Findings Of Fact Petitioner Kenneth Blume, an unmarried man, purchased real property in his name on December 19, 1988. Petitioner Kenneth Blume obtained a mortgage on the property in his own name with PNC Mortgage Servicing Company. Petitioner Kenneth Blume married Petitioner Tina Blume on November 3, 1990. Thereafter, Petitioner Kenneth Blume contacted a title company, Advance Title, Inc. to refinance the property and transfer the property from himself, as sole owner, to himself and his wife, Petitioner Tina Blume. On June 19, 1992, as part of the refinancing transaction, Petitioner Kenneth Blume transferred his individual mortgage with PNC Mortgage Servicing Company to Foundation Financial Services, Inc. which paid off Petitioner Kenneth Blume's original mortgage. On June 19, 1992, Petitioner Kenneth Blume gave Petitioner Tina Blume a legal interest in the property by transferring half of the encumbered property to her by quit claim deed. Petitioner Kenneth Blume executed the deed in the presence of Cheryl Scott, a notary public and an employee of Advance Title, Inc. Said deed lists Petitioner Kenneth Blume as grantor and Petitioner Kenneth Blume and his wife, Petitioner Tina Blume, as grantees. On June 19, 1992, as part of the refinancing transaction, Petitioners created a new first mortgage on the subject property in favor of Foundation Financial Services, Inc. This mortgage is the obligation of both Petitioners. The quit claim deed was prepared by Advance Title, Inc. on Petitioners' behalf. The quit claim deed showed that the consideration paid for the transfer of the encumbered property was $10. On June 24, 1992, Advance Title, Inc. went to the Clerk of the Circuit Court's Office to record the quit claim deed. As a condition precedent to the recordation of any deed transferring an interest in real property, Section 201.022, Florida Statutes, requires that the grantor, grantee, or agent for the grantee, execute and file a return with the Clerk of the Circuit Court. The return is identified as a Form DR-219, Return for Transfer of Interest in Real Property. On June 24, 1992, Advance Title, Inc. filled out and signed the Form DR-219, Return for Transfer of Interest in Real Property, as the agent of Petitioners. Advance Title, Inc., as Petitioners' agent, did not disclose the full amount of consideration on Form DR-219 as required by question 3. Instead, Advance Title, Inc. wrote that the property was sold for $10. Advance Title, Inc. did not disclose the extinguished or refinanced mortgage on Form DR-219. In response to the question whether the sale was financed, Advanced Title, Inc. did not check the "yes" box on Form DR-219. Form DR-219 defines the word "consideration", in pertinent part, as follows: the purchase price of the property or the total amount paid or to be paid for the transfer of any interest in real property. Consideration includes: cash; new mortgages placed on the property to finance all or part of the purchase; existing mortgages on the property either assumed or taken subject to; mortgages that are cancelled, satisfied or rendered unenforceable, settled by the sale or transfer or in lieu or foreclosure . . . . This definition is consistent with the Legislature's definition of consideration set forth in Section 201.02(1), Florida Statutes (1991), applicable here. Advance Title, Inc., as Petitioners' agent, stated on Form DR-219 that documentary stamp tax in the amount of $.60 was due on the subject transfer of interest in real property. On June 24, 1992, Advance Title, Inc. presented the quit claim deed to the Clerk of the Circuit Court for recordation together with the Form DR-219. The Clerk recorded the quit claim deed and collected $.60 in documentary stamp tax based on information that Advance Title, Inc. provided on the Form DR-219. The Clerk did not tell Advance Title, Inc. or Petitioners that additional documentary stamp taxes were due on the transfer. Respondent conducted a routine audit of the Clerk's records and determined that additional documentary stamp taxes were due on the deed transferring an interest in the encumbered property to Petitioner Tina Blume. The record contains no competent substantial evidence to show that Petitioners fall within an exception to or exemption from paying the additional documentary stamp tax in question here. Moreover, there is no competent persuasive evidence that an agent of the state of Florida or Santa Rosa County misrepresented a material fact on which Petitioners relied to their detriment. Petitioners have not met their burden of proving by a preponderance of the evidence that they do not owe additional documentary stamp taxes on the real estate transaction at issue here.