PRINTER'S NO. 1398
No. 1141 Session of 1999
INTRODUCED BY PUNT, SALVATORE, COSTA, SLOCUM, WOZNIAK, MADIGAN
AND ROBBINS, OCTOBER 14, 1999
REFERRED TO FINANCE, OCTOBER 14, 1999
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further providing for definitions.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. Section 1101-C of the act of March 4, 1971
14 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended
15 July 2, 1986 (P.L.318, No.77), May 7, 1997 (P.L.85, No.7) and
16 April 23, 1998 (P.L.239, No.45), is amended to read:
17 Section 1101-C. Definitions.--The following words when used
18 in this article shall have the meanings ascribed to them in this
19 section:
20 "Association." A partnership, limited partnership, or any
21 other form of unincorporated enterprise, owned or conducted by
1 two or more persons other than a private trust or decedent's
2 estate.
3 "Corporation." A corporation, joint-stock association,
4 business trust or banking institution which is organized under
5 the laws of this Commonwealth, the United States, or any other
6 state, territory, or foreign country, or dependency.
7 "Department." The Department of Revenue of this
8 Commonwealth.
9 "Document." Any deed, instrument or writing which conveys,
10 transfers, devises, vests, confirms or evidences any transfer or
11 devise of title to real estate, but does not include wills,
12 mortgages, deeds of trust or other instruments of like character
13 given as security for a debt and deeds of release thereof to the
14 debtor, land contracts whereby the legal title does not pass to
15 the grantee until the total consideration specified in the
16 contract has been paid or any cancellation thereof unless the
17 consideration is payable over a period of time exceeding thirty
18 years or instruments which solely grant, vest or confirm a
19 public utility easement. "Document" shall also include a
20 declaration of acquisition required to be presented for
21 recording under section 1102-C.5 of this article.
22 "Family farm corporation." A corporation of which at least
23 seventy-five per cent of its assets are devoted to the business
24 of agriculture and at least seventy-five per cent of each class
25 of stock of the corporation is continuously owned by members of
26 the same family. The business of agriculture shall include the
27 leasing to members of the same family of property which is
28 directly and principally used for agricultural purposes. The
29 business of agriculture shall not be deemed to include:
30 (1) Recreational activities such as, but not limited to,
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1 hunting, fishing, camping, skiing, show competition or racing;
2 (2) The raising, breeding or training of game animals or
3 game birds, fish, cats, dogs or pets or animals intended for use
4 in sporting or recreational activities;
5 (3) Fur farming;
6 (4) Stockyard and slaughterhouse operations; or
7 (5) Manufacturing or processing operations of any kind.
8 "Family farm partnership." A partnership of which at least
9 seventy-five per cent of its assets are devoted to the business
10 of agriculture and at least seventy-five per cent of the
11 interests in the partnership are continuously owned by members
12 of the same family. The business of agriculture shall include
13 the leasing to members of the same family of property which is
14 directly and principally used for agricultural purposes. The
15 business of agriculture shall not be deemed to include:
16 (1) recreational activities such as, but not limited to,
17 hunting, fishing, camping, skiing, show competition or racing;
18 (2) the raising, breeding or training of game animals or
19 game birds, fish, cats, dogs or pets or animals intended for use
20 in sporting or recreational activities;
21 (3) fur farming;
22 (4) stockyard and slaughterhouse operations; or
23 (5) manufacturing or processing operations of any kind.
24 "Living trust." Any trust, other than a business trust,
25 intended as a will substitute by the settlor which becomes
26 effective during the lifetime of the settlor, but from which
27 trust distributions cannot be made to any beneficiaries other
28 than the settlor prior to the death of the settlor.
29 "Members of the same family." Any individual, such
30 individual's brothers and sisters, the brothers and sisters of
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1 such individual's parents and grandparents, the ancestors and
2 lineal descendents of any of the foregoing, a spouse of any of
3 the foregoing and the estate of any of the foregoing.
4 Individuals related by the half blood or legal adoption shall be
5 treated as if they were related by the whole blood.
6 "Ordinary trust." Any trust, other than a business trust or
7 a living trust, which takes effect during the lifetime of the
8 settlor and for which the trustees of the trust take title to
9 property primarily for the purpose of protecting, managing or
10 conserving it until distribution to the named beneficiaries of
11 the trust. An ordinary trust does not include a trust that has
12 an objective to carry on business and divide gains, nor does it
13 either expressly or impliedly have any of the following
14 features: the treatment of beneficiaries as associates, the
15 treatment of the interests in the trust as personal property,
16 the free transferability of beneficial interests in the trust,
17 centralized management by the trustee or the beneficiaries, or
18 continuity of life.
