Findings Of Fact Petitioner is incorporated under the laws of the State of Virginia and is registered to conduct business in the State of Florida. Robinson's of Florida is a Division of Petitioner, and is currently engaged in the sale of merchandise and retail through four Robinson's of Florida department stores situated in the Florida counties of Pinellas, Orange, Hillsborough and Seminole. Respondent is an agency of the State of Florida whose duties include the assessment of taxes and penalties imposed under Chapter 201, F.S. An unspecified portion of Robinson's retail sales in Florida is made pursuant to revolving charge agreements between Robinson's and its customers. These sales are made under retail charge agreements (Petitioner's Exhibit 1) which provide that in consideration of credit to be extended by Robinson's of Florida, the customer agrees to pay the full amount owing on the account within 25 days from the billing date of each monthly statement or monthly payments of not less than the payment required by a table included in the agreement which lists minimum monthly payments based upon the unpaid balance of the account. The agreement further provides that in case of a failure to pay the minimum payment due on the monthly statement, that the amount shown as the new balance on the monthly statement shall at the option of Robinson's become due and payable immediately. It provides that the charge card issued to the customer may be terminated or revoked at any time and must be surrendered to Robinson's upon demand. It states that the agreement constitutes a "revolving account" within the meaning of Section 2 subsection 8 of the Florida Retail Installment Sales Act, Chapter 59-414, Laws of Florida, 1959. Each time a customer purchases merchandise pursuant to a Robinson's revolving charge account, he executes a sales ticket (petitioner's Exhibit No. 2 and Exhibit B to Petition) which includes the following printed statement on the face of the ticket. "I agree to pay the total amount of this sales check in accordance with my credit arrangements with you." During March, 1975, Respondent conducted an audit of all of Robinson's revolving charge account sales records in its Florida stores. As a result of the audit, Respondent issued to Petitioner a proposed notice of assessment of tax and penalty under Chapter 201, F.S., dated March 20, 1975, (Exhibit C to Petition). The proposed notice of assessment requested payment of documentary stamp taxes in the amount of $17,925.00, pursuant to Section 201.08(2), F.S., and a penalty in -- the same amount pursuant to Section 201.17(2), F.S., (Exhibit's C & E to Petition). Petitioner requested and was afforded an opportunity to meet with a representative of Respondent for the purpose of objecting to the aforementioned assessment of taxes and penalty on May 6, 1975, in St. Petersburg, Florida. Subsequent to this conference, Petitioner received a letter dated May 9, 1975, from Respondent reaffirming the proposed total assessment and penalty in the total amount of $35,850.00 (Exhibit E to Petition). No evidence has been presented that documentary tax stamps for the sales in question were purchased, affixed to, or placed on the instruments in question.
Recommendation It is recommended: That the proposed assessment of documentary stamp taxes against the Petitioner in the amount of $17,925.00 under Section 201.08(2), Florida Statutes, be determined valid, and that collection thereof be made in accordance with appropriate law and regulations. That the proposed assessment of a penalty against thee Petitioner in the amount of $17,925.00 under Section 201.17(2), Florida Statutes, be determined invalid and set aside. DONE and ORDERED this 30th day of September, 1975, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Larry Levy, Esquire James D. Beasley, Esquire Assistant Attorney General P.O. Box 391 Department of Legal Affairs Tallahassee, Florida The Capitol For the Petitioner Tallahassee, Florida 32304 For the Respondent ================================================================= AGENCY FINAL ORDER =================================================================
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 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.
The Issue Whether the petitioners are entitled to a refund of the documentary stamp taxes paid on a Special Warranty Deed conveying real property from the Federal Home Loan Mortgage Corporation to one of the petitioners.
Findings Of Fact Based on the facts alleged in the petition for administrative hearing, the responses to requests for admission, and the facts stipulated to at the hearing on the motion for recommended summary final order, the following findings of fact are made: On September 27, 1994, Freddie Mac conveyed to Abe Saada by a Special Warranty Deed real property located in Dade County, Florida. Regina Saada is not a party to the Special Warranty Deed. The U.S. Department of Housing and Urban Development Settlement Statement prepared for the closing on the property showed that $9,600.00 in "state tax/stamps" was owed on the deed, of which $4,800.00 was to be paid from the funds of the seller, Freddie Mac, and $4,800.00 was to be paid from the funds of the borrower, Abe Saada. Pursuant to its agreement with Mr. Saada, Freddie Mac paid $9,600.00 to the Clerk of Court as the documentary stamp tax on the deed on or about September 28, 1994. The deed was recorded in the Dade County Official Records at Book 16525 at pages 3583-3585. Abraham Saada is not exempt from the documentary stamp tax.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a Final Order dismissing the Petition for Chapter 120 Administrative Hearing to Contest Denial of Stamp Tax Refund filed by Abraham Saada and Regina Saada. DONE AND ENTERED this 8th day of May, 1997, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 8th day of May, 1997.