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is recommended that Respondent enter a Final Order upholding its assessments as revised in a Notice of Reconsideration dated January 9, 1995, of documentary stamp tax, plus applicable interest and penalties against Petitioners Kenneth and Tina Blume. RECOMMENDED this 23rd day of October, 1995, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD, Hearing Officer Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of October, 1995. APPENDIX The following constitutes the undersigned's specific rulings pursuant to Section 120.59(2), Florida Statutes, on all proposed findings of fact submitted by the parties to this case. Petitioners' Proposed Findings of Fact Petitioners' proposed recommended order for the most part is a memorandum of law and does not designate proposed findings of fact. However, the undersigned rules as follows on statements of fact contained within Petitioners' memorandum: Accept that Petitioner Kenneth Blume chose to sign the quit claim deed. No competent persuasive evidence regarding the Clerk of the Circuit Court's directions to Advance Title, Inc. or Petitioners. Uncorroborated hearsay evidence. Accept that Petitioners were not aware of Respondent's hotline service at the time of the conveyance; however, irrelevant. Reject that Petitioners made prudent and reasonable attempts to learn the requirements of Section 201.02, Florida Statutes. Petitioners had constructive notice of the published statutes and rules which were in effect at the time of the conveyance. Reject that the "system" deceived Petitioners. No competent persuasive evidence to support this fact. Reject that the "system" or "state" failed to disclose the law controlling taxes on real estate transactions. Applicable statutes and rules read together with the definition of consideration set forth on the Form DR-219 constitute sufficient notice to Petitioners. The "system" or "state" did not draft the language in the quit claim deed; therefore, the state was not required to include any language relating to the cost of the transaction. The Form DR-219 included a definition of consideration which is consistent with the language in the applicable statutes and rules. Reject that the state added new terms or changed the terms of the agreement memorialized in the quit claim deed. The state was not a party to the agreement between Petitioners. Reject that the system failed to inform Petitioners of "all" the terms in the contract as "offered" by the state. Respondent's assessment does not involve a contractual relationship between Respondent and Petitioners with the Respondent as a "seller" and Petitioner Kenneth Blume as a "buyer." Respondent's Proposed Findings of Fact The undersigned accepts the substance of Respondent's Proposed Findings of Fact 1-28 as modified in Findings of Fact 1-23 of this Recommended Order. COPIES FURNISHED: Nancy Francillon, Esquire Mark T. Aliff, Esquire Office of the Attorney General The Capitol - Tax Section Tallahassee, FL 32399-1050 Kenneth and Tina Blume 159 W. 29th Court Fayetteville, AR 72701 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the assessments made by respondent for additional documentary stamp surtaxes and the corresponding penalties be upheld. Respectfully submitted and entered this 27th day of February, 1976, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32399-1550 COPIES FURNISHED: Mr. J. Ed Straughn Executive Director Department of Revenue The Capitol Tallahassee, Florida
Findings Of Fact By warranty deed dated July 29, 1974 Marco Cove, Inc. conveyed certain property to the Barnett Bank of Naples, Florida as Trustee. At the time of these conveyances the properties were subject to a first mortgage dated September 14, 1971 in an original principal amount of $1,400,000 to AMI Investments, Inc. mortgagee and a second mortgage dated August 24, 1973 in the amount of $130,278 to Joseph R. Lynch, Inc. By quitclaim deed dated November 5, 1974 (Exhibit 8) Donald P. Landis conveyed his interest in Apartment Number C-3 in the condominium here involved to the Barnett Bank of Naples, Trustee. It appears that at the time of the conveyances here involved Marco Cove, Inc. was delinquent on both mortgages, owed materialmen's liens on the property, had sold some of the units to innocent purchasers without giving clear title, and had not placed in escrow the sums so received from these purchasers. Barnett Bank accepted title as trustee, so the various rights of the parties could be resolved without foreclosure proceedings. Although Petitioner contested that Barnett Bank was Trustee for AMI Investments, Inc., Exhibit 10, which was admitted into evidence without objection, clearly shows the bank understood they were trustees for AMI Investments, Inc. and accepted the deeds here involved. At the time of the conveyances the balance owned on the first mortgage was $63,356.16 and on the second mortgage $130,278. Respondent's third Notice of Proposed Assessment (Exhibit 3) assesses documentary stamp taxes and penalties in the amount of $59.25 on each of the three condominium units conveyed to the Trustee and documentary stamp tax and penalty in the amount of $547.88 on the conveyance of the entire condominium for a total tax and penalty of $725.63. No surtax is claimed. The conveyances to the Trustee did not extinguish the mortgages and the Trustee took title to the properties subject to these mortgages. Petitioner has subsequently sold its rights as first mortgagee to a third party for some $66,000.
