STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOSEPH SLOANE, SYLVIA YEDLIN ) LASKOWITZ, BERNARD YEDLIN, ) FLORENCE PATO and JACK GOLD, )

)

Petitioner, )

)

vs. ) CASE NO. 76-619

) DEPARTMENT OF REVENUE, STATE ) OF FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before Charles C. Adams, Hearing Officer with the Division of Administrative Hearings, at State Office Building, Room 272, 1350 N. W. 12th Avenue, Miami, Florida at 10:00 A.M., January 25, 1977.

APPEARANCES

For Petitioner: Lewis M. Kanner, Esquire

Williams, Salomon, Kanner & Damian 1003 DuPont Building

169 E. Flagler Street Miami, Florida 33131

For Respondent: Caroline C. Mueller, Esquire

Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304 ISSUE

Whether or not the Respondent, State of Florida Department of Revenue, is entitled to documentary stamp tax in accordance with 201.02 F.S. in the amount of $1450.50 and a penalty in the amount of $1450.50 under 201.17 F.S.; and documentary surtax under 201.021 F.S. in the amount of $531.85 and penalties thereon in the amount of $531.85, pursuant to 201.17 F.S.; as entered by the Respondent, State of Florida Department of Revenue on a transaction between Petitioners and Stan-Mil, Inc. are proper.

FINDINGS OF FACT

1. The Petitioners were the stockholders of Gallagher's of Miami, Inc. Among the assets of Gallagher's of Miami, Inc., were the rights under a sublease undertaken between B.G.L. Corporation and Gallagher's of Miami, Inc. dated September 25, 1976 and recorded in Official Record Book 5663, at page 261 of the

   Public Records of Dade County, Florida. This sublease was an amendment to a sublease which was dated June 1, 1965, recorded in Official Record Book 5768, Page 176 of the Public Records of Dade County, Florida, between B.G.L. Corporation, a Florida corporation as lessor, and KSJ Corporation, a Florida corporation as lessee. One of the conditions of Gallagher's lease obligation was responsibility for the payment of a mortgage dated May 1, 1965, recorded in Official Record Book 4592, at Page 161, of the Public Records of Dade County, Florida, from KSJ Corporation, a Florida corporation to Joseph Z. Lipsky and Evalyn Lipsky, as amended by agreement dated August 30, l65 between KSJ Corporation and Joseph Z. Lipsky and Evalyn Lipsky.

   
   

2. Pursuant to a plan of liquidation of Gallagher's of Miami, Inc. that corporation executed and delivered to Petitioners an assignment of the lessee's interest in the aforementioned lease to which Gallagher's of Miami, Inc. was a party. The assignment of lease can be found as Exhibit A to the petition filed by the Petitioners. The contents of such assignment are found to be fact. By letters of July 30, 1975 and March 10, 1975, the Respondent indicated its intention to assess tax in the amount of $326.10 upon the document representing the assignment between Gallagher's of Miami, Inc. and the Petitioners. The amount of documentary stamp tax was premised on the aforementioned mortgage which at the time of the proposed assessment was valued at $108,750. In addition the Respondent indicated its intention to impose a penalty in a like amount of $326.10. The assignment was in fact executed, pursuant to a plan of liquidation, which plan is shown as Petitioner's Exhibit C attached to the petition. The Petitioners' Exhibit C is established as fact.

   
   

3. Petitioners in receiving the assignment in liquidation Gallagher's of Miami, Inc. received such assignment in proportion to their stock holdings in that corporation.

   
   

4. Subsequent to the assignment of leases and agreement between Gallagher's of Miami, Inc. and the Petitioners a further assignment was made between the Petitioners and Stan-Mil, Inc. of the same property, which took place on December 16, 1974.

   
   

5. The Petitioners executed and delivered to Stan-Mil, Inc. a Florida corporation, the assignment of lease of lessee's interest in a lease, as shown in Petitioner's Exhibit A attached to its petition challenging the assessment in the transfer of Petitioners' interest to Stan-Mil, Inc. The facts of Exhibit A are admitted. The assignment was excluded pursuant to an agreement for the sale of a restaurant (Gallagher's Restaurant) , the lease assignment being of the assets of the restaurant which was sold. A copy of the closing statement, upon the sale of the restaurant, a copy of the bill of sale of all assets sold and a copy of an appraisal report allocating the purchase price for the restaurant, among all of the assets sold is attached as Petitioner's Exhibit D to the petition challenging the assessment on the transaction between the Petitioners and Stan-Mil, Inc. The facts of Exhibit D are admitted. The Respondent, through its letter of March 8, 1976, proposes to assess documentary stamp tax under

   201.02 F.S. in the amount of $1450.50 and a penalty in like amount under 201.17

   P.S. In addition the letter notices a proposed assessment of documentary surtax under 201.021 F.S. in the amount of $531.85 and a penalty of $531.85 pursuant to

   201.17 F.S. These amounts represent the tax on the appraised value of the lease-land and building in the amount of $83,500.00 and the leasehold

   improvements in the amount of $400,000.00. These lease-hold improvements are to be distinguished from such tangible items as furniture, fixtures, equipment, dishes and silverware, which were separately appraised in the valuation of the assets of the restaurant, known as Gallagher's of Miami, Inc.