Findings Of Fact Ken La Pointe was predecessor in interest to Petitioner, KANAPHA MEADOWS, INC, in a number of land transactions. Mr. La Pointe sold 15 lots in "1000 Oaks Subdivision" to third parties. These sales generated 13 deeds and 15 mortgages. The deeds given by La Pointe reflect that they are subject to two prior mortgages. La Pointe sold these 15 lots without getting a release on a prior mortgage held for the same property by C. L. Brice, individually and C. L. Brice, Trustee (apparently operating in some capacity as "Kanapha Ranch"), and also without getting a release on another prior mortgage held by Peoples' Bank. However, there is no contention by the parties that La Pointe did not place the proper documentary tax stamps on these deeds. La Pointe continued collecting on the 15 mortgages generated by the 13 deeds and in turn paid interest payments on his mortgage to Peoples' Bank but did not pay anything on the mortgage to Kanapha Ranch, Inc. Accordingly, C. L. Brice (operating through Kanapha Ranch) demanded, with the leverage of threatened foreclosure, that La Pointe assign these 15 mortgages to Kanapha Ranch, Inc. for collection and that all such collections would be applied to the Kanapha Ranch, Inc. mortgage as long as La Pointe continued to owe Kanapha Ranch, Inc. Thereafter, by an Assignment of Mortgages dated June 12, 1980 La Pointe assigned these mortgages to Kanapha Ranch, Inc. for collection only. Thereafter, La Pointe and Brice negotiated a deal, this time with Brice operating through Petitioner, KANAPHA MEADOWS, INC., whereby La Pointe provided a deed to KANAPHA MEADOWS, INC. for the balance of unsold property in "1000 Oaks Subdivision" and assigning to KANAPHA MEADOWS, INC. all mortgages due La Pointe (including the ones already assigned to Kanapha Ranch for collection) and whereby KANAPHA MEADOWS, INC., was to release La Pointe from all debts regarding the "1000 Oaks Subdivision." There were 39 lots in "1000 Oaks Subdivision." Thirty three of these deeds were transferred with proper documentary stamps. Six of these lots deeded to KANAPHA MEADOWS, INC. form the fulcrum of the issue between the parties to this proceeding. La Pointe and KANAPHA MEADOWS, INC. resorted to an elaborate percentage basis formula to determine the value of the property and the debts being assumed. After applying the mortgage amount against the indebtedness, $53,529.86 of the indebtedness was calculated as applicable to the six lots conveyed. This was the amount upon which documentary stamps of $214.40 were calculated and affixed to the Warranty Deed from La Pointe to KANAPHA MEADOWS, INC. for Lots 5, 6, 15, 16, 17, and 21, which deed was dated October 15, 1980 and recorded July 17, 1981 in Official Record Book 1359, pages 522-533 of the Public Records of Alachua County, Florida. No money changed hands at that point and apparently the executed deed was not delivered to KANAPHA MEADOWS, INC. until later. When the exact data and balance due on each mortgage was collected, approximately February 21, 1981, the parties were ready to close. On February 24, 1981, La Pointe assigned all 15 mortgages (most of them third mortgages because they had not been released from La Pointe's liability of the first two mortgages to Kanapha Ranch and Peoples' Bank) to KANAPHA MEADOWS, INC. At that time, La Pointe received an Assumption Agreement with Release from KANAPHA MEADOWS, INC. assuming the Peoples' Bank mortgage and also an Assumption Agreement with Release assuming the Kanapha Ranch mortgage. The 6 lots were received then and are now indicated on the KANAPHA MEADOWS, INC. books at an evaluation of $17,600.94. The October 15, 1980 Warranty Deed, the Assignment of Mortgages, and both Assumptions/Releases were recorded July 17, 1981. Petitioner contends that the $214.40 in tax stamps affixed thereto was appropriate based on the difference between the liabilities assumed and the assets received by KANAPHA MEADOWS, INC. from La Pointe. Respondent's position is that additional tax is due in the amount of $1,199.80 based upon the mortgages to which the deed was subject, which mortgages are reflected on the face of the deed and were specifically assumed by Petitioner.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Revenue enter a Final Order ratifying its assessment of an additional documentary stamp tax owed by Petitioner of $1,198.80 plus appropriate penalties and interest to date of that Final Order. DONE and ENTERED this 19th day of March, 1985, in Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 1985. COPIES FURNISHED: William Townsend, Esquire Department of Revenue Carlton Building Tallahassee, Florida 32301 C. L. Brice 6500 S. W. Archer Road Gainesville, Florida 32608 Edwin A. Bayo Assistant Attorney General Department of Legal Affairs Room LL04, The Capitol Tallahassee, Florida 32301 Randy Miller Executive Director 102 Carlton Building Tallahassee, Florida 32301
