A and B, C's parents, transferred two lots to C and D, C's spouse. Within 1 year of that transfer, C and D conveyed one of the lots to E and F, D's parents, and the other lot to G, C's brother. The transfer to E and F is not excludable, because a direct transfer from A and B to E and F would have been taxable. The transfer to G is excludable, because the transfer between C and D and G is an excludable transfer between siblings and between a sibling's spouse and a sibling and because a direct transfer from A and B to G, their lineal descendent, would have been an excludable transfer.
E and F each owned 50% of the stock in corporation G. On partial liquidation of corporation G, G's real estate is distributed to E. If E held his stock for more than 2 years, the real estate distribution is taxable only to the extent of F's proportionate interest in corporation G.
In an industrial development agency transaction, C enters into a contract for the improvement of a manufacturing plant. C transfers the plant realty to the IDA, which borrows money to finance the improvements. The IDA leases back the realty to C, or sells the realty back to C under an installment-sale contract. C's payments to the IDA under the lease or installment-sale contract are sufficient to enable the IDA to recover its financing costs. Title to the improved realty is transferred back to C at the end of the lease term or installment-sales agreement payment term.
Example. A transfers title to real estate to B in exchange for a cash payment. As part of the same transaction, B immediately leases back the real estate to A for 30 or more years. A's rental payments under the lease are sufficient to allow B to recoup his entire cash payment to A plus interest on the cash payment. A has the right to repurchase the real estate from B for a nominal amount at the end of the lease term. Neither the sale nor the lease is subject to tax.
B, the lessee under a lease with A, subleased the leased premises to C. B remained liable to A for full performance under the lease. The sublease is not taxable because B has not been released from performance under the lease by A.
E, the lessee under a 99-year lease with D, assigned the leased premises to F. D released E from future performance under the lease. If the unexpired term of the lease is 30 years or more or the assignee obtains an equity interest in the premises under the assignment, the assigned lease is subject to tax.
61 Pa. Code § 91.193
The provisions of this §issued under section 1107-C of the Tax Reform Code of 1971 ( -C).
This section cited in 61 Pa. Code § 91.154 (relating to documents involving corporations, partnerships, limited partnerships and other associations); 61 Pa. Code § 91.156 (relting to trusts); 61 Pa. Code § 91.159 (relating to transfers by will or intestate law); 61 Pa. Code § 91.161 (relating to charitable, religious and educational organizations); 61 Pa. Code § 91.167 (relating to deed of easement); 61 Pa. Code § 91.168 (relating to salt and lease back transactions); 61 Pa. Code § 91.170 (relating to rule in Baehr Bros. v. Commonwealth, 487 Pa. 233, 409 A.2d 326 (1979); 61 Pa. Code § 91.171 (relating to transfers by operation of law); and 61 Pa. Code § 91.194 (relating to statement of value).