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D.C. Municipal Regulations (Last Updated: September 13, 2017) |
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Title 9. TAXATION AND ASSESSMENTS |
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Chapter 9-5. TAX ON RECORDATION OF DEEDS |
Section 9-516. ENTITIES SUBJECT TO THE RECORDATION OF ECONOMIC INTERESTS ACT
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516.1Any corporation, partnership, association, trust or other unincorporated entity shall be subject to the recordation tax if it, during the twelve (12) month period immediately preceding the transfer of an economic interest in real property located in the District:
(a) Derives more than fifty percent (50%) of its annual gross receipts from the ownership or disposition of real property located in the District; or
(b) Holds, on the date of the transfer of an interest, real property located in the District, the value of which comprises eighty percent (80%) or more of the value of its entire tangible asset holdings.
516.2In determining whether an entity derives more than fifty percent (50%) of its annual gross receipts from the ownership or disposition of real property located in the District, in transfers that are aggregated, the date of the most recent transfer aggregated shall govern when the twelve (12) month period shall end.
516.3Gross receipts from the ownership or disposition of real property shall include, but is not limited to, the following:
(a) Rents from real property; or
(b) Gain from the sale or other disposition of real property.
516.4The Deputy Chief Financial Officer shall use the fair market value of both the entity's real property assets and assets other than real property on the date of each transfer in determining whether an entity's real property located in the District comprises eighty percent (80%) or more of the value of its entire tangible asset holdings.
Example: X corporation, a publicly-held manufacturing corporation in New York, owns a warehouse in Virginia valued at two hundred thousand dollars ($ 200,000), a manufacturing plant in Maryland valued at three hundred thousand dollars ($ 300,000), an office building in the District valued at three million two hundred thousand dollars ($ 3,200,000), and various equipment and assets valued at three hundred thousand dollars ($ 300,000). X corporation is subject to the tax because it holds real property in the District, the value of which comprises eighty percent (80%) or more of the value of its entire tangible asset holdings.
516.5In deciding whether the eighty percent (80%) test is met, the Deputy Chief Financial Officer may accept a determination of value of the real property and other assets that reasonably reflects the fair market value of the assets.
516.6If the Deputy Chief Financial Officer decides that a determination made pursuant to § 516.5 does not reasonably reflect the fair market value of the property, the Deputy Chief Financial Officer may disallow the determination and use any method that the Deputy Chief Financial Officer decides will result in a reasonable determination of the fair market value of the assets.
516.7The Deputy Chief Financial Officer may request the following items, among others, as the Deputy Chief Financial Officer decides is relevant to determine whether an entity is subject to the transfer tax:
(a) Income-Expense reports filed pursuant to D.C. Official Code § 47-821;
(b) Federal Income tax Returns (subject to confidentiality requirements imposed by D.C. Official Code § 47-1805.4; and
(c) Books and records of the entity.