Findings Of Fact The instant proceeding arises over the application of the Florida documentary stamp tax law, Chapter 201 of the Florida Statutes, to transactions in which customers bought lots from Sandy Development Company and homes from Shubert Construction Company. Documentary stamp taxes and surtaxes have been paid on these transactions reflecting only the price of the lot. The Petitioners assert that the amounts already paid are the proper amounts due. The Respondent, Department of Revenue, asserts that the taxes and surtaxes are due upon the price of the home and lot together. The Department has issued a proposed notice of assessment against the Petitioners which reflects the amount due for additional taxes and surtaxes if the Department's position is upheld, plus an amount levied as a tax penalty, which amounts total $2,449.70. This Proposed Notice of Assessment and the schedule by which it was computed are included as Exhibit "A" to this stipulation. The mathematical computations underlying this assessment are not in dispute. The Petitioner Jerome Parker is the sole stockholder and sole employee of the Petitioner Sandy Development Company (hereinafter "Sandy"). Sandy is engaged in the business of buying vacant land and selling parcels of that land to individuals to use as home building sites. This land is located in Pasco County, Florida. Sandy has been engaged in this business since its incorporation in 1973, and has engaged in no other type of business. The Shubert Construction Company (hereinafter "Shubert") employs the Petitioner Jerome Parker as its Assistant Secretary and Branch Manager. Parker runs the Shubert branch office in Pasco County, with the help of one secretarial employee. Parker is Shubert's authorized agent for soliciting customers, negotiating and signing construction contracts, and arranging for financing for prospective home buyers. All of Shubert's construction business in Pasco County is conducted through Parker's office. Shubert maintains one other office, located outside Pasco County. Customers wishing to purchase a home and lot have come to Parker's office, which is located at the Shubert Construction Company, 1520 1st Street, Zephyrhills, Florida. Some of these customers already have lots selected, and Parker makes no attempt to sell lots to those customers. Customers who do not already have lots selected are solicited by Parker to consider purchasing a lot from listings maintained by him. Parker keeps at his office listings and maps of lots which are available for sale to home buyers by Sandy, Shubert, and certain third parties. If the customer expresses an interest in a lot or subdivision owned by Sandy or Shubert, Parker proceeds with the initial steps in selling that customer a lot (i.e., a credit check). If the customer expresses interest in a lot or subdivision owned by a third party, Parker refers the customer to that third party. All of the sales by Sandy, with a few exceptions, originated in this manner at Parker's office. Customers buying lots from Sandy return to Parker's office at the Shubert Construction Company after the credit check is completed. The purpose of this second visit is to have the customer sign a loan application to finance both the home and the land, and an option and acceptance of option for the land, conditioned upon the lender's extension of credit. These papers, copies of which appear as Exhibit "B" to this stipulation, are then routinely forwarded to the lender by Parker, acting as agent for both Shubert and Sandy. The Exhibit reflects that the loan application is for a single sum covering home and lot. The customers sign one note and one mortgage for both home and lot and make lump sum installment payments to the lender without dividing those payments into separate accounts for home and lot. It is the practice of the lender, however, to issue separate checks to Sandy and Shubert for the lot and home, respectively. Although persons buying lots from Sandy are not legally obligated to buy a home from Shubert, they have nevertheless done so in every case. Some 38 individual customers have purchased lots from Sandy, and all have contracted for the purchase of a home from Shubert built upon the land purchased from Sandy. In the course of selling a lot belonging to Sandy along with a home from Shubert, Jerome Parker normally identified Sandy as the seller of the lot, but this information was not emphasized to the customer. The enclosed affidavits from customers of Parker's indicate whether they sought to purchase a home, a lot, or both, and whether they believed the seller to be a single enterprise or two enterprises. Upon learning of a customer who wished to purchase both a lot and a home, Jerome Parker formed the intent to sell, through his two agency capacities, both a lot and a home to that customer. Shubert owns no interest in Sandy, and Sandy owns no interest in Shubert. The only link between the companies is through their mutual agent and employee Jerome Parker. Parker owns no interest in Shubert Construction Company. This Stipulation includes Exhibits "A" and "B" referred to above, and in addition Exhibit "C" consisting of affidavits relating to the intentions and beliefs of Sandy's customers, and Exhibit "D" consisting of copies of notes and mortgages signed by Sandy's