Filed 9/22/14

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

926 NORTH ARDMORE AVENUE, LLC,

Plaintiff and Appellant,

v.

COUNTY OF LOS ANGELES,

Defendant and Respondent.

 B248536

 (Los Angeles County

 Super. Ct. No. BC476670)

APPEAL from a judgment of the Superior Court of Los Angeles County, Rita 

Miller, Judge. Affirmed.

Goodson Wachtel and Petrulis and Lemoine Skinner III, for Plaintiff and 

Appellant.

John F. Krattli, County Counsel and Albert Ramseyer, Principal Deputy County 

Counsel, for Defendant and Respondent.

__________________________
2

BA Realty, LLLP

1 owned 926 North Ardmore Avenue LLC (Ardmore), a single 

member entity established to hold and manage an apartment building. In 2008, the 

owners of BA Realty sold approximately 90% of their partnership interests, 45% to each 

of two trusts. Following the sale, the County of Los Angeles Registrar-Recorder sent a 

notice demanding that Ardmore pay a documentary transfer tax (see Revenue and 

Taxation Code, §§ 11911 et seq.) based on the value of the apartment building. The 

notice asserted that the cumulative sale of more than 50% of BA Realty (which owned 

Ardmore) qualified as a “change of ownership” of the apartment building, thereby 

triggering a documentary transfer tax. 

Ardmore paid the demand and filed a tax refund action arguing that Revenue and 

Taxation Code section 11911 does not authorize a documentary transfer tax based on the 

change in ownership of a legal entity that owns the legal entity that holds title to realty. 

Following a bench trial, the court entered judgment in favor of the County. We affirm, 

concluding that section 11911 permits a documentary transfer tax when a transfer of 

interest in a legal entity results in a “change of ownership” within the meaning of 

Revenue and Taxation Code section 64, subdivision (c) or (d).

FACTUAL BACKGROUND

A. Summary of Events Preceding the County Recorder’s Tax Payment Demand

In 1972, Beryl and Gloria Averbrook established a family trust that owned, among 

other things, an apartment building located at 926 North Ardmore Avenue (the apartment 

building). The family trust provided that, upon the death of the first spouse, an 

administrative trust was to be established that would distribute the trust principal to the 

following subtrusts: the “Survivor’s Trust”, the “Bypass Trust”, the “Exempt Marital 

Trust” and the “Nonexempt Marital Trust.” The surviving spouse was to be the 

beneficiary of each of the subtrusts. Beryl died in April of 2007, leaving Gloria as the 

beneficiary of the family administrative trust (the family trust) and the subtrusts. Gloria 

 

1 BA Realty is described in its operating agreement as a “limited liability limited 

partnership.” 
3

designated her two sons, Bruce and Allen Averbrook, as successor trustees of the family

trust. 

In August of 2008, Bruce and Allen, acting in their capacity as trustees, 

established 926 North Ardmore LLC (Ardmore) to “acquire, hold, manage and dispose 

of” the apartment building. The family trust was named as the sole member of Ardmore, 

which elected to be disregarded as an entity separate from its owner for state and federal 

income tax purposes. (See generally Cal. Code Regs., tit. 18, § 23038, subd. (b); 26 

C.F.R. § 301.7701-2, subd. (c)(2) [permitting single owner limited liability companies to 

elect whether to be recognized or disregarded for tax purposes as an entity separate from 

their owners].) The family trust later conveyed the apartment building to Ardmore, and 

then transferred its interest in Ardmore to a trust-owned partnership named BA Realty, 

LLLP. 

In December of 2008, the family trust and its subtrusts entered into an agreement 

for the distribution of the family trust assets. Under the agreement, the family trust 

distributed its interest in BA Realty among the subtrusts as follows: 65% to the 

Survivor’s Trust; 24% to the Nonexempt Marital Trust, 10% to the Bypass Trust and 1% 

to the Exempt Marital Trust. The same day the distribution agreement was executed, 

Gloria established an irrevocable trust for her son Allen (Allen’s Trust) and a second 

irrevocable trust for her other son Bruce (Bruce’s Trust). In January of 2009, Gloria 

directed the Survivor’s Trust to distribute a 3.5% interest of BA Realty to each of her 

sons’ trusts. Shortly thereafter, the Survivor’s Trust and the two marital trusts each 

agreed to sell 50% of their interests in BA Realty to Allen’s Trust and their remaining 

50% interest to Bruce’s Trust. Following these sales, the Allen and Bruce Trusts each 

held approximately 45% of the total interests in BA Realty. 

Ardmore reported these sales to the State Board of Equalization through a 

“statement of change in ownership of legal entities.” (See Rev. & Tax. Code, §§ 480.1 & 
4

480.22[requiring individuals and entities to file a statement with the Board when a 

transfer of interests in a legal entity results in a “change of ownership” within the 

meaning of section 64, subdivisions (c) or (d)].) Ardmore’s statement asserted that the 

family trust’s initial distribution of BA Realty (which owned Ardmore) to the various 

subtrusts did not qualify as a “change of ownership” of Ardmore’s real property because 

Gloria remained the beneficial owner of the property through her status as beneficiary of 

the subtrusts. The statement further indicated, however, that the subtrusts (other than the 

Bypass Trust) had subsequently transferred one-half of their interests in BA Realty to 

each of Bruce’s trust and Allen’s trust. The statement did not take a position as to

whether this subsequent transfer constituted a “change of ownership” under the relevant

property tax provisions. 

Based on the statement of change in ownership, the Office of the Assessor for the 

County of Los Angeles sent Ardmore a notice of supplemental property tax indicating 

there had been a “change in ownership” of Ardmore’s real property, thereby triggering a 

property tax reassessment. Ardmore paid the supplemental reassessment tax without 

objection.

B. The County Recorder’s Notice of Documentary Transfer Tax Assessment

In 2011, the Registrar-Recorder/County Clerk for the County of Los Angeles (the 

recorder) sent a notice demanding that Ardmore pay a documentary transfer tax based on 

the value of the apartment building. The notice asserted the tax was due pursuant to 

section 11911 and Los Angeles County Code section 4.60.020, which permit the 

imposition of a tax on “each deed, instrument or writing by which any lands, tenements 

or other realty sold within the county of Los Angeles shall be granted, assigned, 

transferred or otherwise conveyed to or vested in the purchaser or purchasers . . .” The 

recorder asserted that the “change in ownership” of the legal entity that controlled

Ardmore had “created a liability for the documentary transfer tax.”

 

2 Unless otherwise noted, all further statutory references are to the Revenue and 

Taxation Code.
5

Ardmore paid the tax demand (approximately $11,000) and filed a claim with the 

County seeking a refund. Ardmore argued the subtrusts’ sale of more than 50% of BA 

Realty did not support a documentary transfer tax assessment for two reasons. First, it 

asserted that the sale of a partnership that owns a single member limited liable company 

that holds title to realty does not constitute “realty sold” within the meaning of section 

11911 or County Code section 4.60.020. Ardmore contended that although section 

11925 permitted the recorder to impose a tax on transfers of controlling interests in

partnerships that “hold realty,” that section was inapplicable because BA Realty did not 

hold title to any realty; instead, it owned an LLC that held title to realty. 

As its second ground, Ardmore argued that the subtrusts’ sale of BA Realty to the 

Bruce and Allen trusts should not be categorized as a taxable transfer or sale. Ardmore 

contended that, under federal income tax rules, Gloria Averbrook was considered the 

owner of both of her sons’ irrevocable trusts because she had retained the right to

reacquire any property within those trusts and replace it with property of equal value. 

Ardmore further asserted that, as a result, the subtrusts’ sale of a majority interest in BA 

Realty to the Allen and Bruce trusts was effectively a sale by Gloria to herself. The 

County rejected Ardmore’s refund claim. 

