Opinion ID: 1669807
Heading Depth: 1
Heading Rank: 4

Heading: Post-1990 Amendment

Text: In 1990, the Florida Legislature amended section 201.02(1), listing potential sources of consideration in a conveyance of real property. The types of consideration listed were (1) money exchanged, (2) the discharge of an obligation, and (3) the amount of any mortgage, purchase money mortgage lien, or other encumbrance. The amendment also provided for the valuation of nonmonetary consideration, presuming such consideration to be equal to the fair market value of the real property or interest therein. Following this amendment, the DOR amended its rules concerning the imposition of the tax on transfers to corporations. Before the 1990 amendment to the statute, rule 12B-4.013(7) of the Florida Administrative Code provided that transfers of real property to corporations by their shareholders as a contribution to capital were not subject to the documentary stamp tax if the transfer was not in exchange for valuable consideration. Bernard A. Barton, et al., Kuro and Muben-Lamar In the Eye of the Beholder?, Fla. B.J., May 2002, at 49. Following the 1990 amendment, the rule states that [a] conveyance of realty to a corporation in exchange for shares of its capital stock, or as a contribution to the capital of a corporation, is subject to tax. There is a presumption that the consideration is equal to the fair market value of the real property interest being transferred. Fla. Admin. Code R. 12B-4.013(7). Similarly, when the value of an interest in a partnership is increased by a conveyance of real property to the partnership, this transaction is also subject to the tax. Fla. Admin. Code R. 12B-4.013(10). Following the 1990 amendment to section 201.02(1), conflict has developed among the Florida district courts as to how to impose the statute on transactions conveying property between grantors and their wholly owned companies. In Kuro, as stated above, the Second District held that the documentary stamp tax did not apply to a transfer of property from two sole stockholders to their corporation. 713 So.2d at 1022. The Second District considered the DOR rules on transfers to corporations and the 1990 amendment to section 201.02(1), but held that the shareholders had rebutted the presumption that the stock issued to them was consideration valued as equal to the fair market value of the condominiums transferred. Id. In Muben-Lamar, L.P. v. Department of Revenue, 763 So.2d 1209 (Fla. 1st DCA 2000), the First District Court of Appeal held that the issuing of partnership interests for real property was consideration and thus a transaction subject to the documentary stamp tax. In Muben-Lamar, however, the partnership was made up of three partners, only two of whom owned the property prior to transferring it to the partnership as a capital contribution. Id. at 1210. The third partner, who owned one percent of the partnership, contributed a promissory note as a capital contribution. Id. Thus, while the majority of the First District certified conflict with Kuro, Judge Lawrence specially concurred in result only, arguing that the decision in Muben-Lamar did not conflict with Kuro. Judge Lawrence distinguished the facts in Muben-Lamar from those in Kuro because of the various and diverse interests in the partnership, each [partner] contributing property in which the other previously had no interest. Muben-Lamar, 763 So.2d at 1210 (Lawrence, J., specially concurring). We granted review in Muben-Lamar on the basis of its conflict with Kuro, but we subsequently dismissed review. Muben-Lamar, L.P. v. Fla. Dep't of Revenue, 789 So.2d 337 (Fla.2001).