customers, and/or affidavits relating to the handling of the notes and mortgages by the Farmers Home Administration. The parties do not waive objections on the grounds of relevancy or materiality to the materials included in the Exhibits. The only question remaining to be resolved is whether the transactions described above are taxable under Florida Statutes, sections 201.02 and 201.021 based on the price of the lot alone, or upon the price of the lot and the home. Petitioner and Respondent reserve the right to introduce testimony not inconsistent with the foregoing. All documents used in the transactions here under consideration are prepared on forms provided by Farmers Home Administration (FHA) of the Department of Agriculture. These include the Option to Purchase, Construction Contract, and all notes and mortgages. The Option to Purchase provides it is given to enable buyer to obtain an FHA loan and such offer is void if buyer is unable to obtain a loan from FHA. At the time of closing purchaser executes a note for the full amount of the loan for home and lot secured by a mortgage on the lot. At this time the construction of the home has not commenced although the buyer has in effect borrowed funds to purchase the lot and pay for the construction of his home. Construction funds are disbursed to the builder by FHA in draws as the construction of the home progresses. Upon completion of the home the final draw is paid to the builder and buyer presumably takes possession. No evidence was presented regarding the payment to the seller for the price of the lot, which is separately stated on documents forwarded to FHA, however nothing was presented to indicate the seller was not paid at the time of closing, which would be the normal procedure. From the testimony that after closing Sandy Development had no claim to the lot, it would be presumed that Sandy had been paid for the lot.
Findings Of Fact Prior to the bankruptcy of Recreation Corporation of America (RCA), Drexel Properties (Drexel), predecessor in interest to Petitioner Sheridan Ventures, Inc., engaged in negotiations with RCA and Fidelco Growth Investors (Fidelco) for the purchase of some eighty-three acres of land owned by RCA that was located in Hollywood and Dania, Florida. Fidelco held a mortgage on the property in the amount of $2,400,000.00. On January 20, 1976, a bankruptcy judge in the United States District Court for the Southern District of Florida issued an amended order in Case No. 75-16-BK-JE-H, authorizing the trustee in bankruptcy of the estate of RCA, bankrupt, to accept the offer of Drexel to purchase the trustee's equity in the real property of the bankrupt for the sum of $15,000.00, subject to the first lien of Fidelco, taxes, interest, certain costs, and two subordinate liens in the amounts of $5,939.92 and $2,691.50. On January 28, 1976, the trustee executed a Bankruptcy Trustee's Deed conveying the property in question to Petitioner, subject to the Fidelco lien and taxes. Petitioner recorded the aforesaid deed in Broward County on February 27, 1976, and state documentary tax stamps in the amount of $45.00 were paid. (Testimony of Mehallis, Exhibits 1-2, Exhibit D to Petition) Respondent issued a proposed notice of assessment of documentary stamp tax, penalty, and interest in the total amount of $14,807.52 on September 7, 1976, based on a taxable consideration of $2,415,000.00. This sum represented the $15,000.00 cash paid by Petitioner and the $2,400,000.00 existing mortgage on the property. In this assessment, Petitioner was credited with the $45.00 previously paid for documentary tax stamps. An informal conference was held on September 21, 1976, after which a revised assessment in an increased amount was withdrawn when both parties agreed that the subordinate liens had been satisfied out of the $15,000.00 cash given for the deed. Subsequently, Respondent issued Revised Assessment No. 2, dated September 22, 1976, reflecting a sum due of $7,653.30 payable for documentary stamp tax, a like sum as a penalty, and interest for six months and five days in the amount of $471.83, for a total of $15,778.43. It was stipulated by the parties at the hearing that this amount is correctly computed and is the proper amount payable if the Petitioner is deemed liable therefor. (Exhibits A, C, E to Petition, Exhibit 3) At the time Petitioner purchased the trustee's interest in the property, it had no intention of paying Fidelco's full lien because the amount of that mortgage exceeded the fair market value of the land. It intended to use the trustee's deed as a negotiating tool to get a better arrangement with Fidelco. Consequently, it made no payments on the mortgage and, on April 7, 1976, Fidelco filed foreclosure proceedings in the Broward County Circuit Court. Petitioner interposed set-off and a counter claim in an amount exceeding $500,000.00 based on funds it had previously advanced to RCA under a prior contract. (Testimony of Mehallis) A real estate appraisal of the property established its fair market value to be $1,120,000.00 as of January, 1976. (Testimony of Lukacs)