C. Summary of Trial Court Proceedings 

On January 10, 2012, Ardmore filed a complaint for a tax refund asserting that the

recorder had an illegal policy of enforcing the documentary transfer tax on transfers of 

controlling interests in legal entities that either hold title to real property or own other 

legal entities that hold title to property. According to Ardmore, the Revenue and 

Taxation Code only permitted a transfer tax “on the sale of real property and not on the 

sale of legal entities, except for sales of interests in partnerships holding real property that 

result in the termination of the partnerships . . .” As in its claim for refund, Ardmore 

argued in the alternative that there had been no “sale” of a controlling interest in BA 

Realty because Gloria was treated as the legal owner of the subtrusts and the Bruce and 

Allen Trusts under applicable federal income tax provisions. Ardmore’s complaint also 
6

sought attorneys fees under Code of Civil Procedure section 1021.5, arguing that the 

action would result in the enforcement of an important public right and confer a 

significant benefit on the general public. 

At trial, an employee of the county recorder testified that, in 2010, the County of 

Los Angeles had started assessing a documentary transfer tax whenever a legal entity had 

undergone a change of ownership within the meaning of state property tax law. The 

witness confirmed that this policy was set forth in a statement published on the County 

Recorder’s website: 

“NOTICE - COLLECTION OF DOCUMENTARY TRANSFER TAX FOR LEGAL 

ENTITY CHANGES IN OWNERSHIP

The Los Angeles County Registrar-Recorder/County Clerk (‘RRCC’) began enforcing 

collection of Documentary Transfer Tax (‘DTT’) on legal entity transfers where no 

document is recorded, but which resulted in a greater than 50% interest in control of the 

legal entity being transferred. The collection is made pursuant to Chapter 4.60 of the Los 

Angeles County Code, and California Revenue and Taxation Code (‘RTC’) sections 

11911 and 11925, and is consistent with case law which defines ‘realty sold’ as having 

the same meaning as changes in ownership for property tax purposes in RTC section 

64(c)(1). In addition, effective January 1, 2010, RTC section 408 was amended to allow 

recorders to obtain information pertaining to these transfers from the Assessor. As a 

result, in an effort to collect the tax, the RRCC will continue to identify, and send notices 

for, properties where a change of ownership occurred which transferred a greater than 

50% controlling interest in the legal entity thereby creating a liability for the DTT.” 

The witness explained that, prior to 2010, the county recorder had no way to 

enforce the documentary transfer tax against transfers of interests in legal entities that 

resulted in a “change of ownership” of real property. The witness explained that 

although taxpayers were required to file a statement of change in ownership of a legal 

entity to the Board of Equalization and the assessor (see §§ 480.1 & 480.2), the prior 

version of the tax code had prohibited the assessor from “shar[ing these statements] with 

the Registrar Recorder.” The witness further explained that the law was changed in 2009 
7

to provide the recorder to access to information regarding changes in ownership of legal 

entities. According to the witness, since the change in law had gone into effect, the 

recorder had been sending a documentary transfer tax demand whenever the assessor 

notified it there had been a transfer of interest in a legal entity that resulted in a “change 

of ownership.” 

At the conclusion of the trial, the court issued a written order in favor of the 

County. The court ruled that, under the Revenue and Taxation Code, the transfer of more 

than a 50% interest in a partnership permitted the recorder to “collect a documentary 

transfer tax on real property owned by a ‘lower tier entity’ of [the] partnership. . . . 

[Therefore,] a documentary transfer tax could be collected, even though the apartment 

building . . . was owned by [the] ‘lower tier entity’ [Ardmore] rather than the partnership

[BA Realty] itself.” 

The court further ruled that “even if Ardmore had prevailed” on the merits, the 

court would not have awarded attorneys fees under Code of Civil Procedure section 

1021.5 The court explained that the trial evidence showed the “transaction [at issue] was 

unique. Plaintiff did not point to a single transaction like it in which the County had 

collected documentary transfer tax on the real property of a ‘lower-tier’ entity’ whollyowned and controlled by an ‘upper-tier entity,’ based on a change of ownership of this 

kind.” The court further explained that “if the County’s decision ultimately is held to 

have been erroneous, the decision was reached through reasonable analysis of an issue of 

first impression in connection with an extremely complex transaction . . . This level of 

error, if any, should not result in the taxpayers of the County underwriting plaintiff’s 

substantial attorneys fees.” On March 8, 2013, the court entered a judgment of dismissal. 

DISCUSSION

The issue presented in this appeal is whether the recorder was permitted to impose 

a documentary transfer tax based on the transfer of more than 50% of the interest in a 

partnership that was the sole member of an LLC that held title to realty. Ardmore argues 

that a documentary tax may only be applied to “realty sold,” which does not generally 
8

include sales or transfers of legal entities that either hold title to realty or own separate 

legal entities that hold title to realty. According to Ardmore, section 11925 describes the 

only situation in which the transfer of interest in a legal entity may trigger a documentary 

tax, which is limited to sales or transfers of partnerships that directly hold title to realty. 

Ardmore contends section 11925 does not apply to this transaction.

The County, however, argues we should follow prior decisions that have construed 

the term “realty sold” in section 11911 to have the same meaning as the term “change of 

ownership” set forth in the property tax provisions. The County asserts that, based on 

these authorities, the documentary tax may be applied whenever there is a “change of 

ownership” in a legal entity within the meaning of section 64, subdivisions (c) and (d). It 

further asserts that because Ardmore has admitted the subtrusts’ sale of more than a 50% 

interest in BA Realty to the Bruce and Allen Averbrook trusts constituted a “change of 

ownership” of Ardmore’s real property under section 64, the transaction necessarily 

qualified as a “sale” of realty within the meaning of section 11911. 

The parties have not identified any disputed issue of material fact, but disagree on 

the interpretation of the Documentary Transfer Tax Act. We therefore apply a de novo 

standard of review. (See generally Shapiro v. Board of Directors (2005) 134 Cal.App.4th 

170, 178 [“We apply a de novo standard of review where, as here, our task consists of 

applying a statute to underlying facts that are not in dispute.”].)

A. Summary of Statutes Governing the Documentary Transfer Tax and 

“Changes of Ownership” in Legal Entities 

1. History and summary of documentary transfer taxes on sales of realty

a. Prior federal documentary stamp taxes

Prior to 1968, federal law imposed documentary stamp taxes on (among other 

things) transfers of capital stock and conveyances of land. Former section 29 U.S.C. 

section 4321 imposed a tax on the “sale or transfer of shares or certificates of stock,” 

which was defined to include “shares or certificates of profits or of interests in property 
9

or accumulations.” (See former 29 U.S.C., § 4381, subd. (c).)

3 Former section 29 U.S.C. 

section 4361 imposed a separate tax on “each deed, instrument, or writing by which any 

lands, tenements, or other realty sold shall be granted, assigned, transferred, or otherwise 

conveyed to, or vested in, the purchaser or purchasers. . .” 

The federal stamp tax laws included a special provision for “changes in 

partnerships,” which was set forth in former 29 U.S.C. section 4383. Subdivision (a) of 

the statute provided that “[i]n the case of any share, certificate, right, or realty held by a 

partnership, no tax shall be imposed under section 4321, . . . [or] 4361 by reason of any 

transfer of an interest in the partnership” if the partnership was “continuing” within the 

meaning of 29 U.S.C. section 708. Under section 4383, subdivision (b), a partnership

that “terminate[d]” within the meaning of 29 U.S.C. section 708 was to be treated as 

“having transferred all shares, certificates and rights held by such partnerships at the time 

of such termination” and “having executed an instrument whereby there was conveyed, 

for fair market value . . . all realty held by the partnership of such termination.” (Former 

29 U.S.C., § 4383, subds. (b)(1) & (2).) Section 708, entitled “Continuation of 

partnership,” provides that a partnership is considered “as continuing if it is not 

terminated.” Under section 708, subdivision (2)(B), “termination” occurs if “within a 12-

month period there is a sale or exchange of 50 percent or more of the total interest in 

partnership capital and profits.” 