Findings Of Fact Paragraph 3 of the Petitioner's petition for administrative hearing provides: "That the Petitioners accepted a conveyance of certain real property in Brevard County, Florida in lieu of foreclosure of a mortgage held by them. The Department of Revenue contends that the documentary surtax should be paid on the deeds based on the amount of the outstanding mortgage at the time of the conveyances. It has served notice of the proposed assessments against each of the Petitioners in the following amounts, to wit: Jesse Jackson Parrish, Jr., tax - $187.00, penalty - $187.00, interest - $5.61, total due to date - $379.61; Ralph Bernard Parrish, tax - $187.00, penalty - $187.00, interest - $5.61, total due to date - $379.61; J.J. Parrish & Company, Inc., tax - $374.55, penalty - $374.55, interest - $11.24, total due to date - $760.34, and Pauline Bryan, tax - $187.00, penalty - $187.00, interest - $5.61, total due to date - $760.34, and Pauline Bryan, tax - $187.00, penalty - 187.00, interest - 5.61, total due to date - $379.61. That the statutes, Florida Statutes, 201.02, does not require payment of the documentary sur tax in such a case. The condition of this statute, by the court, in Leadership Housing, Inc., a Delaware corporation vs. Department of Revenue of the State of Florida, Fla. App. 336 So 2d 1239, holds that the statute should be strictly construed in favor of the tax payer and against the Government." In its answer the Respondent admitted the allegations contained in the first three sentences of the above quoted paragraph. In response to the last sentence of Paragraph 3 of the petition, the Respondent answered as follows: "Respondent denies the following allegations contained in the fourth sentence of paragraph three, if Petitioners are refering to section 201.021 Florida Statutes, and asserts that the conveyance which is the subject of this cause is subject to the imposition of documentary surtax stamps pursuant to section 201.021, Florida Statutes. Respondent, with respect to the allegations contained in the last sentence of Paragraph 3, admits to the existence of the decision in the Leadership Housing Inc., a Delaware corporation v. Department of Revenue of the State of Florida case, but asserts that such decision is not applicable in the instant cause." Since the allegations of the first three sentences of Paragraph 3 of the petition have been admitted by the Respondent, the allegations will be accepted as facts, and are intended to be construed as findings of fact herein. In Paragraph 2 of their petition, the Petitioners alleged: "There are no issues of material fact." In its answer the Respondent did not admit this allegation, but rather asserted that it was without knowledge with respect to it. The position taken by the Respondent at the final hearing clearly indicates that the Respondent is in agreement that there are no issues of fact to be determined in this case. On or about December 23, 1975, Alexander H. Clattenberg, Jr. and John Lowndes, Trustees, executed warranty deeds granting to Jesse Jackson Parrish, Jr., Ralph Bernard Parrish, and Pauline Parrish Bryan three separate parcels of land located in Brevard County, Florida. These warranty deeds were received in evidence respectively as Respondent's Exhibits 4, 2, and 3. On or about July 8, 1976, Alexander H. Clattenberg, Jr. and John F. Lowndes, Trustees, executed a warranty deed granting to J. J. Parrish & Company, Inc., certain real property located in Brevard County, Florida. A copy of this deed was received in evidence as Respondent's Exhibit 1. On or about December 29, 1976, the Respondent issued notices of proposed assessment against Jesse Jackson Parish, Jr., Ralph Bernard Parrish, and J. J. Parrish & Company, Inc. based upon Respondent's Exhibits 4, 2, and 1. Copies of these notices of proposed assessment were received in evidence as Respondent's Exhibit 5. A copy of a proposed assessment against Pauline Parrish Bryan was neither offered into evidence nor received. It is alleged in the Petitioners' petition, and admitted in the Respondent's answer, however, that a notice of proposed assessment was served upon Pauline Bryan. Except insofar as the pleadings contain undisputed allegations respecting the consideration for the warranty deeds that were received in evidence as Respondent's Exhibits 1 through 4, there was no evidence presented at the final hearing from which any findings can be made respecting the consideration for the deeds.