6. The Petitioners are challenging the proposed assessment of tax on the transaction between the Petitioners and Stan-Mil, Inc.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction in this cause.

   
   

8. The facts in this cause concerning the transfer of the lease and obligations from the Petitioners to Stan-Mil, Inc. to include the leasehold improvements, are an assignment of a real property interest in which identifiable consideration flows from Stan-Mil, Inc. to the Petitioners in the amount of $483,500.00. See Devore v. Lee, 37 So.2d 924 (Fla. 1947). Therefore, the Petitioners are liable for documentary stamp tax in WE amount of $1450.50 pursuant to 201.02 F.S. and the documentary surtax in the amount of $531.85, pursuant to 201.021 F.S. In addition, the Petitioner are liable for the payment of penalty in the amount of $1450.50 comparable to the amount of documentary stamp tax owed and the payment of a penalty of $531.85 comparable to the amount of documentary surtax owed, all in accordance with 201.17 F.S. See Associated Dry Goods v. Department of Revenue, 335 So.2d 832 (1 DCA Fla. 1976)

RECOMMENDATION

It is recommended that the documentary stamp tax in the amount of $1450.50 and a like penalty of $1450.50, and the documentary surtax in the amount of

$531.85 and a like penalty of $531.85, as assessed against the Petitioners, be upheld.

DONE and ENTERED this 28th day of February, 1977, in Tallahassee, Florida.

CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

Lewis M. Kanner, Esquire 1003 DuPont Building

169 E. Flagler Street Miami, Florida 33131

Caroline E. Mueller, Esquire Assistant Attorney General The Capitol

Tallahassee, Florida 32304

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOSEPH SLOANE, SYLVIA YEDLIN LASKOWITZ, BERNARD YEDLIN, FLORENCE PATO AND JACK GOLD,

Petitioners,

vs. CASE NO. 76-619

DEPARTMENT OF REVENUE, STATE OF FLORIDA,

Respondent.

/

FINAL ORDER OF DEPARTMENT OF REVENUE

This cause comes before the Department of Revenue after hearing having been held pursuant to Section 120.57, Florida Statutes, before a Hearing Officer of the Division of Administrative Hearings. Said Hearing Officer has heretofore submitted to the Department of Revenue a Recommended Order dated February 28, 1977. Appearances at the Administrative Hearing were:

Lewis M. Kanner, Esquire

Williams Salomon, Kanner & Damian 1003 DuPont Building

169 E. Flagler Street Miami, Florida 33131

Representing the Petitioners

Caroline C. Mueller, Esquire Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, Florida 32304 Representing the Respondent

Pursuant to Section 120.57(1)(b)9, Florida Statutes, the Department of Revenue, after careful analysis elects to modify the Recommended Order by making one change in the Findings of Fact. The record supports the fact that the sub- lease undertaken between B.G.L. Corporation and Gallagher's of Miami, Inc., was dated September 25, 1976.

The Department of Revenue adopts the following as the Final Order of the Department of Revenue:

ISSUES

Whether or not the Respondent, State of Florida, Department of Revenue, is entitled to documentary stamp tax in accordance with Section 201.02, Florida Statutes, in the amount of $1,450.50 and a penalty in the amount of $1,450.50 under Section 201.17, Florida Statutes; and documentary surtax under Section

1. , Florida Statutes, in the amount of $531.85 and penalties thereon in the amount of $531.85, pursuant to Section 201.17, Florida Statutes; as entered by the Respondent, State of Florida, Department of Revenue, on a transaction between Petitioners and Stam-Mil, Inc., are proper.

   
   

   FINDINGS OF FACT

   
   

   The Petitioners were the stockholders of Gallagher's of Miami, Inc. Among the assets of Gallagher's of Miami, Inc., were the rights under a sub-lease undertaken between B.G.L. Corporation and Gallagher's of Miami, Inc., dated September 25, 1967, and recorded in Official Record Book 5663, at page 261 of the Public Records of Dade County, Florida. This sub-lease was an amendment to a sub-lease which was dated June 1, 1965, recorded in Official Record Book 5768, at page 176 of the Public Records of Dade County, Florida, between B.G.L. Corporation, a Florida corporation as lessor, and KSJ Corporation, a Florida corporation as lessee. One of the conditions of Gallagher's lease obligation was responsibility for the payment of a mortgage dated May 1, 1965, recorded in Official Record Book 4592, at page 161 of the Public Records of Dade County, Florida, from KSJ Corporation, a Florida corporation to Joseph Z. Lipsky and Evalyn Lipski, as amended by agreement dated August 30, 1965, between KSJ Corporation and Joseph Z. Lipsky and Evalyn Lipsky.