 

3 Ardmore has filed a motion requesting that we take judicial notice of 79 

documents, most of which are legislative materials related to the former federal stamp 

tax, the state Documentary Transfer Tax Act and the County and City transfer taxes. We 

take judicial notice of items 1-13 (text and legislative history of the former federal stamp 

tax (former 26 U.S.C. §§ 4321 et seq.) and the Federal Excise Tax Reduction Act of 

1954); items 17-18 (federal regulations implementing federal stamp tax act); items 23-28 

(legislative history of the Documentary Tax Transfer Act, §§ 11911 et seq.); item 29 

(legislative history of AB 1428 (Stats. 1999, c. 75 (A.B.1428), § 1)); and items 30-31 

(legislative history of SB 816 (Stats. 2009, c. 622 (S.B. 816)). We deny Ardmore’s 

request for judicial notice of the remaining documents because those materials are not 

relevant to our disposition of this matter. (See Arce v. Kaiser Foundation Health Plan, 

Inc. (2010) 181 Cal.App.4th 471, 482 [court “may decline to take judicial notice of 

matters that are not relevant to dispositive issues on appeal”].)
10

The federal documentary stamp taxes were repealed by the Excise Tax Reduction 

Act of 1965, 26 U.S.C. §§ 4041 et seq. (1965). (See In re 995 Fifth Ave. Associates, L.P.

(2d Cir. 1992) 963 F.2d 503, 510, fn. 3; Texaco, Inc. v. U.S. (5th Cir. 1980) 624 F.2d 20, 

21, fn. 2.) The repeal of the stamp tax on transfers of capital stock became effective on

January 1, 1966; the repeal of the stamp tax on the sale of realty became effective on 

January 1, 1968. 

b. The California Documentary Transfer Tax Act

In 1967, the California legislature enacted the “Documentary Transfer Tax Act,”

§§ 11901, et seq. (DTTA), which “replace[d] and was patterned after the [portion] of the 

Federal Stamp Act [applying] to conveyances.” (Thrifty Corp. v. County of Los Angeles

(1989) 210 Cal.App.3d 881, 884 (Thrifty).) The legislative history of the DTTA indicates 

that the Act was intended to “authorize counties . . . to levy a tax upon the transfer of real 

property.” (Legis. Analyst, analysis of Sen. Bill. No. 837 (1967 Reg. Sess.) May 9, 

1967.)

Several of the DTTA’s provisions are substantially similar to the portion of the

prior federal stamp tax on conveyances of real property on which it was modeled. 

Section 11911, which is patterned after former 29 U.S.C. section 4361, provides: “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. . . .”

Sections 11921-11931 list numerous “exemptions” to the transfer tax, most of 

which are patterned on similar exemptions that had appeared in the now-expired federal 

stamp tax. Section 11925, patterned on former 29 U.S.C. section 4383, sets forth an 

exemption for “any realty held by a partnership.” As originally enacted in 1967, the 

section stated:
11

(a) In the case of any realty held by a partnership, no levy shall be imposed pursuant 

to this part by reason of any transfer of an interest in the partnership, if both of the 

following occur: 

(1) The partnership is considered a continuing partnership within the 

meaning of Section 708 of the Internal Revenue Code of 1986.

(2) The continuing partnership or other entity treated as a partnership 

continues to hold the realty concerned.

(b) If there is a termination of any partnership within the meaning of Section 708 of 

the Internal Revenue Code of 1986, for purposes of this part, the partnership or 

other entity shall be treated as having executed an instrument whereby there was 

conveyed, for fair market value . . . all realty held by the partnership.

Section 708 of the Internal Revenue Code has not been amended since the expiration of 

the federal tax stamp. The section continues to define any partnership that has not 

terminated as continuing, and defines termination to include a transfer of more than a 

50% interest in the partnership’s capital and profits within a 12-month period. 

In 1999, the California Legislature adopted AB 1428, which amended section 

11925 in two ways. (Stats. 1999, c. 75 (A.B. 1428), § 1.) First, it expanded the 

exemption’s application to partnerships and “other entit[ies] treated as a partnership for 

federal income tax purposes.” Second, the Legislature added subdivision (d):

“No levy shall be imposed pursuant to this part by reason of any transfer between an 

individual or individuals and a legal entity or between legal entities that results solely in a 

change in the method of holding title to the realty and in which proportional ownership 

interests in the realty, whether represented by stock, membership interest, partnership 

interest, cotenancy interest, or otherwise, directly or indirectly, remain the same 

immediately after the transfer.”

The Legislative Counsel’s Digest comments accompanying AB 1428 explained 

that “Existing law authorizes counties and cities and counties to impose a documentary 

transfer tax at a specified rate upon deeds, instruments, or other writings by which 

specified property is transferred. Existing law exempts from the imposition of that tax, 
12

for any realty held by a partnership, the transfer of an interest in a partnership under 

specified conditions. [¶] This bill would additionally make that exemption applicable to 

an entity treated as a partnership for federal income tax purposes. [¶] This bill would also 

preclude the imposition of that tax by reason of any transfer between an individual or 

individuals and a legal entity or between legal entities that results solely in a change in 

the method of holding title to the realty and in which proportional ownership interests in 

the realty . . . remain the same immediately after the transfer.” (Stats. 1999, c. 75 

(A.B.1428), § 1.) 

c. The County of Los Angeles and City of Los Angeles transfer tax 

provisions

The County of Los Angeles and the City of Los Angeles have each adopted 

ordinances imposing a documentary transfer tax authorized under section 11911. The 

language of the ordinances are essentially identical to the provisions set forth in the 

DTTA. For example, Los Angeles County Code (L.A.C.C.) section 4.60.020 imposes a 

tax 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 . . .” The County Code contains additional 

sections that reflect each of the exemptions to the transfer tax described in the DTTA, 

including the partnership provisions set forth in section 11925. Identical provisions 

appear in the Los Angeles City Municipal Code, differing only in the amount of the tax 

rate. (See L.A.M.C. §§ 21.9.2 [imposing tax]; 21.9.8 [partnership exemption].)

Under the County and City codes, the County Recorder is responsible for 

administering the documentary transfer tax on behalf of the County and the City.

(L.A.C.C. § 4.60.110; L.A.M.C., § 21.9.9.)

2. Summary of California property tax provisions governing “change in 

ownership” of legal entities

Under the California Constitution, real property is reappraised for property tax 

purposes when purchased or when a “change in ownership” occurs. (See Cal. Const. art. 
13

XIIIA, § 2(a).) The Revenue and Taxation Code sets forth detailed provisions describing

what type of transfers constitute a “change of ownership” that triggers reassessment.

(See §§ 60-69.5; Holland v. Assessment Appeals Bd. No. 1 (2014) 58 Cal.4th 482, 485

[“The task of defining when there has been a change in ownership that triggers 

reassessment has been left largely to the Legislature. [Citation.]”].) Under section 60,

the term “change of ownership” is generally defined to “mean[] a transfer of a present 

interest in real property, including the beneficial use thereof, the value of which is 

substantially equal to the value of the fee interest.” 

The tax code and the implementing regulations set forth numerous provisions 

governing transfers of property involving legal entities. The implementing regulations 

state that “[t]he transfer of any interest in real property to a corporation, partnership, 

limited liability company, or other legal entity is a change in ownership of the real 

property interest transferred.” (Cal. Code. Regs., tit. 18, § 462.180, subd. (a); see also 

§ 61, subd. (j).) Section 62, subdivision (a)(2), however, excludes from the definition of 

“change of ownership” any “[t]ransfers of . . . interests in legal entities between legal 

entities or by an individual to a legal entity (or vice versa) which result solely in a change 

in the method of holding title and in which proportional ownership interests of the 

transferors and transferees . . . remain the same after the transfer.” (Cal. Code. Regs., tit. 

18, § 462.180, subd. (d)(4); § 62, subd. (a)(2).) The implementing regulations describe 

such transfers as “Excluded Proportional Interest Transfers.” (Cal. Code. Regs., tit. 18, 

§ 462.180, subd. (d)(4).)

Section 64 describes when the transfer of interest in a legal entity qualifies as a 

“change in ownership” of the entity’s real property. Subdivision (a) provides, in relevant 

part: “Except as provided . . . in subdivisions (c) and (d) of this section, the purchase or 

transfer of ownership interests in legal entities, such as corporate stock or partnership or 

limited liability company interests, shall not be deemed to constitute a transfer of the real 

property of the legal entity. . . .” 