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED: That the Respondent assess documentary surtaxes, interest, and penalties against the Petitioners in the amounts set out in Paragraph 3 of the Petitioners' petition for administrative hearing. RECOMMENDED this 31st day of May, 1977, in Tallahassee, Florida. STEVEN PFEIFFER Assistant Director Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Mr. Harry L. Coe Executive Director Department of Revenue Room 102, Carlton Building Tallahassee, Florida 32304 Edwin J. Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 Joe D. Matheny, Esquire Henderson, Matheny & Jones P. O. Box 6536 Titusville, Florida 32780
Findings Of Fact Prior to the hearing the parties jointly moved to consolidate the two (2) above styled cases and stated the stipulation would cover both 76-2197, D.O.A.H., and 77-604, D.O.A.H. The former involved six (6) deeds and the latter three (3) deeds. The following facts were stipulated to by the parties: The Respondent, Department of Revenue, imposed a documentary stamp tax upon six (6) deeds which transferred the title to properties from individual persons to Petitioner Corry. The transfer came about as a result of the following: In each of the six (6) transfers under question, Petitioner Corry sold property to certain individuals. The Petitioner gave to the individuals a deed and took back a purchase money mortgage. The purchasers made essentially no payments on the mortgage to Petitioner Corry and ultimately the purchasers deeded the property back to the Petitioner. The deeds were recorded in the courthouse records. In one of the deeds there is a specific statement that the deed is executed in lieu of foreclosure and that the purchaser is released from all liability. There is no such specific statement in the other deeds. By a Proposed Notice of Assessment dated August 3, 1976, the Respondent, Department of Revenue, sought to impose a documentary stamp tax upon the six (6) deeds. The consideration upon which the tax is based in cases like the instant case is usually the amount of mortgage debt forgiven but in the instant case no such information was provided and the tax was based on the assessed values of the property. Petitioner Corry is contesting the legal liability of Petitioner for the assessment and is not contesting the legal liability of Petitioner for the assessment and is not contesting the mathematical computation of the amount allegedly due. It is Petitioner's contention that the six (6) deeds are not subject to documentary stamp taxation inasmuch as the Petitioner paid nothing for the deeds and were signed by the mortgagors at the request of the Petitioner to clear title of the equitable owner. It is the Respondent Department of Revenue's contention that the six (6) deeds are subject to documentary stamp taxation since they are deeds in lieu of foreclosure or are deeds given when debts are rendered unenforceable. At the time the six (6) deeds were recorded on December 22, 1975, in Taylor County, the Deputy Clerk asked Petitioner how much he paid for the six (6) deeds in question and when he responded that he paid nothing for the deeds the Deputy Clerk advised him that he owed no documentary stamp tax or surtax thereon. Relying on the Deputy Clerk's advice, the deeds were recorded and no taxes were paid, only the recording fees. The Hearing Officer further finds: The deeds in question were secured for the purpose of clearing title to the equitable owner. The Petitioner paid nothing to the mortgagor for the deeds. The stipulation controls both cases No. 76-2197 and 77-604.
Recommendation Hold the assessments as valid assessment. DONE and ORDERED this 6th day of July, 1977, in Tallahassee, Florida. COPIES FURNISHED: Caroline C. Mueller, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 William W. Corry, Esquire Post Office Box 527 Tallahassee, Florida 32302 DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of July, 1977.