19 "Person." Every natural person, association, or corporation.
20 Whenever used in any clause prescribing and imposing a fine or
21 imprisonment, or both, the term "person" as applied to
22 associations, shall include the responsible members or general
23 partners thereof, and as applied to corporations, the officers
24 thereof.
25 "Real estate."
26 (1) Any lands, tenements or hereditaments within this
27 Commonwealth, including, without limitation, buildings,
28 structures, fixtures, mines, minerals, oil, gas, quarries,
29 spaces with or without upper or lower boundaries, trees and
30 other improvements, immovables or interests which by custom,
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1 usage or law pass with a conveyance of land, but excluding
2 permanently attached machinery and equipment in an industrial
3 plant.
4 (2) A condominium unit.
5 (3) A tenant-stockholder's interest in a cooperative housing
6 corporation, trust or association under a proprietary lease or
7 occupancy agreement.
8 "Real estate company." A corporation or association which is
9 primarily engaged in the business of holding, selling or leasing
10 real estate ninety per cent or more of the ownership interest in
11 which is held by thirty-five or fewer persons and which:
12 (1) derives sixty per cent or more of its annual gross
13 receipts from the ownership or disposition of real estate; or
14 (2) holds real estate, the value of which comprises ninety
15 per cent or more of the value of its entire tangible asset
16 holdings exclusive of tangible assets which are freely
17 transferable and actively traded on an established market.
18 "Title to real estate."
19 (1) Any interest in real estate which endures for a period
20 of time, the termination of which is not fixed or ascertained by
21 a specific number of years, including, without limitation, an
22 estate in fee simple, life estate or perpetual leasehold; or
23 (2) any interest in real estate enduring for a fixed period
24 of years but which, either by reason of the length of the term
25 or the grant of a right to extend the term by renewal or
26 otherwise, consists of a group of rights approximating those of
27 an estate in fee simple, life estate or perpetual leasehold,
28 including, without limitation, a leasehold interest or
29 possessory interest under a lease or occupancy agreement for a
30 term of thirty years or more or a leasehold interest or
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1 possessory interest in real estate in which the lessee has
2 equity.
3 "Transaction." The making, executing, delivering, accepting,
4 or presenting for recording of a document.
5 "Value."
6 (1) In the case of any bona fide sale of real estate at
7 arm's length for actual monetary worth, the amount of the actual
8 consideration therefor, paid or to be paid, including liens or
9 other encumbrances thereon existing before the transfer and not
10 removed thereby, whether or not the underlying indebtedness is
11 assumed, and ground rents, or a commensurate part thereof where
12 such liens or other encumbrances and ground rents also encumber
13 or are charged against other real estate: Provided, That where
14 such documents shall set forth a nominal consideration, the
15 "value" thereof shall be determined from the price set forth in
16 or actual consideration for the contract of sale;
17 (2) in the case of a gift, sale by execution upon a judgment
18 or upon the foreclosure of a mortgage by a judicial officer,
19 transactions without consideration or for consideration less
20 than the actual monetary worth of the real estate, a taxable
21 lease, an occupancy agreement, a leasehold or possessory
22 interest, any exchange of properties, or the real estate of an
23 acquired company, the actual monetary worth of the real estate
24 determined by adjusting the assessed value of the real estate
25 for local real estate tax purposes for the common level ratio of
26 assessed values to market values of the taxing district as
27 established by the State Tax Equalization Board, or a
28 commensurate part of the assessment where the assessment
29 includes other real estate;
30 (3) in the case of an easement or other interest in real
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1 estate the value of which is not determinable under clause (1)
2 or (2), the actual monetary worth of such interest; [or]
3 (4) the actual consideration for or actual monetary worth of
4 any executory agreement for the construction of buildings,
5 structures or other permanent improvements to real estate
6 between the grantor and other persons existing before the
7 transfer and not removed thereby or between the grantor, the
8 agent or principal of the grantor or a related corporation,
9 association or partnership and the grantee existing before or
10 effective with the transfer[.]; or
11 (5) in the case of a transfer of real estate from a
12 nonprofit industrial development agency or authority to a
13 grantee in a nonexcluded transaction, the actual amount paid by
14 the nonprofit industrial development agency or authority to
15 acquire the real estate.
16 Section 2. This act shall take effect in 60 days.
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