   
   

   Pursuant to a plan of liquidation of Gallagher's of Miami, Inc., that corporation executed and delivered to Petitioners an assignment of the lessee's interest in the aforementioned lease to which Gallagher's of Miami, Inc., was a party. The assignment of lease can be found as Exhibit A to the petition filed by the Petitioners/ The contents of such assignment are found to be fact. By letters of July 30, 1975, and March 10, 1975, the Respondent indicated its intention to assess tax in the amount of $326.10 upon the document representing the assignment between Gallagher's of Miami, Inc., and the Petitioners. The amount of documentary stamp tax was premised on the aforementioned mortgage which at the time of the proposed assessment was valued at $108,750.00. In addition, the Respondent indicated its intention to impose a penalty in a like amount of $325.10. The assignment was in fact executed, pursuant to a plan of liquidation, which plan is shown as Petitioner's Exhibit C attached to the petition. The Petitioners' Exhibit C is established as fact.

   
   

   Petitioners in receiving the assignment in liquidation Gallagher's of Miami, Inc., received such assignment in proportion to their stock holdings in that corporation.

   
   

   Subsequent to the assignment of leases and agreement between Gallagher's of Miami, Inc., and the Petitioners a further assignment was made between the Petitioners and Stan-Mil, Inc., of the same property, which took place on December 16, 1974.

   
   

   The Petitioners executed and delivered to Stan-Mil, Inc., a Florida corporation, the assignment of lease of lessee's interest in a lease, as shown in Petitioners' Exhibit A attached to its petition challenging the assessment in the transfer of Petitioners' interest to Stan-Mil, Inc. the facts of Exhibit A are admitted. The assignment was excluded pursuant to an agreement for the sale of a restaurant (Gallagher's Restaurant), the lease assignment being of the assets of the restaurant which was sold. A copy of the closing statement, upon the sale of the restaurant, a copy of the bill of sale of all assets sold and a copy of an appraisal report allocating the purchase price for the restaurant, among all of the assets sold are attached as Petitioners' Exhibit D to the petition challenging the assessment on the transaction between the Petitioners

   and Stan-Mil, Inc. The facts of Exhibit D are admitted. The Respondent, through its letter of March 8, 1976, proposes to assess documentary stamp tax under Section 201.02, Florida Statutes, in the amount of $1,450.50 and a penalty in like amount under Section 201.17, Florida Statutes. In addition the letter notices a proposed assessment of documentary surtax under Section 201.021, Florida Statutes. In addition the letter notices a proposed assessment of documentary surtax under Section 201.021, Florida Statutes, in the amount of

   $531.83 and a penalty of $531.83 pursuant to Section 201.17, Florida Statutes. These amounts represent the tax on the appraised value of the lease-land and building in the amount of $83,500.00 and the leasehold improvements in the amount of $400,000.00. These leasehold improvements are to be distinguished from such tangible items as furniture, fixtures, equipment, dishes and silverware, which were separately appraised in the valuation of the assets of the restaurant, known as Gallagher's of Miami, Inc.

   
   

   The Petitioners are challenging the proposed assessment of tax on the transaction between the Petitioner's and Stan-Mil, Inc.

   
   

   CONCLUSIONS OF LAW

   
   

   1. The Division of Administrative Hearings has jurisdiction in this case.

      
      

   2. The facts in this case concerning the transfer of the lease and obligations from the Petitioners to Stan-Mil, Inc., to include the leasehold improvements, are an assignment of a rel property interest in which identifiable consideration flows from Stan-Mil, Inc., to the Petitioners in the amount of

$483,500.00. See Devore v. Lee, 27 So. 2d 924 (Fla. 1947). Therefore, the Petitioners are liable for documentary stamp tax in the amount of $1,450.50 pursuant to Section 201.021, Florida Statutes. In addition, the Petitioners are liable for the payment of penalty in the amount of $1,450.50 comparable to the amount of documentary stamp tax owed and the payment of a penalty of $531.85 comparable to the amount of documentary surtax owed, all in accordance with Section 201.17, Florida Statutes. See Associated Dry Goods v. Department of Revenue, 335 So. 2d 832 (1 DCA Fla. 1976).

CONCLUSION

It is ordered that the documentary stamp tax in the amount of $1,450.50 and a like penalty of $1,450.50, and the documentary surtax in the amount of $531.85 and a like penalty of $531.85, as assessed against the Petitioner's, be upheld.

CERTIFICATION

I CERTIFY that the foregoing is the Final Order of the Department of Revenue adopted by the Governor and Cabinet on the 3rd day of May, 1977.

HARRY L. COE, JR.

Executive Director Department of Revenue State of Florida

Room 102, Carlton Building Tallahassee, Florida 32304

Dated this 3rd day of May, 1977.

Docket for Case No: 76-000619

Orders for Case No: 76-000619