Findings Of Fact On February 16, 1979, I-B-A, Inc., a Florida corporation, executed a Declaration of Trust pursuant to Section 689.071, Florida Statutes (1977), designating I-B-A, Inc., as Beneficiary and Lewis H. Harmon as Trustee. The trust agreement defined and declared the interest of the Beneficiary to be personal property only. Pursuant to the terms of the trust agreement I-B-A, Inc., conveyed legal title to the real property described in the Declaration of Trust to the Trustee by Warranty Deed. I-B-A, Inc., assigned its beneficial interest to One Biscayne Tower, N.V. Following the assignment, the Trustee, upon direction of the Beneficiary, conveyed legal title to the property to One Biscayne Tower, N.V. by Special Warranty Deed. These documents were all executed on February 16, 1979, and only minimal documentary stamps were placed on the Warranty Deed and the Special Warranty Deed. The consideration paid for the assignment of the beneficial interest from I-B-A, Inc., to One Biscayne Tower, N.V. was $49,101,000. On June 27, 1978, attorneys for taxpayer requested a private ruling from DOR respecting the documentary stamp taxes due on conveyances transferring real property through a Florida land trust established pursuant to Section 689.071, Florida Statutes. By letter dated July 10, 1978, DOR responded to this inquiry by opining that if the necessary documentation exists to comply with the statute the two recorded conveyances would require only minimal documentary tax stamps. One or more articles and/or editorials appeared in Miami newspapers following the February 16, 1979, transaction above discussed pointing out that some $200,000 in documentary stamp taxes had not been collected by the State on the transfer of a large downtown office building from one owner to another. On November 8, 1979, taxpayer received a Notice of Proposed Assessment under Chapter 201, Florida Statutes, in which DOR claimed $268,939.10 in taxes, penalties and interest due on the Special Warranty Deed by which the Trustee conveyed the trust property to One Biscayne Tower, N.V. Following an informal conference between Taxpayer's attorneys and DOR, DOR on June 18, 1980, issued a Revised Notice of Proposed Assessment under Chapter 201, Florida Statutes, in which DOR claimed $283,939.76 in taxes, penalties and interest, with interest accruing at the rate of $66.18 per day. In this assessment DOR claimed taxes were due on the Special Warranty Deed from Trustee to Taxpayer or, in the alternative, on the assignment of the beneficial interest under the trust from I-B-A, Inc., to One Biscayne Tower, N.V. Both the Warranty Deed from I-B-A, Inc., to the Trustee and the Special Warranty Deed from the Trustee to One Biscayne Tower, N.V. were recorded. The Trust Agreement was not recorded. DOR's basis for the assessment issued in this transaction was that no recorded instrument contained a provision declaring the interests of the beneficiaries under the Trust Agreement to be personal property-only. Following receipt of the Revised Assessment, the Trustee and One Biscayne Tower, N.V. filed suit in the Circuit court in and for Dade County seeking to reform the Warranty Deed from I-B-A, Inc., to the Trustee to include a provision specifically stating that the interest of the beneficiaries under the Trust Agreement was personal property only. I-B-A, Inc., was joined as a defendant. On 18 July 1980, the parties to this suit submitted a stipulation to the court that final judgment may be entered ex parte without delay, reforming the Warranty Deed ab initio in accordance with the Complaint. By Final Judgment entered 12 August 1980, Circuit Judge Dan Satin reformed this Warranty Deed ab initio to include the language in a recorded instrument specified in Section 689.071(4), Florida Statutes. The purpose of the parties in setting up a Florida land trust through which to transfer the property was to avoid the payment of documentary stamp taxes and surtaxes on the $49,101,000 purchase price which a bankruptcy court had approved for the sale of this asset. Accordingly, the reformation of the Warranty Deed was to comply with the intent of the parties at the time the Warranty Deed was executed and delivered.