Recommendation That Petitioner be held liable for the proposed assessment of documentary stamp tax, penalty, and interest under Chapter 201, Florida Statutes, in the amount of $15,778.43. DONE and ENTERED this 28th day of April 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Edwin J. Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 Brian C. Deuschle, Esquire Spear, Deuschle and Curran, P.A. 5554 North Federal Highway Ft. Lauderdale, Florida 33308
The Issue The issue for consideration in this case is whether deeds by property owners which convey unencumbered real property to a corporation solely owned by them, are subject to a documentary stamp tax imposable under Section 201.021(1), Florida Statutes, and Rule 12B-4.013(7), Florida Administrative Code.
Findings Of Fact By Warranty Deed dated April 30, 1991, W. Dewey Kennell sold eight condominium apartments, units 1731, 1733, 1735, 1737, 1741, 1743, 1745 and 1747, in Baywood Colony Southwood Apartments IV, a condominium, to Kurt Rabau and Ronald Rabau, his son, residents of Germany. The Rabaus purchased the properties as an investment in rental property for income. At the time of the sale, the property was subject to mortgages totaling $250,000, which the Rabaus paid off on May 24, 1994. Sometime after the purchase, the Rabaus were advised to incorporate and hold title to the properties in a corporate capacity to protect themselves against personal liability. Thereafter, on September 14, 1994, the Rabaus formed Kuro, Inc., the Petitioner herein, to take and hold title to the properties, with Kurt Rabau and Ronald Rabau each owning 50% of the corporate stock. There were no other owners of stock in the corporation. On October 12, 1994, the Rabaus transferred all eight properties to Kuro, Inc. Kuro, Inc. had no assets other than the eight apartments, and did no business prior to the transfer of those apartments to it. Consequently, the stock of Kuro, Inc. was valueless prior to the receipt of the transferred apartments. The corporation’s federal tax form relating to transfer of property to a corporation, the “Corporation’s Statement on Transfer of Property Under Code Section 351” reflects that the Rabaus “transferred the jointly owned property [described therein] for which Kuro Inc. issued the stock”. From the evidence presented it is clear that the Kuro Inc. stock was issued in exchange for the contribution of the apartments to the corporation. Other documents in the corporation’s 1994 tax return indicate that the property was valued at fair market value at the time of transfer to the corporation, and the transferee’s, (corporation’s) adjusted basis was identical after the transfer. Each of the Rabaus received 500 shares of the corporation’s stock which was valued at $618,642. Of that amount, $617,642 was considered additional paid-in capital. There was no additional property received or possessed by the corporation. A minimal documentary stamp tax was paid by the parties at the time the eight Warranty Deeds for the apartments were transferred to the corporation. The consideration reflected on the face of each deed was “...the sum of $10.00 and other valuable consideration.” Subsequent to the transfer, the Department conducted an audit of the Clerk of Circuit Court in Sarasota County and, on November 10, 1994, issued a Notice of Intent to Make Documentary Stamp Tax and Discretionary Surtax Audit Changes, by which it indicated its intent to impose a documentary tax of $4,207.00 on the transfers, a 50% penalty of $2,103.50, and interest totaling $38.73 through November 10, 1994, with additional interest to accrue at the rate of 1% per month, prorated daily ($1.38), until date of payment. Thereafter, on March 27, 1995, the Department issued a Notice of Proposed Assessment to Kuro, Inc., and Petitioner timely filed a protest. Subsequent to that action, on January 11, 1996, the Department issued its Notice of Decision sustaining the proposed assessment, penalty and accrued interest, and Petitioner requested formal hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a final order imposing a tax in the amount of $4,207.00 with interest from date of filing at 1 percent per month based on the amount of tax not paid to date of payment. DONE and ENTERED this 22nd day of April, 1997, in Tallahassee, Florida. ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6947 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of April, 1997. COPIES FURNISHED: C. Samuel Whitehead, Esquire 2199 Ringling Boulevard Sarasota, Florida 34237 James F. McAuley, Esquire Office of the Attorney General The capitol - Tax Section Tallahassee, Florida 32399-1050 Linda Lettera General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue Tallahassee, Florida 32399-1011
The Issue Whether petitioner is liable for documentary stamp surtax, penalty and interest, pursuant to Proposed Notice of Assessment, dated November 17, 1976. The parties stipulated to the relevant facts set forth in the petition. They also stipulated that the amounts of the proposed assessment are properly computed and due, if petitioner is determined to be liable therefor.
