Code of Maine Rules › 18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES › 125 - BUREAU OF REVENUE SERVICES › Chapter 207 - CONTROLLING INTEREST TRANSFERS › Section 125-207-03 - Controlling interest transfers

Current through 2024-29, July 17, 2024
A. A controlling
				interest transfer occurs when a person, or a group of persons acting in
				concert, transfers or acquires more than a 50% interest in an entity that owns
				real property in Maine within a 12-month period. When such a transfer occurs,
				there is ordinarily no deed to convey title to the real property owned by the
				transferred entity because the real property owned by the entity being
				transferred is not being sold directly. Instead, the ownership of the entity
				itself is being transferred. The real estate transfer tax is imposed equally on
				the transferor and transferee based on the value of the transferred portion of
				the real property. For example, within a 12-month period, Company A acquires
				from an unrelated individual a 75% interest in Company B, which owns a
				warehouse in Maine. If the value of the Maine warehouse at the time of the
				final transfer is $1,000,000, the real estate transfer tax is imposed on the
				portion of Company B that is being transferred (75%) multiplied by the value of
				Maine real property owned by Company B ($1,000,000), or $750,000. The real
				estate transfer tax is imposed half on the transferor (the individual seller)
				and half on the transferee (Company A).
B. All acquisitions involving persons acting
				in concert must be aggregated to determine if a controlling interest has been
				transferred. Factors relevant in determining whether two or more persons are
				acting in concert include but are not limited to the following:
1.
Common ownership.
Persons are
				treated as acting in concert if they have a relationship with each other such
				that one person influences or controls the actions of another through common
				ownership. For example, if a parent corporation and its wholly-owned subsidiary
				each purchase a 30% interest in Company A, the parent corporation and its
				wholly-owned subsidiary are treated as acting in concert in acquiring a
				controlling interest (60% total) in Company A.
2.
Unity.
For situations when
				common ownership or control is not present, persons will be treated as acting
				in concert only if the unity with which the purchasers have negotiated and will
				consummate the transfer of ownership interest supports a finding that they are
				acting as a single entity. For example, if three partnerships, which are
				neither commonly owned nor controlled, each purchase a 20% interest in Company
				A (60% total) as part of a collective negotiation to acquire a controlling
				interest in Company A, the unity with which the three partnerships acted will
				support a finding that they are acting as a single entity. If, however, the
				acquisitions are completely independent, with each purchaser buying without
				regard to the identity of the other purchasers, the acquisitions must be
				considered separate acquisitions.
3.
Other factors.
Other factors
				to be considered in determining whether persons are acting in concert include,
				without limitation, the following:
a. The
				timing of the separate transfers or acquisitions of interests in an
				entity;
b. Contractual terms
				indicating unity;
c. Agreements
				between the purchasers that bind them to a course of action with respect to the
				transfer or acquisition; and
d. The
				number of purchasers; or
e. The
				nature of relationships (e.g., close personal or family
				relationships).