Findings Of Fact On December 27, 1976, Petitioner entered into an Assumption Agreement and Release of Seller, a copy of which is appended to this recommended order as Exhibit "A". The agreement contains, in writing, the obligation of Flagler Hospital, Inc., to pay Petitioner the sum of $238,464,52. The document is not a renewal of an existing obligation. On April 25, 1977, Respondent gave Petitioner notice that a penalty and interest under Section 201.08, Florida Statutes, had been assessed against it in the amount of $729.42 because the agreement constituted a note or written obligation to pay money. The agreement was executed in the State of Florida. No documentary stamp taxes have been paid regarding the agreement. The mathematical computation of the tax, penalty and interest is correct. The agreement represents the assumption of an existing debt between Petitioner and Inter-Medic Health Centers, Inc., by Flagler Hospital, Inc. The original debt is evidenced by a note and mortgage dated February 11, 1976. Documentary stamp taxes in the amount of $360.00 were paid as to the original note. No additional indebtedness was created by the agreement, but the agreement releases the original obligor, Inter-Medic Health Centers, Inc., from liability.
Findings Of Fact On or about January 9, 1974, Petitioners and their partners, Edward Mehler, and Sylvia Mehler, sold certain property located in Broward County, Florida, to Leo Koehler, Pat Manganelli, and Walter Urchison. A copy of the deed was received in evidence as Respondent's Exhibit 1. The Petitioners and the Mehlers took a $50,000 mortgage from the buyers as a part of the purchase price. The mortgage deed was received in evidence as Respondent's Exhibit 2. The face amount of the mortgage is $50,000. The buyers defaulted on the mortgage to the Petitioners and the Mehlers without having made any payments on the mortgage. The Petitioners and the Mehlers were unsuccessful in negotiating any payment from the buyers. The buyers were apparently irresponsible, and were unsuccessful in business. The buyers had given their deed to the property to a Mr. Frank Post. Mr. Post apparently took the deed in payment for a debt. The Petitioners and the Mehlers were unsuccessful in negotiating any payment on the mortgage from Post. The Petitioners and the Mehlers were unsuccessful in locating any market for the mortgage. The mortgage had no market value. Rather than foreclosing one the mortgage, the Petitioners and the Mehlers took a warranty deed from the original buyers and a quitclaim deed from Post. These deeds were received in evidence as Respondent's Exhibits 3 and 4. The deeds were taken in lieu of foreclosure, and the effect of the deeds was to discharge the $50,000 mortgage obligation. Petitioners and the Mehlers placed minimum Florida documentary stamp tax and surtax stamps on each deed, taking the position that the consideration for the deeds was nothing. The Respondent took the position that the consideration for the deeds was the discharge of the mortgage obligation, and assessed $410 in stamp tax, surtax, and penalty obligations upon the Petitioners. The petitioners subsequently commenced this action. The property which is the subject of this matter has very little market value. The property has been on the market for some time, and no buyer has been found. The property has been valued at $12,500, but its market value is less than that.
Findings Of Fact On or about August 15, 1979, Mead Timber Company and Scott Timber Company conveyed certain property located in Suwannee County, Florida (hereinafter referred to as the "Property"), to Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch (hereinafter referred to as the "Original Conveyance"). The warranty deed for the Original Conveyance was recorded on August 15, 1979, at Official Records Book 187, page 444, of the Public Records of Suwannee County, Florida. In connection with said Original Conveyance the closing statement therefor showed a purchase price of Two Million Four Hundred Thousand Dollars ($2,400,000.00), said amount being the actual amount of the purchase and sale. In connection with the deed for said Original Conveyance, the closing statement indicated that Seven Thousand Two Hundred Dollars ($7,200.00) of documentary stamp taxes were paid based upon Thirty Cents ($.30) per One Hundred Dollars ($100.00) of consideration, and said Seven Thousand Two Hundred Dollars ($7,200.00) for documentary stamps was in fact paid. In connection with said Original Conveyance, a first mortgage and security agreement was given by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, to the Mutual Life Insurance Company of New York, said mortgage dated and filed August 15, 1979, at Official Records Book 187, page 451, of the Public Records of Suwannee County, Florida (hereinafter referred to as "First Mortgage"). The mortgage secured a note with a face amount of Three Million Dollars ($3,000,000.00) dated August 15, 1979. The First Mortgage showed a face amount of Three Million Dollars ($3,000,000.00). In connection with the First Mortgage, pursuant to the loan commitment dated April 13, 1979, only