Section 64, subdivision (c)(1) provides, in relevant part, that when a single person 

or entity obtains a majority ownership interest in any partnership or limited liability 
14

company through the purchase or transfer of partnership or limited liability company 

interest, “including any purchase or transfer of 50 percent or less of the ownership 

interest through which control or a majority ownership interest is obtained, the purchase 

or transfer of . . . [that] interest shall be a change of ownership of the real property owned 

by the . . . partnership [or] limited liability company . . . in which the controlling interest 

is obtained.” The implementing regulations describe this as a change in “control” of the 

legal entity. (Cal. Code. Regs., tit. 18, § 462.180, subd. (d)(1).)4

 Section 64, subdivision (d) describes when the transfer of more than a 50% 

interest in a legal entity that does not result in any single individual or entity obtaining 

majority ownership nonetheless qualifies as a “change in ownership.” The subdivision 

states, in part, that if property is transferred to a legal entity in a transaction “excluded 

from change in ownership by [section 62, subdivision (a)(2)]”―i.e. “excluded 

proportional interest transfers”―“the persons holding ownership interests in that legal 

entity immediately after the transfer shall be considered the ‘original coowners.’” 

Subdivision (d) further provides that if the original coowners subsequently transfer

“interests cumulatively representing more than 50 percent of the total interests in the 

entity . . . in one or more transactions, a change in ownership of that real property owned 

by the legal entity shall have occurred, and the property that was previously excluded 

from change in ownership under the provisions [of section 62, subdivision (a)(2)] shall be 

 

4 The implementing regulations provide the following example regarding the 

application of section 64, subdivision (c): “A and B each own 50 percent of the stock of 

Corporation X. Corporation X acquires White acre from Corporation Y, an unaffiliated 

corporation in which neither A nor B has interests, and White acre is reappraised upon 

acquisition. A transfers 30 percent of Corporation X’s stock to C, and B later transfers 25 

percent of Corporation X’s stock to C. Upon C’s acquisition of 55 percent of Corporation 

X’s stock, there is a change in control of Corporation X under Section 64(c) and a 

reappraisal of White acre.” (Cal. Code. Regs., tit. 18, § 462.180, subd. (d).) 
15

reappraised.”

5 The implementing regulations describe this as the “Transfers of More 

than 50 Percent” rule. (Cal. Code. Regs., tit. 18, § 462.180, subd. (d)(2).)6

Thus, section 64 describes two situations in which the purchase or transfer of 

interests in legal entities is deemed to constitute a “change of ownership” of real property 

owned by the legal entity or its sub-entity. First, a change of ownership is deemed to 

occur under subdivision (c) when a single individual or entity obtains, in one or more 

transactions, majority control of a legal entity that holds title to realty or owns separate 

legal entities that hold title to realty. Second, under subdivision (d), a change of 

ownership occurs when: (1) real property is transferred to a legal entity in an “excluded 

proportional interest transfer” governed by subdivision 62, subdivision (a)(2); and (2) the 

original coowners of the legal entity thereafter transfer more than 50% of the interests in

the legal entity in one or more subsequent transactions.

 

5

Subdivision (d) clarifies, however, that any transfer of ownership interests “that 

results in a change in control” of a partnership or limited liability company “is subject to 

reappraisal as provided in subdivision (c) rather than this subdivision.” 

6

The implementing regulations provide the following example regarding the 

application of section 64, subdivision (d): “A and B, hold equal interests as tenants in 

common in Greenacre, a parcel of real property. A and B transfer Greenacre to 

Corporation Y and in exchange A and B each receive 50 percent of the corporate stock. 

No change in ownership pursuant to Section 62(a)(2). Pursuant to Section 64(d), A and 

B become original coowners. A transfers 30 percent of Corporation Y’s stock to C (A’s 

child), and B then transfers 25 percent of Corporation Y’s stock to D (B’s grandchild). 

Change in ownership of Greenacre upon B’s transfer to D. . .” (Cal. Code. Regs., tit. 18, 

§ 462.180, subd. (d).)

The regulations also contain an example highlighting relevant elements of section 

64 subdivisions (c) and (d): “Spouses H and W acquire as community property from the 

current owners, who are not original co-owners, 100% of the capital and profits interests 

in an LLC which owns Blackacre. Each of H and W is treated as acquiring 50 percent of 

the ownership interests as defined in subdivision (c) and Revenue and Taxation Code 

Section 64(a). No change in control of the LLC; no change in ownership of Blackacre.” 

(Cal. Code. Regs., tit. 18, § 462.180, subd. (d).) 
16

3. Statutory requirements regarding statements of change in ownership of 

legal entities

Revenue and Taxation Code sections 480.1 and 480.2 require the filing of a 

statement whenever there has been a change in ownership of a legal entity within the 

meaning of section 64 subdivision (c) or (d). Section 480.1 states, in relevant part: 

“Whenever there is a change in control of any [legal entity], as defined in subdivision (c) 

of Section 64, a signed change in ownership statement . . . shall be filed by the person or 

legal entity acquiring ownership control of the [legal entity] with the [State Board of 

Equalization].” Section 480.2 similarly provides: “Whenever there is a change in 

ownership of any [legal entity], as defined in subdivision (d) of Section 64, a signed 

change in ownership statement . . . shall be filed by the [legal entity] with the [State 

Board of Equalization].” Section 482 imposes a penalty for failure to file a statement

required under section 480.1 or 480.2 within 90 days of the change in control or 

ownership. 

If the Board of Equalization determines a change in control or ownership has 

occurred, it disseminates the information to the county assessor to permit a reassessment 

of the real property interests. According to the Board of Equalization, this information 

sharing “is necessary because, ordinarily, transfers of ownership interests in legal entities 

do not involve a recorded deed or other notice that would inform county assessors” that a 

change in ownership has occurred. (See http://www.boe.ca.gov/proptaxes/leop.htm.

7

)

Prior to 2009, Revenue and Taxation Code sections 408 and 481 barred the 

assessor from providing county recorders access to statements of change in ownership of 

legal entities. Section 481 prohibited the assessor and the board from permitting 

 

7 This statement appears on a section of the Board of Equalization’s website 

discussing its “Legal Entity Ownership Program” (LEOP). We may take judicial notice 

of the Board’s description of the LEOP set forth on its website. (See Evid. Code, § 452, 

subd. (c); Shaw v. People ex rel. Chiang (2009) 175 Cal.App.4th 577, 606, fn. 10 [taking 

judicial notice of diagrams and definitions set forth on the “Department of 

Transportation’s Web site” pursuant to Evid. Code, § 452, subds. (c) & (h)]; People v. 

Kelly (2013) 215 Cal.App.4th 297, 304, fn. 4. [permitting judicial notice of statements on 

websites of state agencies pursuant to Evidence Code, § 452, subd. (c)].)
17

inspection of change in ownership statements “except as provided in section 408.”

Section 408 subdivision (a) generally prohibited the assessor from permitting inspection 

of any records in his or her possession that are not otherwise required to be made public

by law. Although section 408, subdivision (b) required the assessor to provide access to 

“all records in his or her office” to certain categories of government entities (law 

enforcement, grand juries, etc.), county recorders were not included. 

In 2009, the Legislature adopted SB 816, which made several amendments to

section 408 and the statement of change in ownership reporting requirements set forth in 

sections 480.1, 480.2 and 482. (Stats. 2009, c. 622 (S.B. 816).) First, SB 816 amended 

section 408, subdivision (b) by requiring the assessor to provide access to his or her

record to “the county recorder when conducting an investigation to determine whether a 

documentary transfer tax is imposed.” Second, SB 816 shortened the time period for 

filing statements of change in ownership of legal entities from 90 days to 45 days. Third, 

the bill amended the penalty provisions for failing to file the statement set forth in section 

482. Prior to the amendment, the penalty could only be applied if the person or entity 

failed to respond to a written request for the statement from the Board of Equalization. In 

addition, the penalty was automatically extinguished if the person or entity filed a change 

in ownership statement within 60 days of receiving notification that a penalty had been 

assessed. SB 816 amended section 482 by removing the “extinguishment” provision and 

making the penalty applicable if the statement was not filed within 45 days of the change 

in ownership or control. Thus, SB 816 made two general changes to the law: (1) it 

provided county recorders access to assessors’ records, including statements of change in

control and ownership of legal entities, and (2) it shortened the time to file statements of 

change in control or ownership of a legal entity and imposed an automatic penalty if the 

statement was not filed within 45 days of the change of control or ownership.

