At a closing for a $1,200,000 commercial property in Boston, the seller's attorney argues that the deed excise stamps should not be required because the transaction is structured as a sale of 100% of the LLC membership interests that owns the property — not a direct deed transfer of the real estate itself. Which of the following statements best describes the Massachusetts legal position on this argument?
Correct Answer
D) The attorney's argument may avoid the deed excise tax, but Massachusetts may scrutinize such structures under MGL Chapter 93A and DOR anti-avoidance principles if the primary purpose is tax evasion.
When a property transfer is structured as a sale of LLC membership interests rather than a direct deed conveyance, no deed is recorded and therefore no deed excise tax is technically triggered under MGL Chapter 64D, which taxes 'deeds, easements, and other instruments' conveying real property. However, Massachusetts authorities — including the Department of Revenue and courts applying MGL Chapter 93A — may scrutinize such structures as potential tax avoidance schemes, particularly when the LLC was created shortly before the sale or has no business purpose other than holding the real estate. While the structure may be legally effective, it carries regulatory and legal risk and is not a guaranteed exemption. This is the most accurate and nuanced answer reflecting Massachusetts practice.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
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