Penn Towers Associates, LP v. Com.

Citation866 A.2d 1205
PartiesPENN TOWERS ASSOCIATES, L.P. and Joseph Soffer, Petitioners, v. COMMONWEALTH of Pennsylvania, Respondent.
Decision Date25 January 2005
CourtCommonwealth Court of Pennsylvania

Jennifer L. Cerce, Pittsburgh, for petitioners.

Ronald H. Skubecz, Harrisburg, for respondent.

BEFORE: FRIEDMAN, Judge, and SIMPSON, Judge, and McCLOSKEY, Senior Judge.

OPINION BY Judge FRIEDMAN.

Penn Towers Associates, LP (Penn Towers) and Joseph Soffer (together Taxpayers), petition for review of the February 25, 2003, order of the Board of Finance and Revenue, sustaining the Department of Revenue's (Department) imposition of realty transfer tax in the amount of $86,099.00 on a conveyance of real estate from Soffer to Penn Towers. We affirm.

The parties have stipulated to the following facts. On May 16, 2001, Soffer, an individual, conveyed certain real estate situate in Wilkins Township, Pennsylvania, to Penn Towers, a Delaware limited partnership formed on May 11, 2001. Soffer is the sole limited partner of Penn Towers, with a ninety-nine percent (99%) interest, and Soffer Management L.L.C. is Penn Towers' general partner, with a one percent (1%) interest. Soffer owns a one hundred percent (100%) interest in Soffer Management L.L.C.1 Thus, at the time of transfer, Soffer effectively owned a one hundred percent (100%) interest in Penn Towers.

At the recording of the deed in Allegheny County, Soffer filed a statement of value regarding the real estate, which listed a county assessed value of $8,609,900.00, a common level ratio factor of one and a fair market value of $8,609,900.00. The statement of value claimed a one hundred percent (100%) exemption from the realty transfer tax because:

The Grantor [Soffer] owns a 100% interest in the Grantee [Penn Towers]. The Grantor is the sole limited partner of the Grantee. The Grantor also owns 100% of the Grantee's general partner, Soffer Management, LLC. Thus, the deed in this transaction does not effect a transfer of a beneficial interest in the property to someone other than the Grantor. See, Exton Plaza Associates, 763 A.2d at 524. [Exton Plaza Associates v. Commonwealth, 763 A.2d 521 (Pa.Cmwlth.2000).] The realty transfer tax does not apply to this transaction because the deed is not a "document" which conveys and [sic] interest in real estate to someone other than the grantor within the meaning of the Realty Transfer Tax Act.

(Statement of Value, Stipulation of Facts.)

Despite Taxpayers' claim, on July 26, 2001, the Department issued a realty transfer tax notice of determination for the property indicating that the transfer of property was subject to the realty transfer tax under section 1102-C of what is commonly referred to as the Realty Transfer Tax Act (Act)2 and that, on a determined value for the real estate of $8,609,900.00, Taxpayers owed $86,099.00, as well as $1,828.91 in interest.

Taxpayers appealed the notice of determination to the Department's Board of Appeals, which sustained the determination. Taxpayers then appealed to the Board of Finance and Revenue, which also sustained, and Taxpayers now appeal to this court.3

Taxpayers rely on Exton Plaza, for the proposition that the realty transfer tax applies only where the deed effects a transfer of property to someone other than the grantor. Thus, Taxpayers argue that, under Exton Plaza, the conveyance of real estate from Soffer to Penn Towers is not subject to realty transfer tax because Soffer, as the sole owner of Penn Towers, effectively transferred the property to himself. On the other hand, the Commonwealth contends that this case is controlled by our decision in Farda v. Commonwealth, 849 A.2d 297 (Pa.Cmwlth.2004), in which we held that a conveyance from individuals to a limited partnership, of which they were sole partners, was subject to the realty transfer tax. We agree with the Commonwealth.

In Exton Plaza, the taxpayer, a general partnership, sought exemption from the realty transfer tax for the conveyance of a shopping center to a limited partnership of the same name and with the same principals and same business address. Although we recognized that transfers between partnerships are fully taxable, as are transfers between partnerships and their partners, unless excluded, we stressed that the first inquiry must be whether the deed effects a real transfer of an interest in property to someone other than the grantor. In this regard, we stated:

In this context, the stipulated facts tell us that the general partnership converted to the limited partnership, transferring a 1 percent interest to a limited liability company as the general partner. Regardless of the details of how this conversion was accomplished, the shopping center was essentially contributed to the Limited Partnership, and the principals' property rights in the shopping center remain essentially unchanged. The execution of the deed transferring the shopping center merely memorialized the conversion from a general partnership to a limited partnership.
Our conclusion — that the deed in this case does not effect a transfer of a beneficial interest in the shopping center to someone other than the grantor-is most analogous to the exclusion for a correctional or confirmatory deed that does not change the beneficial interest in the property.

Exton Plaza, 763 A.2d at 524.

In Farda, we distinguished the situation in Exton Plaza from that where the Fardas, a husband and wife as grantors, were individuals conveying certain real estate to a limited partnership of which they were the sole partners, not a business partnership wishing to change its business form under Pennsylvania law. Thus, the deed in Farda conveyed legal title to "someone other than the grantors" because the Fardas were not the same as the partnership to which they transferred the property. For this reason, we held that the transfer was governed by section 1102-C.4 of ...

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3 cases
  • Jamestown Condo. v. Sofayov
    • United States
    • Commonwealth Court of Pennsylvania
    • May 3, 2019
    ...between a limited partnership and its partners - are consistent with earlier decisions of this Court. See, e.g., Penn Towers Assocs., LP v. Com., 866 A.2d 1205, 1207 n.4 (Pa. Cmwlth. 2005) (noting that, in the realm of taxation, "[l]imited partnerships . . . are entities separate from their......
  • In Re: Petition Of Lawrence County Tax Claim Bureau For Sale Of Real Estate At Public Sale
    • United States
    • Commonwealth Court of Pennsylvania
    • July 1, 2010
    ...designated representative, the general partner.59A Am Jur 2d Partnership § 782 (2003) (footnotes omitted). In Penn Towers Associates, LP v. Commonwealth, 866 A.2d 1205 (Pa.Cmwlth.2005), we explained that “limited partnerships are entities separate from their partners and [t]ransfers between......
  • Kline v. Commonwealth
    • United States
    • Commonwealth Court of Pennsylvania
    • May 19, 2006
    ...realty transfer tax in the amount of $52,233.20. (emphasis added.) Farda, 849 A.2d at 299-300. Recently, in Penn Towers Associates, LP v. Commonwealth of Pennsylvania, 866 A.2d 1205 (Pa.Cmwlth.2005), this Court revisited Farda. In Penn Towers Associates, Joseph Soffer (Soffer) had conveyed ......

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