8

 

 

8

In 2011, sections 480.1, 480.2 and 482 were amended again to make the penalty 

applicable if the statement of change in control of ownership of a legal entity was not 

filed within 90 days of the change in ownership. (See Stats. 2011, c. 708 (S.B. 507).)
18

The Senate Revenue and Taxation Committee’s analysis of SB 816 provided the 

following explanation for the legislation: “The Documentary Transfer Tax . . . allows 

cities and counties to enact taxes on documents that serve to transfer real property. . . . SB 

816 provides a firmer deadline to file change of ownership statements and removes a 

sixty day grace period, thereby encouraging taxpayers to file the legally required forms, 

which may or may not trigger the [documentary transfer tax]. Additionally, by providing 

access to assessor information, SB 816 will help recorders determine whether the 

[documentary transfer tax] applies to certain changes of ownership.” The analysis further 

provided that the committee believed SB 816 would “result in some increased revenue 

for local agencies as a result of increased [Documentary Transfer Tax] collections . . .” 

(Senate Rev. and Tax. Comm., summary of Sen. Bill No. 816 (Reg. Session 2009-2010.) 

April 22, 2009, pp. 3-4.)

Two years after SB 816 was passed, the Legislature adopted AB 563, which added 

section 408.4 (Stats. 2011, c. 320 (A.B. 563), § 1.) Section 408.4 requires the assessor to 

“permit access to all records in his or her office to designated employees of a city’s 

finance office when conducting an investigation to determine whether a documentary 

transfer tax should be imposed for an unrecorded change in control or ownership of 

property.” An analysis of AB 563 prepared by the Senate Rule Committee explained: 

“Two years ago, the Legislature required the assessor to disclose information . . . and 

permit access to all records to the County Recorder when conducting an investigation to 

determine whether the documentary transfer tax is due. The City of Los Angeles wants 

the Assessor to share this information with city financial officials to help assess the 

[documentary transfer tax].” (Sen. Rules Com, Sen. Floor Analyses, 3d reading analysis 

of Assem. Bill. No. 563 (2011-2012 Reg. Sess.) August 29, 2011, pp. 2-3.) 

B. The DTTA Authorizes a Transfer Tax When There Has Been a “Change in 

Ownership” of a Legal Entity, Subject to the Limitations Set Forth in Section 

11925

Using the above statutory framework as our guide, we must assess whether the

sale of more than a 50% interest in a partnership that owns a single-entity limited liability 
19

company that holds title to realty constitutes “realty sold” within the meaning of section 

11911.9 Ardmore argues that section 11911 does not permit a tax under such 

circumstance because: (1) the transaction would not have been subject to taxation under 

the now-expired federal stamp tax (see former 26 U.S.C. section 4861) that served as the 

model for the DTTA; and (2) section 11925 of the DTTA, which applies when there is a 

transfer of more than 50% of a partnership that holds title to realty within a 12-month 

period, sets forth the only circumstance under which a transfer in interests of a legal 

entity constitutes a taxable event. Ardmore further contends that section 11925 does not 

apply to the transaction here because BA Realty did not “hold” title to realty; rather it

owned a legal entity that held title to realty. 

The recorder, however, argues we should adopt a broader interpretation of section 

11911. Specifically, the recorder contends we should follow prior case law that has

interpreted the term “realty sold” in section 11911 to have the same meaning as the 

phrase “change of ownership” as used in the property tax provisions. The recorder 

asserts that because the transfer of a 90% interest in BA Realty qualified as a “change of 

ownership” of the property held by Ardmore under section 64, the transfer necessarily

qualified as the “sale” of realty within the meaning of section 11911.

1. Summary of decisions defining the term “realty sold” to have the 

same meaning as “change of ownership”

Several prior decisions have looked to the definitions of “change of ownership” set 

forth in the property tax provisions to aid in the interpretation of section 11911. In 

Thrifty, supra, 210 Cal.App.3d 881, the County of Los Angeles imposed a documentary 

transfer tax on a parcel of land that was leased to a corporation for 20 years with an 

option to extend the lease for an additional 10 years. The trial court ruled section 11911 

did not apply “‘to the recordation of leases or leasehold interests.’” (Id. at p. 883.) The 

 

9 The parties do not dispute that if section 11911 permits the imposition of a transfer 

tax under such circumstances, the tax is also permissible under the County and City 

transfer tax ordinances, which incorporate language that is essentially identical to section 

11911. 
20

“issue presented [on appeal was] when, if ever, can a leasehold interest in real property 

constitute ‘realty sold’ for purposes of triggering taxation under Revenue and Taxation 

Code section 11911.” (Id. at p. 883.) 

The court began its analysis by examining the legislative history of the statute, 

which indicated “the Legislature . . . intended to generally place leases outside of the 

scope of section 11911.” (Thrifty, supra, 210 Cal.App.3d at p. 883.) The court further 

found, however, that interpretations of the former federal stamp tax on which section 

11911 was patterned made clear that “a lease was subject to a [federal] transfer tax when 

it was of sufficient duration to approximate an interest such as an estate in fee simple or a 

life estate.” (Id. at p. 885)

The court next considered whether, under California law, the specific lease at issue 

(a 20-year lease with a 10 year renewal option) was “of sufficient longevity . . . to 

approximate an “‘ownership’ right rather than a mere ‘temporary right of possession.’” 

(Thrifty, supra, 210 Cal.App.3d at p. 885.) According to the court, “[t]he Legislature 

ha[d] . . . provided . . . guidance in making this determination. Revenue and Taxation 

Code section 61 . . . defines ‘change in ownership’ for property tax purposes in part as 

‘[t]he creation of a leasehold interest in taxable real property for a term of 35 years or 

more (including renewal options).’ [Citation.]” (Ibid.) The court explained that 

“[w]hile 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.” (Ibid.) 

In reaching its holding, the court rejected the County’s assertion that, under the 

federal test, there was a “question of fact whether a lease of a shorter duration then that 

specified in section 61 approximates an interest in fee.” (Thrifty, supra, 210 Cal.App.3d 

at p. 886.) The court explained: “The determination of what the Legislature intended 

when it employed the term ‘realty sold’ in section 11911 is a question of law. Since we

conclude that the Legislature intended [the term ‘realty sold’ in section 11911] to be 

defined consistently with the phrase ‘change of ownership’ in section 61, as a matter of 
21

law Thrifty’s 20-year lease with an option to renew for 10 years was not of sufficient 

longevity to constitute ‘realty sold’ under section 11911.” 

Later, in McDonald’s Corporation v. Board of Supervisors (1998) 63 Cal.App.4th 

612 (McDonald’s), a different appellate district considered whether an amendment to a 

lease that resulted in a remaining term of less than 35 years, but a total leasehold period 

of more than 35 years, was subject to the transfer tax. The court agreed with “Thrifty’s

h[olding] that the phrase ‘realty sold,’ left undefined in the Document Transfer Tax Act 

was ‘sufficiently similar to the phrase “change in ownership” . . . to warrant that each 

phrase be defined to have the same meaning.’ [Citation.]” (Id. at p. 616.) The court then 

analyzed various state regulations and opinion letters that had found a lease amendment 

resulting in a remaining term of less than 35 years did not constitute a “change of 

ownership” under the property tax provisions. The court concluded that because the 

amended lease did not qualify as a “change of ownership,” there was no basis to impose a 

documentary transfer tax. 

A year after McDonald’s was decided, the Office of the Attorney General issued 

an opinion letter analyzing whether “a transfer of real property from a parent corporation 

to its wholly-owned subsidiary corporation constitutes ‘realty sold’ for purposes of 

section 11911.” (82 Ops. Cal. Atty. Gen. 56 (March 26, 1999).)10 The Attorney General 

noted that although “[t]he statute itself does not define the term,” Thrifty and McDonald’s

had each “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.” 

