Tax Type
Recordation Tax
Description
Transfer of Site and Plant from Subsidiary to Parent.
Topic
Documents Subject to Tax
Date Issued
02-05-1976
You have requested an opinion on the extent to which a proposed transfer of certain property from a wholly-owned subsidiary to its parent corporation would be subject to the recordation taxes imposed by §§ 58-54, 58-54.1, Code of Virginia (1950), as amended. In 1973 the subsidiary acquired, at a price of $115,250.00 and for the purpose of providing a site for the construction of a plant by its parent corporation, a tract of approximately 152 acres of land located in Orange County, Virginia. On this land, the parent corporation subsequently constructed a plant costing several million dollars. It is now proposed to have title to the land transferred from the subsidiary to the parent in a transaction that does not qualify for income tax treatment pursuant to Internal Revenue Code of 1954, §§ 331, 332, 333 or 337. Anticipating the transfer, you inquire whether the tax imposed by §58-54 upon recordation of a deed transferring title from the subsidiary to the parent would be measured by the actual value of the approximately 152 acres of land or by the actual value of the land and the plant constructed thereon, and whether §58-54.1 would apply to the transfer. I assume that the subsidiary would not receive any consideration for transferring to its parent corporation title to the land in question.
With exceptions that are inapplicable under the facts of the instant case, §58-54 imposes a tax "[o]n every deed . . . which is admitted to record. . . .' If no consideration is given for the deed, the tax imposed by §58-54 should be computed upon the actual value of the property conveyed. See Report of the Attorney General (1974-1975) at 516. In this case, it appears that the plant erected by the parent corporation on the land acquired by the subsidiary has become attached to and a part of the real estate and would therefore follow the conveyance of the legal title to the realty. See Report of the Attorney General (1963-1964) at 301. I am, therefore, of the opinion that the proper measure for the recordation tax imposed by §58-54 would be the actual value of the tract of land and the plant erected thereon.
Section 58-54.1 imposes a tax upon a deed "by which any lands, tenements or other realty sold shall be granted. . . .' (Emphasis added.) In the absence of consideration for the transfer, this tax does not apply. See Report of the Attorney General (1974-1975) at 517. Therefore, the tax imposed by §58-54.1 would not be payable in this case.
Attorney General's Opinion