the court 

followed the Thrifty Corp. analysis, relying upon an opinion letter and regulations of the 

State Board of Equalization which construed “change in ownership” and applying such 

construction in interpreting section 11911’s “realty sold.” 

Following, then, the judicial construction of the term “realty sold” to mean 

“change in ownership,” we find that a transfer of real property from a parent corporation to 

3 98-1203 

 

a wholly-owned subsidiary corporation does not constitute a “change in ownership.” (§§ 62, 

subd. (a)(2); 64, subd. (b); Cal. Code Regs., tit. 18, § 462.180; Title Ins. & Trust Co. v. 

County of Riverside (1989) 48 Cal.3d 84, 93-95; Crow Winthrop Operating Partnership v. 

County of Orange (1992) 10 Cal.App.4th 1848, 1852-1853.) Even though a corporation has 

a legal status distinct from its officers and shareholders (Title Ins. & Trust Co. v. County of 

Riverside, supra, 48 Cal.3d at 97; Merco Constr. Engineers, Inc. v. Municipal Court (1978) 

21 Cal.3d 724, 729-730; Miller v. McColgan (1941) 17 Cal.2d 432, 436), the transfer of real 

property from a parent corporation to a wholly-owned subsidiary corporation is not 

considered a transfer of control for purposes of a “change in ownership” and hence cannot 

be so considered for purposes of the Act as “realty sold.” In effect, the Legislature has 

determined that a legal entity does not “sell” to itself in these circumstances where the 

transferee is a wholly-owned subsidiary of the transferor and the beneficial ownership of the 

property remains the same. 

Our construction of section 11911 is consistent with federal law upon which 

the Act was patterned when it was enacted in 1967 (Stats. 1967, ch. 1332, § 1). In Thrifty 

Corp. v. County of Los Angeles, supra, 210 Cal.App.3d at 884, the court stated: 

“. . . Section 11911 was enacted . . . to replace and was patterned after 

the Federal Stamp Act on conveyances which expired on that same date. 

(Former 26 U.S.C. §§ 4361, 4363; see Taxes Replace Taxes (1968) 43 L.A. 

Bar Bull. 121.) Because section 11911 was patterned after the former federal 

act and employs virtually identical language as that act, we must infer that the 

Legislature intended to perpetuate the federal administrative interpretations of 

that federal act. (See Estate of Morse (1970) 9 Cal.App.3d 411, 415; 51 

Ops.Cal.Atty.Gen. 50, 57 (1968) [‘it is reasonable to assume that the 

Legislature intended that the established federal construction of the language 

used [in the federal stamp act] be continued.’]; 62 Ops.Cal.Atty.Gen. 87, 90 

[by reference to former federal regulations the Attorney General by written 

opinion concluded that the transfer of an easement is taxable under section 

11911].)” 

In Columbia Gas of Pennsylvania, Inc. v. United States (3d Cir. 1971) 446 F.2d 320, the 

court concluded that a transfer of real property from one wholly-owned subsidiary 

corporation to another wholly-owned subsidiary corporation was not subject to the federal 

tax upon which section 11911 was patterned. The court found the transfer to be part of a 

“plan of reorganization or adjustment” “whereby a mere change in identity, form, or place 

of organization is effected,” which was exempt from the federal tax (id., at pp. 322-324), and 

which is similarly expressly exempt under the Act (§ 11923, subd. (d)). In effect, the federal 

court concluded that the parent corporation was the beneficial owner of the property both 

before and after the transfer and thus the tax was inapplicable. (Id., at p. 324.) This is the 

4 98-1203 

 

same basis upon which we have construed the provisions of section 11911. 

Our interpretation of section 11911 is also consistent with a recent 

pronouncement of legislative intent with respect to the application of the Act to corporate 

transfers. With specific regard to the transfer of property from a corporation to a limited 

liability company, the Legislature has recently declared: 

“It is the intent of the Legislature that existing business entities, such 

as partnerships and corporations, be permitted to convert into or transfer real 

property to, limited liability companies without incurring a documentary 

transfer tax provided that the direct or indirect proportionate interests in the 

property remain the same.” (Stats. 1996, ch. 57, § 29.) 

If any doubt remains in construing the language of section 11911, we would 

observe the admonition given by the court in McDonald’s Corp. v. Board of Supervisors, 

supra, 63 Cal.App.4th at 617, when it was considering the scope of section 11911: 

“. . . ‘ “[i]t is, of course, well settled that in case of doubt statutes 

levying taxes are construed most strongly against the government and in favor 

of the taxpayer.” ’ (Larson v. Duca (1989) 213 Cal.App.3d 324, 329, quoting 

Dreyer’s Grand Ice Cream, Inc. v. County of Alameda (1986) 178 Cal.App.3d 

1174, 1182; E. Gottschalk & Co. v. County of Merced, supra, 196 Cal.App.3d 

at p. 1382; see Edison California Stores v. McColgan (1974) 30 Cal.2d 472, 

476.)” 

We conclude that the documentary transfer tax does not apply to the transfer 

of real property from a parent corporation to a wholly-owned subsidiary corporation when 

the beneficial ownership of the property remains the same. 

* * * * * 

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