The Attorney General adopted the same analysis, concluding that the transfer tax 

was inapplicable because there was no “change of ownership” within the meaning of the 

property tax laws: “Following . . . the judicial construction of the term ‘realty sold’ to 

 

10 The opinion letter was issued before the Legislature amended section 11925 to add 

subdivision (d), which clarified that the transfer tax was inapplicable to any transfer 

between legal entities “that results solely in a change in the method of holding title to the 

realty and in which proportional ownership interests in the realty . . . remain the same 

immediately after the transfer.”
22

mean ‘change in ownership,’ we find that a transfer of real property from a parent 

corporation to a wholly-owned subsidiary corporation does not constitute a ‘change in 

ownership.’ (§[] 62, subd. (a)(2); [Citations.].) Even though a corporation has a legal 

status distinct from its officers and shareholders [citations], 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.’” 

2. The term “realty sold” includes “changes of ownership” within the 

meaning of Revenue and Taxation Code section 64, subdivisions (c) and 

(d) 

We agree with Thrifty and McDonald’s conclusion that where, as here, the DTTA 

does not directly address whether a particular type of transaction qualifies as “realty sold” 

within the meaning of section 11911, courts may look to the definitions of “change 

in ownership” set forth in the property tax provisions. As explained in Thrifty, 

under principles of statutory construction, similar terms used “in the same code and 

governing . . . analogous subject[s]” should generally “be defined consistently” unless 

“countervailing indications require otherwise.” (Thrifty, supra, 210 Cal.App.3d at p. 886; 

see also 9 Witkin, Summary 10th (2005) Tax, § 320, p. 462 [“Although [§] 11911 does 

not define ‘realty sold,’ that phrase is sufficiently similar to the phrase ‘change in 

ownership,’ used in the Revenue Code and governing the analogous subject of property 

taxation, to warrant that each phrase be defined to have the same meaning”].) 

The legislative history of the DTTA and the overall structure of the Revenue and 

Taxation Code support Thrifty’s conclusion that section 11911 is generally intended to 

permit a transfer tax when there has been a “change of ownership” in the property. 

Section 60 defines “change in ownership” to “mean[] a transfer of a present interest in 

real property, including the beneficial use thereof, the value of which is substantially 

equal to the value of the fee interest.” (Emphasis added). Although section 11911 refers 

to the “sale” of realty, the legislative history indicates the documentary transfer tax was 

intended to apply to any instrument reflecting a sale resulting in the “transfer” of real 
23

property. The Legislative Analyst’s original analysis of the DTTA states that the Act 

would “authorize counties through enactment of an appropriate ordinance . . . to levy a 

tax upon the transfer of real property.” (Legis. Analyst, analysis of Sen. Bill. No. 837 

(1967 Reg. Sess.) May 9, 1967.) A Legislative Counsel opinion letter reported that the 

act would “authorize counties and cities to impose a tax on documents evidencing a 

transfer of real property.” (Opinion of Legislative Counsel on Senate Bill No. 837 

(August 1, 1967.) Numerous other materials in the legislative history, including the 

Governor’s “bill memorandum,” a letter from the DTTA’s author to the Governor and 

an analysis by the Department of Finance, contain virtually identical language,

each referring to the DTTA as authorizing a “tax on the transfer of real property.”

(See Vernon L. Sturgeon, bill memorandum to Governor Reagan re Assem. Bill No. 

837 (1967 Reg. Sess.) Aug. 18, 1967; Letter dated August 7, 1967 from Senator 

Stephen P. Teale to Governor Ronald Regan re Sen. Bill No. 837; Dept. of Finance Bill 

Analysis, Sen. Bill No. 837 (1967 Reg. Sess.) as amended July 31, 1967.) 

The legislative history of subsequent bills amending or affecting the documentary 

transfer tax provisions similarly indicate the tax is intended to apply to sales resulting in 

the “transfer” of realty. For example, the Legislative Counsel’s Digest comments 

accompanying the 1999 amendments to the DTTA (which added § 11925, subd. (d) and 

expanded the exemption to entities treated as partnerships for purposes of federal income 

tax) state that the DTTA “authorizes counties and cities to impose a documentary transfer 

tax at a specified rate upon deeds, instruments, or other writings by which specified 

property is transferred.” (Stats. 1999, c. 75 (A.B.1428), § 1.) Similar statements appear 

in the Legislative Counsel’s Digest comments accompanying SB 816, which amended 

section 408 to provide county recorders access to the assessor’s records when conducting 

an investigation to determine whether to impose a transfer tax (Stats. 2009, c. 622 (S.B.

816) [DTTA “authorizes . . . city and county to impose a tax upon specified instruments 

that transfer specified interests in real property”]), and in the Assembly floor analysis of 

AB 563 (Assem. Rev. and Tax. Com., Assem. Conc. Amends. To Assem. Bill No. 563, 

(2011-2012 Reg. Sess.) as amended August 29, 2011, p. 2 [DTTA “allows cities and 
24

counties to enact, by ordinance, taxes on documents that serve to transfer real property’]), 

which extended similar access to city employees. The fact that the Legislature has 

defined the term “change of ownership” to generally mean “a transfer of a present interest 

in real property,” and has repeatedly referred to section 11911 as authorizing a tax on

sales resulting in “transfers of real property” supports Thrifty’s conclusion that the term 

“realty sold” should, in the absence of countervailing indications, be construed to have 

the same meaning as “change in ownership.” 

Thrifty’s holding is also supported by recent changes in the law that suggest the 

Legislature endorses the view that a transfer tax may be imposed when there is a “change 

in ownership” of a legal entity under section 64, subdivisions (c) or (d). As discussed 

above, in 2011, the Legislature adopted AB 563, which required the assessor to provide 

information to city officials conducting an investigation to determine “whether a 

documentary transfer tax should be imposed for an unrecorded change in control or 

ownership of property.” (§ 408.4.) The phrase “unrecorded change in control or 

ownership” mirrors the language the Legislature has used to describe the two forms of 

“change in ownership” of legal entities set forth in section 64, subdivision (c)–“change in 

control” of a legal entity (see § 480.1)―and section 64, subdivision (d)―“change in 

ownership” of a legal entity (see § 480.2). The Assembly floor analysis of AB 563 

confirms that the bill was intended to enable “cities [investigating the imposition of the 

DTTA] to identify change of ownership legal entity transfers and other real property 

transfers that may not be currently captured.” (Assem. Rev. and Tax. Com., Assem. 

Conc. Amends. To Assem. Bill No. 563, (2011-2012 Reg. Sess.) as amended August 29, 

2011, p. 2.)

Two years earlier, the Legislature made a similar change to section 408, requiring 

that the assessor provide information to any county recorder investigating “whether a 

documentary transfer tax is [to be] imposed.” Although the amendment to section 408 

did not specifically refer to investigations regarding “change in control or ownership” of 

legal entities, the amendment was included in a bill (SB 816) that shortened the period for 

filing “statements of change in control or ownership of legal entities” and strengthened 
25

the penalty provisions for failing to file such statements. Moreover, the legislative 

history of SB 816 indicates the amendment to section 408 was intended to enable county

recorders to determine whether the transfer tax was applicable as the result of a “change[] 

of ownership.” The language in the text and history of both SB 816 and AB 563 contain 

persuasive evidence that the Legislature intended to provide local officials the ability to 

impose the documentary transfer tax where an unrecorded transfer of interests in a legal 

entity has resulted in a “change in ownership” within the meaning of section 64, 

subdivisions (c) and (d). 

We also find it instructive that the Legislature has taken no action in response to 

multiple court decisions and several local county ordinances that have specifically 

interpreted the DTTA to permit a transfer tax when a “change in ownership” has 

occurred. Although Thrifty was decided more than 25 years ago and McDonald’s was 

decided more than 15 years ago, we are not aware of any subsequent conduct by the

Legislature suggesting disapproval of those holdings. (Cf. People v. Nasalga (1996) 12 

Cal.4th 784, 792 [refusing to overturn 31-year old decision, noting that “the Legislature 

ha[d] taken no action, as it easily could have done, to abrogate [the holding]”].) 