One Million Eight Hundred Thousand Dollars ($1,800,000.00) was disbursed thereunder. The parties thereto anticipated that an additional One Million Two Hundred Thousand Dollars ($1,200,000.00) would be disbursed at some future date, subject to conditions precedent that (a) the Borrowers place all of the Property encumbered thereby into cultivation, after having first cleared and prepared same for cultivation, and (b) that the Borrowers install twenty (20) 12-inch irrigation wells which would be appropriately drilled and equipped, and (c) that the Borrowers install twenty (20) automatic center-pivot irrigation systems thereon. The aforementioned conditions precedent have not been accomplished to date. The time period during which the conditions precedent set forth in paragraph seven (7) above could be completed, and during which time period the Borrowers could require the First Mortgage lender to make the additional disbursement under the First Mortgage, has expired, and the Borrowers have no further legal right to require any additional disbursements under the First Mortgage. The Petitioner has waived any right to seek or obtain the additional One Million Two Hundred Thousand Dollars ($1,200,000.00) from the holder of the First Mortgage. In connection with the First Mortgage for the Original Conveyance, the Borrowers paid Four Thousand Five Hundred Dollars ($4,500.00) as documentary stamp taxes on the promissory note secured by the First Mortgage, and paid Six Thousand ($6,000.00) in intangible taxes. In connection with the Original Conveyance, a second mortgage was given by Tommy M. Faircloth, Sam L. Rudd and Alvin C. Futch to Mead Timber Company and Scott Timber Company in the original principal sum of Three Hundred Thousand Dollars ($300,000.00), said mortgage dated and filed August 15, 1979, at Official Records Book 187, page 461, of the Public Records of Suwannee County, Florida (hereinafter referred to as the "Second Mortgage"). On or about October 1, 1980, Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch conveyed a portion of the Property to Timber River, Inc., a Florida corporation, by warranty deed which instrument was filed October 2, 1980, at Official Records Book 203, page 790, of the Public Records of Suwannee County, Florida (hereinafter referred to as the "Second Conveyance"). In connection with the deed for said Second Conveyance, only minimum documentary stamps in the amount of Forty Cents ($.40) were attached and affixed thereto. The Respondent herein has alleged that, since the Second Conveyance was subject to both the First Mortgage and the Second Mortgage, the taxable consideration should be Three Million Three Hundred Thousand Dollars ($3,300,000.00)(the face amount of the two [2] mortgages combined), and therefore the documentary stamps which should have been affixed to the deed would be Thirteen Thousand Two Hundred Dollars ($13,200.00), leaving an additional tax due in the amount of Thirteen Thousand One Hundred Ninety-nine and Sixty One-hundredths Dollars ($13,199.60). Timber River, Inc., the grantee of the Second Conveyance, is a corporation which was wholly owned by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch in equal proportions at the time of the Second Conveyance. Timber River, Inc., in consideration of Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch conveying to said corporation the property described in the deed of the Second Conveyance, issued its common stock to said individuals in equal proportions. Timber River, Inc., took the Property subject to the First Mortgage and second Mortgage, and did not assume or agree to assume either the First Mortgage or the second Mortgage. Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, individually, have at all times been or are presently liable to the mortgagee, Mutual Life Insurance Company of New York, and are personally responsible for making all payments under said mortgage. All payments under said mortgage both prior to and subsequent to the Second Conveyance have been made by Tommy M. Faircloth, Sam L. Rudd, and Alvin C. Futch, individually.
Findings Of Fact Petitioner is in the land development business. Petitioner sold residential lots to various purchasers and contracted through a sister corporation to construct homes on the lots. At the time the lots were conveyed no improvements had been made. Petitioner placed documentary tax stamps and documentary surtax stamps upon the deeds reflecting the consideration for the deeds as the price of the lots. Respondent contends that stamps should have been placed on the deeds reflecting the consideration as the price of the lots plus improvements. Accordingly Respondent is proposing to assess additional stamp taxes, surtaxes, penalties and interest upon the Petitioner in the total amount of $13,002.10. The pleadings, answers to interrogatories and responses to requests for admissions establish that unless Rule 12A-4.13(22), Florida Administrative Code is invalid, Petitioner is liable for the taxes Respondent proposes to assess. The transactions which form the basis of the proposed assessment are package deals within the meaning of the Rule.
