TAXATION ‑- REAL ESTATE EXCISE TAX ‑- TRANSFER OF REAL PROPERTY ‑- TRANSFEROR CORPORATION OWNS ALL STOCK OF TRANSFEREE CORPORATION

TAXATION ‑- REAL ESTATE EXCISE TAX ‑- TRANSFER OF REAL PROPERTY ‑- TRANSFEROR CORPORATION OWNS ALL STOCK OF TRANSFEREE CORPORATION.

The one percent real estate excise tax does not apply to the transfer of real property by one corporation to another corporation where the transferor owns all of the authorized issued and outstanding capital stock of the transferee and no additional stock is to be issued in exchange for the real property.

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

                                                                    July 31, 1963

Honorable Sid Buckley
Prosecuting Attorney
Stevens County
Colville, Washington

                                                                                                                Cite as:  AGO 63-64 No. 44

Dear Sir:

            By a previously acknowledged letter you have requested our opinion on a question which we paraphrase as follows:

            Does the one percent real estate excise tax apply to the transfer of real property by one corporation to another corporation where the transferor owns all of the authorized, issued and outstanding capital stock of the transferee and no additional stock is to be issued in exchange for the real property?

            We answer your question in the negative.

                                                                     ANALYSIS

            As we stated in AGO 59-60 No. 100 [[to Prosecuting Attorney, Pacific County on February 10, 1960]], the real estate excise tax, when levied by a county, is imposed when there is (1) a transfer of an interest in land and (2) a valuable consideration for the transfer.

            In this instance there has been a transfer of real property, the two corporations being separate legal entities.  See, AGO 59-60 No. 100.  However, we do not find valuable consideration for the transfer.

            The tax is measured by the "selling price" which is defined in RCW 28.45.030 reading in material part:

             [[Orig. Op. Page 2]]

            "As used in this chapter, the term 'selling price' means the consideration, including money or anything of value, paid or delivered or contracted to be paid or delivered in return for the transfer of the real property or estate or interest in real property. . . ."

            We concluded in AGO 59-60 No. 100 [[to Prosecuting Attorney, Pacific County on February 10, 1960]]that the transfer of real estate to a corporation by the sole stockholder in exchange for common stock was a taxable transaction.  The shareholder received certain rights relating to the control, operation and profits of the corporation from the receipt of the stock given in consideration of the transfer.

            In the transaction here under consideration no stock or other thing or value was given in exchange for the real estate.  There was no consideration or any "selling price" by which to measure the value.  We would conclude that the transfer is not subject to the tax.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

HENRY W. WAGER
Assistant Attorney General