Tax Type
Recordation Tax
Description
Limited Liability Company
Topic
Documents Subject to Tax
Date Issued
09-10-1992
September 10, 1992
Re: Request for Ruling; Recordation Tax
Dear****************
This will reply to your letter of July 1, 1992, in which you request guidance on two tax issues relating to a Virginia Limited Liability Company.
First, you ask if the tax imposed by Va. Code §58.1-801 applies to a deed conveying real estate to a domestic limited liability company when the grantors receive 100% of the membership interests in the organization.
House Bill 790 (1992 Acts of Assembly, Chapter 574) of the 1992 General Assembly amended Va. Code §58.1-811 by extending the exemption for recordation tax imposed by §58.1-801 to limited liability companies. Specifically, the bill, which became effective on July 1, 1992, provides an exemption from tax for any deed conveying real estate to a limited liability company, when the grantors are entitled to receive not less than 50% of the profits or surplus of such limited liability company. Therefore in the situation you describe, the deed would not be subject to the recordation tax imposed by Va. Code §58.1-801. In addition, the deed would not be subject to the grantor's tax imposed by Va. Code §58.1-802. See Va. Code §58.1-811(C).
It should be noted that, under Va. Code §17-59, the code section under which any exemption from recordation taxes is claimed must be clearly stated on the face of the document to be recorded.
Second, you ask if the limited liability company will be taxed as a partnership for Virginia income tax purposes if it is taxed as a partnership for federal income tax purposes.
Because Virginia is a conformity state, a limited liability company that is classified as a partnership for federal income tax purposes will be similarly treated for Virginia income tax purposes. See Va. Code §58.1-301. Under Va. Code §58.1-392, a Virginia partnership or a partnership having income from Virginia sources is not required to file a report with the Department of Taxation.
If you have any other questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6324P
Rulings of the Tax Commissioner