Moreover, after Thrifty and McDonalds were decided, several counties announced 

that they would begin enforcing the transfer tax based on “changes in ownership” of legal 

entities. Los Angeles County announced its intent to enforce the tax under such 

circumstances through a statement published on its website in or around 2010. Before 

Los Angeles made this announcement, at least two other counties had already amended 

their local transfer tax ordinances to define “realty sold” to include any change in 

ownership of a legal entity within the meaning of section 64, subdivision (c) or (d). The 

County of Santa Clara adopted such an amendment in 2007 (see County of Santa Clara 

Code, § A30-39.6 [documentary transfer tax is imposed when a “change of ownership” 

occurs under the circumstances set forth in section 64, subdivision (c) or (d)]; San 

Francisco adopted a similar amendment through a ballot initiative approved by voters in 

2008. (See City and County of San Francisco Business and Tax Regulations Code, Art.

12-C, § 1114 [“‘realty sold’ includes any acquisition or transfer of ownership interests in
26

a legal entity that would be a change of ownership of the entity’s real property under 

California Revenue & Taxation Code § 64”].) Thus, for approximately five years, three

of the largest counties in the state have been imposing the transfer tax based on the 

definitions of “change in ownership” set forth in section 64. The Legislature, in turn, has 

responded to these ordinances by passing multiple laws that are specifically designed to 

help counties determine when legal entity transfers have resulted in a “change in 

ownership.” (See §§ 408, 408.4.) 

3. Ardmore has failed to demonstrate section 11911 does not permit a 

transfer tax based on changes in ownership 

Ardmore disagrees with our interpretation of section 11911, arguing that there are 

two reasons we should not consider the “change of ownership” definitions set forth in 

section 64 when construing the term “realty sold.” 

First, it contends that when interpreting section 11911, we should look solely to 

federal administrative regulations and decisions interpreting former 26 U.S.C section 

4361, which imposed a federal stamp tax on conveyances of realty. Ardmore argues that 

because section 11911 was patterned on section 4361, we must look only to federal law 

to aid our interpretation. It further asserts there is no federal authority suggesting that 

former section 4361 was meant to apply to transfers of interests in corporate entities 

holding title to realty, other than transfers in partnerships that resulted in their 

termination. 

We disagree with Ardmore’s assertion that our interpretation of section 11911 is 

dependent only on federal laws that expired over 45 years ago. The state DTTA includes 

no language requiring that it be construed in the same manner as the federal statute it was 

designed to replace. Prior cases analyzing the meaning of section 11911 demonstrate that 

although federal interpretations of former section 4361 may aid in construing the DTTA

under some circumstances, we are not bound by these federal interpretations. People ex 

rel. Dept. of Public Works v. Santa Clara County (1969) 275 Cal.App.2d 372 (Santa 

Clara County), which was decided shortly after the DTTA was adopted, is instructive. In 
27

Santa Clara County, the court considered whether “transfers of realty effected by a court

order issued pursuant to an eminent domain judgment involve[d] a sale within the 

meaning of [section 11911].” (Id. at p. 376.) The court noted that the DTTA was 

patterned on the “similar federal [stamp] tax” and that “the federal government [had] 

never applied the tax to conveyances by condemnation.” (Id. at p. 374, fn. 3.) The court

nonetheless concluded the tax did apply, citing (among other things) prior California 

decisions characterizing “a transfer of property by eminent domain [a]s a ‘sale” (id. at 

p. 376) and the absence of any statutory language exempting condemnation orders from 

the transfer tax. 

Similarly, in Thrifty, the court did consider whether the prior federal stamp tax 

was applicable to leasehold interests. However, the court ultimately rejected the federal 

rule used to determine what type of leasehold interests qualified for a transfer tax. 

Instead, the court looked to state property tax law to make that determination, holding 

that “the Legislature intended [the term “realty sold” in section 11911] to be defined 

consistently with the phrase ‘change of ownership’ in section 61,” which required a lease 

term of 35 years or more. Santa Clara County and Thrifty illustrate that although the

prior federal interpretations of the long expired stamp tax may prove helpful in assessing 

the meaning of the DTTA, federal law does not dictate the meaning of the DTTA. 

There are multiple reasons why federal interpretations of former 26 U.S.C. section 

4361 are of limited utility in assessing the specific issue in this case, which involves the 

transfer of a partnership that owned a single-entity limited liability corporation that held 

title to an apartment building. First, the former federal tax stamp scheme applied to 

multiple categories of transfers: transfers of interests in capital stock (which extended to 

interests in capital profits, property and accumulations) were taxed under one provision 

(former section 4321), while conveyances of realty were separately taxed under a 

separate provision (former section 4361). It is therefore understandable that the 

conveyance tax set forth in former section 4361 would not apply to the type of 

transaction at issue here because, as Ardmore explains in its brief, application of the 

federal tax under such circumstances would presumably result in double taxation: one set 
28

of stamp taxes for the transfer of interests in the legal entities themselves and a second 

stamp tax for the realty held by the lower-tier entity. California, however, has not 

adopted a separate documentary tax on instruments or writings transferring interests in 

the profits or accumulations of legal entities. Thus, under the state DTTA, applying the 

transfer tax to the transaction here would result in only one transfer tax. 

The former federal stamp tax is also of limited utility in addressing the specific

transaction before us because limited liability companies did not exist in California until 

1994, which is almost 30 years after the federal stamp tax expired. (City of Los Angeles 

v. Furman Selz Capital Management, L.L.C. (2004) 121 Cal.App.4th 505, 513

[describing history of LLCs in California].) ““A limited liability company is a hybrid 

business entity that combines aspects of both a partnership and a corporation. . . . It is 

formed under the Corporations Code and . . . provides members with limited liability to 

the same extent enjoyed by corporate shareholders, yet allows members to actively 

participate in management and control.” (Ibid.) Depending on the elections made by the 

LLC and the number of its members, the company may be treated for state and federal

income tax purposes as either a corporation, partnership or as a disregarded entity. (See 

id. at pp. 513-514; 26 C.F.R. § 301.7701-3.) Given that single-entity LLC’s such as 

Ardmore (whose sole purpose is to hold realty) did not exist when the federal stamp tax 

was in effect, we find prior interpretations of the federal stamp tax to be of limited use

here. 

Finally, as discussed at length above, since the DTTA was adopted in 1967, there 

have been changes in California law suggesting the Legislature endorses the view that 

section 11911 permits counties and cities to impose a documentary tax on transfers of 

interests in legal entities that result in a “change of ownership” within the meaning of 

section 64. Most notably, the Legislature has required the assessor to provide county and 

city recorders information regarding changes in ownership of legal entities for the express 

purpose of determining the applicability of the transfer tax. We should not ignore these 

changes in the law merely because section 11911 was initially patterned on a federal 

statute that was never tested against facts similar to those presented here. 
29

Ardmore next contends that we should interpret section 11925 as setting forth the 

sole legal authority for a transfer tax based on transfers of interests in a legal entity. In 

sum, section 11925 provides that the tax may not be applied to transfers of interests in 

partnerships or entities treated as partnerships for federal income tax purposes

(collectively partnership entities) that hold realty unless the transfer results in the 

termination of the partnership entity within the meaning of 26 U.S.C. section 708. 

Section 708, in turn, provides that a partnership is treated as terminated if more than 50%

of “the total interest in partnership capital and profits” is transferred within a 12-month 

period.11 Ardmore argues that because the Legislature has adopted a specific provision 

explaining that the transfer tax may be applied to transfers of certain types of legal 

entities (partnerships entities that own realty) under some circumstances (transfers that 

result in the partnership entity’s termination), we should assume it did not intend the tax 

to apply transfers of interests of any other form of legal entity that might hold realty, such 

as a single member, disregarded LLC. 