Findings Of Fact Petitioner is a Netherland Antilles Corporation, duly authorized to do business in the State of Florida. On April 9, 1974, petitioner executed a mortgage deed to Seville Management, a partnership, whereby it encumbered its long-term lease on certain real property located in Miami Beach, Florida, in the amount of $2,500,000. The lease contained an option to purchase the land in the amount of $1,500,000, which was later increased to $1,550,000. Paragraph 33 of the deed provided that petitioner would be obligated to consummate the exercise of the option to purchase on or before June 1, 1976, and that failure to do so would constitute a default of the mortgage on the leasehold interest. (Testimony of Cassel, Petition) In June 1976, Petitioner obtained fee simple title to the property in question through the exercise of the option to purchase for the sum of $1,550,000, by warranty deed dated June 27, 1976, from the trustees of Central States, Southeast and Southwest Areas Pension Fund as grantor. The deed provided that the lease was thereby "extinguished, canceled and terminated, the Grantee herein being owner of the interest of the Lessor and the Lessee in such lease. Petitioner recorded the warranty deed on July 6, 1976, and affixed the state documentary stamps on a consideration of $1,550,000. However it only affixed the nominal sum of 55 cents for documentary surtax, At the time of the conveyance, the mortgage balance on the property exceeded the purchase price of $1,550,000. (Testimony of Cassel, Petition) Subsequently, respondent assessed documentary surtax in the amount of $1704.45 and a penalty in a like amount, plus interest in the amount of $74.31 against petitioner with respect to the transaction based on a consideration of $1,550,000. On November 4, 1976, an informal conference was held with the respondent and thereafter by letter of November 17, 1976, respondent issued a Notice of Proposed Assessment in the total amount of $3,483.21 for delinquent documentary surtax, penalty and interest. (Petition, Exhibit 1)
Recommendation That the proposed assessment against petitioner in the amount of $3483.21 for documentary surtax, penalty, and interest under Section 201.021, F.S., be upheld and assessed. DONE and ENTERED this day of April, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Edwin J. Stacker, Esquire Assistant Attorney General The Capitol Tallahassee, Florida 32304 Craig B. Sherman, Esquire Broad and Cassel Barnett Bank Building 1108 Kane Concourse Bay Harbor Islands, Florida 33154
Findings Of Fact At all pertinent times, respondent held a 2-APS license, No. 23-2019, authorizing the grocery store to sell package goods. In response to a request from the Miami Police Department, petitioner's employee, Norman David Leifer, investigated respondent's premises and discovered three bottles of Coors Beer and six cans of Victoria Cerveza all lacking Florida tax stamps. The word "Florida" was not printed or lithographed on the can lids or bottle crowns. He found the beer in sealed containers in a walk-in cooler containing meats, other alcoholic beverages and other products being offered for sale. The beer Mr. Leifer found was on respondent's premises for the purpose of resale, and Florida taxes had not been paid on the beer.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That petitioner assess a civil penalty against respondent in the amount of one hundred ($100.00), or, if the fine has not been paid within one month of entry of the final order, suspend respondent's license for a period of two weeks. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 8th day of January, 1981. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of Janaury, 1981. COPIES FURNISHED: Dennis E. LaRosa, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Frederick E. Graves, Esqurie Suite 3000, New World Tower 100 North Biscayne Boulevard Miami, Florida 33132 Jaruquito Grocery 1366 NE First Avenue Miami, Florida 33132
