TAXES, REAL ESTATE ‑- COUNTY EXCISE TAX ON SALE OF REAL PROPERTY ‑- TRANSFER OF REAL PROPERTY TO CORPORATION ‑- CORPORATIONS

TAXES, REAL ESTATE ‑- COUNTY EXCISE TAX ON SALE OF REAL PROPERTY ‑- TRANSFER OF REAL PROPERTY TO CORPORATION ‑- CORPORATIONS.

 A partnership transfer of land to a corporation in which the partners have the same proportionate interest as in the partnership, for a consideration, is taxable.

                                                                  - - - - - - - - - - - - -

                                                                    April 4, 1952 

Honorable Hugh Evans
Prosecuting Attorney
Spokane County Court House
Spokane 11, Washington                                                                                                              Cite as:  AGO 51-53 No. 280

 Attention:  John E. Calbom

Dear Sir: 

            You request our opinion whether the 1% excise tax on the sale of real estate applies

             (1) when a partnership transfers real property to an existing corporation, stock of which is held by the individual partners in the same proportion as their partnership interest, and the consideration is to be paid from future corporate profits; and

             (2) when the partners transfer real estate to a new corporation formed by the partners with the same provisions as to consideration.

             We conclude:

             that the tax is due in both situations and is based upon the consideration paid for the transfer.

              [[Orig. Op. Page 2]]

                                                                     ANALYSIS

             The county excise tax on the sale of real estate is imposed by county ordinance pursuant to chapter 11, Laws of 1951, Ex. Sess., as amended (chapter 28.45 RCW) upon each sale of real property in the county.  The term "sale" is defined to include any

             "transfer of ownership of or title to real property, * * * or any estate or interest therein for valuable consideration" (RCW 28.45.010).

             Taxability is conditioned upon two essentials:  (1) transfer of an interest in land, and (2) consideration.  Your questions postulate consideration.

             Thus the question presented us is whether "transfer" has occurred.  We conclude that it has.

             It goes without citation that a corporation is an entity entirely distinct and separate from its shareholders.  See Title 23 RCW, andState v. Northwest Magnesite Co., 28 Wn. (2d) 1, 41, 182 P. (2d) 643 (1947).  Thus there is a transfer of title and ownership from individuals to a separate legal "person" within the meaning of the real estate sales tax law.  The transfer from the partners to the corporate entity in which they have stock is no different than a normal transfer of real property to a corporation from a nonstock owning vendor.  Corporate situations in which consideration may not be present are not within the scope of this opinion since not presented by your questions.  See RCW 28.45.030.

             We hope the above may be of assistance.

 Very truly yours,
SMITH TROY
Attorney General

C. R. NELSON
Assistant Attorney General