New law imposing transfer tax on the transfer of LLC membership
July 10, 2008

Q: What is the effective date of the new law imposing transfer tax on the transfer of LLC membership interests?

A: The new law is effective on July 1, 2008 and imposes transfer and recordation taxes on a transfer of “controlling interest” in a “real property entity”. The law generally defines a “controlling interest” as more than 80% of the total value of the stock of a corporation, or of the total interest in capital and profits of a limited liability company. A “real property entity” is generally defined as any type of entity that owns real property if that real property (a) constitutes at least 80% of the value of its assets, and (b) has an aggregate value of at least $1,000,000. There are certain exclusions and exemptions from the transfer and recordation tax. The real property entity must report the transfer to the State Department of Assessments and Taxation within 30 days after completion of the transfer.

If you have questions, please contact:
John Wise, Esquire

JWise@tandllaw.com
(410) 752-2468