Ardmore overlooks the fact that section 11925 is an exemption to the transfer tax

authorized under section 11911. Section 11925 effectively provides that a transfer of 

interests in a partnership holding title to realty does not constitute “realty sold” under 

section 11911 unless the special conditions set forth in the exemption are satisfied (i.e., 

termination within the meaning of section 708). The Legislature has not provided an 

exemption for transfers of interests in any other type of entities that hold realty. We must 

therefore assume transfers of interests in non-partnership entities that hold title to realty

(including single-member, disregarded LLCs) are taxable if the transfer results in the 

“sale” of realty within the meaning of section 11911. (See Bearden v. U.S. Borax, Inc. 

(2006) 138 Cal.App.4th 429, 437 [“Under the maxim of statutory construction, expressio 

unius est exclusio alterius, if exemptions are specified in a statute, we may not imply 

additional exemptions unless there is a clear legislative intent to the contrary. 

 

11 Ardmore has taken the position that section 11925 was inapplicable to BA Realty 

LLLP, because, although a partnership, LLLP did not “hold realty”; instead, it owned an 

LLC that held realty. 
30

[Citations.]”].) As discussed above, we interpret the term “realty sold” within section 

11911 to generally apply when a transfer of interest in a legal entity results in a “change 

of ownership” within the meaning of sections 64 (c) and (d). Section 11925 merely 

clarifies that this general rule is inapplicable when a partnership entity holds title to the 

realty; under such circumstances, a transfer tax is only appropriate if the transfer results 

in the termination of the partnership entity within the meaning of 26 U.S.C. section 

11925.

To summarize, under the DTTA, a documentary tax may be applied to transfers of 

interests in legal entities pursuant to section 11911 if the transfer results in a “change of 

ownership” under section 64, subdivision (c) or (d). However, where title to realty is 

held by a partnership entity, a transfer of interest in the partnership entity is taxable only 

if the transfer results in termination within the meaning of section 708, which generally 

applies when more than 50% of the partnership entity’s interests are transferred within a 

12-month period. 

We do not suggest that Ardmore’s interpretation of the DTTA is unreasonable, 

recognizing that the Act is not a model of clarity. During the 45 years since it was 

passed, extensive statutory changes governing the formation of legal entities and property

taxation have arguably made the task of interpretation even more difficult. As with any 

statute, however, our ultimate goal in interpreting the DTTA is to “‘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.) “When statutory language permits more than one reasonable interpretation, ‘“we 

‘must select the construction that comports most closely with the apparent intent of the 

Legislature, with a view to promoting rather than defeating the general purpose of the 

statute, and avoid an interpretation that would lead to absurd consequences.’”’ 

[Citation.]” (Rea v. Blue Shield of California (2014) 226 Cal.App.4th 1209, 1225.) In 

this case, the history of the DTTA and the overall structure of the Revenue and Taxation 

Codes indicate the Legislature generally intended the documentary tax to apply when

there has been a sale, memorialized in writing, that results in a transfer of realty. 
31

Interpreting the term “realty sold” to include the “change of ownership” provisions 

applicable to legal entities promotes this purpose by capturing most forms of legal entity 

transfers that result in a change in the beneficial ownership of the property. 

Ardmore’s proposed interpretation would, however, work at cross purposes,

effectively permitting property owners to avoid the transfer tax by conveying their real 

property to a wholly owned, single entity LLC established for the sole purpose of holding 

the property, and then selling the LLC (rather than the property) to a third party. 

Although Ardmore has thoroughly briefed this case, it has never identified any policy 

reason that would support imposition of a transfer tax when realty is transferred through a 

direct sale, but not when realty is transferred through the sale of an LLC established 

solely to hold the realty. We believe the Legislature has signaled―both through the acts 

it has taken and the acts it has not―that the transfer tax should be interpreted to apply 

under both circumstances, and in any other circumstance where a transfer in legal entity 

interests results in a change of ownership within the meaning section 64, subject to the 

express limitations set forth in section 11925. 

C. Application of the DTTA to the Current Transaction

We conclude the County was permitted to impose a transfer tax under the 

circumstances presented here. The parties do not dispute that several subtrusts 

collectively owned BA Realty (a partnership), which was the sole member of Ardmore (a

disregarded limited liability company) that held title to an apartment building. The 

subtrusts then sold an approximate 45% interest in BA Realty to the Bruce Trust (the 

beneficiary of which was Bruce Averbrook) and sold an approximate separate 45% 

interest to the Allen Trust (the beneficiary of which was Allen Averbrook). 

As Ardmore has argued throughout these proceedings, under these circumstances, 

the exemption set forth in section 11925 was inapplicable because BA Realty did not 

hold title to the realty; instead, it owned Ardmore, which held title to the realty.12 We 

 

12 In its appellate brief, Ardmore argues that if we conclude the transaction is 

governed by section 11925 of the DTTA, the transfer tax is inapplicable because the 
32

therefore must determine whether the transaction resulted in a change of ownership of 

Ardmore’s realty under section 64 subdivision (c) or (d). 

Section 64 subdivision (c) is inapplicable. Although the subtrusts sold 

approximately 90% of BA Realty to the Bruce and Allen Trusts, the transfer did not 

result in any single individual or entity holding more than a 50% interest in the 

partnership or in Ardmore. After the transaction, the Bruce and Allen Trusts each owned 

an approximate 45% interest in both entities and the Bypass Trust retained an 

approximate 10% interest in both entities. (See generally Ocean Avenue LLC v. County 

of Los Angeles (2014) 227 Cal.App.4th 344 [section 64, subdivision (c) applies only if

the transfer results in a single individual or entity obtaining more than a 50% interest in 

the entity].) 

However, as Ardmore admits in its appellate brief (and previously admitted in 

discovery responses), the transaction did qualify as a “change of ownership” of 

Ardmore’s realty under section 64, subdivision (d). The “statement of change in control 

and ownership of a legal entity” that Ardmore filed with the Board of Equalization 

indicates that the subtrusts were the “original coowners” of BA Realty within the 

meaning of section 64, subdivision (d).13 The subtrusts then collectively sold more than a 

 

subtrusts’ sale to the Bruce and Allen Averbrook did not technically result in a 

“termination” of BA Realty within the meaning of section 708. In sum, Ardmore 

contends that, under federal income tax law, Gloria was treated as the owner of the Bruce 

and Allen Trusts because she retained the authority to withdraw any property from those 

trusts and replace it with other property of equal value. Ardmore further asserts that

because Gloria was treated as the federal income tax owner of the subtrusts and both of 

hers sons trusts, the sale of BA Realty from the subtrusts to her subtrusts was essentially 

a sale to herself, and therefore not a termination within the meaning of section 708. We 

need not address this argument because, as explained above, we agree with Ardmore’s 

argument that section 11925 is not applicable to this transaction. It is therefore 

immaterial whether a termination of the partnership occurred within the meaning of 

section 708. 

13 The statement of change in ownership indicates the subtrusts became “original 

coowners” of BA Realty through a series of excluded “proportional interest transfers” 

(see Cal. Code. Regs., tit. 18, § 462.180, subd. (d)(4)) governed by section 62, 
33

50% interest in BA Realty to the Allen and Bruce Trusts, triggering a change in

ownership under subdivision (d). We therefore conclude that the County was permitted 

to impose a transfer tax and affirm the trial court’s judgment. 

DISPOSITION

The judgment is affirmed. Respondent shall recover its costs on appeal.

ZELON, J.

We concur:

PRELUSS, P. J.

WOODS, J.

 

subdivision (a)(2). The family trust (of which Gloria was the beneficiary) initially owned 

BA Realty, Ardmore and the apartment building. The family trust conveyed the 

apartment building to Ardmore, and then transferred Ardmore to BA Realty. Both of 

these transactions fell within section 62, subdivision (a)(2) because Gloria, as the 

beneficiary of the family trust, remained the beneficial owner of 100% of the apartment 

building. The family trust later distributed its interest in BA Realty among the subtrusts. 

This transaction also fell within section 62, subdivision (a) because Gloria was the 

beneficiary of the family trust and each of the subtrusts. As a result of the latter 

transaction, the subtrusts were treated as “original coowners” of BA Realty.