THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY CUTLER, MIRABITO, BAKER, BOYD, CLYMER, COX, DENLINGER, FLECK, FREEMAN, GILLEN, GINGRICH, GODSHALL, GRELL, HARHART, HENNESSEY, HICKERNELL, HUTCHINSON, KAUFFMAN, KORTZ, LAWRENCE, LONGIETTI, MARSHALL, METZGAR, MILLER, MOUL, PICKETT, PYLE, REICHLEY, ROAE, ROSS, STERN, SWANGER, TOEPEL, VULAKOVICH, WATSON, QUINN, FARRY AND BEAR, FEBRUARY 23, 2011

AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES, AS AMENDED, OCTOBER 19, 2011   

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," in realty transfer tax, further providing for

definitions, for excluded transactions and for acquired

company.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definitions of "association," "corporation,"

"family farm corporation" and "family farm partnership" in

section 1101-C of the act of March 4, 1971 (P.L.6, No.2), known

as the Tax Reform Code of 1971, amended July 2, 1986 (P.L.318,

No.77) and April 23, 1998 (P.L.239, No.45), are amended to read:

Section 1101-C.  Definitions.--The following words when used

in this article shall have the meanings ascribed to them in this

section:

"Association."  A partnership, limited partnership, limited

liability partnership or any other form of unincorporated

enterprise, owned or conducted by two or more persons other than

a private trust or decedent's estate.

"Corporation."  A corporation, limited liability company, 

joint-stock association, business trust or banking institution

which is organized under the laws of this Commonwealth, the

United States, or any other state, territory, or foreign

country, or dependency.

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"Family farm [corporation.] business."  A corporation or

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association of which at least seventy-five per cent of its

assets are devoted to the business of agriculture and at least

seventy-five per cent of each class of stock of the corporation 

or interest in the association is continuously owned by members

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of the same family. The term includes any corporation that may

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be formed to succeed the business operations of a family farm

corporation or a family farm partnership. The business of

agriculture shall include the leasing to members of the same

family or the leasing to a corporation or association owned by

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members of the same family of property which is directly and

principally used for agricultural purposes. The business of

agriculture shall not be deemed to include:

(1)  Recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  The raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  Fur farming;

(4)  Stockyard and slaughterhouse operations; or

(5)  Manufacturing or processing operations of any kind.

["Family farm partnership."  A general, limited or limited

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liability partnership of which at least seventy-five per cent of

its assets are devoted to the business of agriculture and at

least seventy-five per cent of the interests in the general,

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limited or limited liability partnership are continuously owned

by members of the same family. The business of agriculture shall

include the leasing to members of the same family of property

which is directly and principally used for agricultural

purposes. The business of agriculture shall not be deemed to

include:

(1)  recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  the raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  fur farming;

(4)  stockyard and slaughterhouse operations; or

(5)  manufacturing or processing operations of any kind.]

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Section 2.  Section 1102-C.3(19.1) and (20) sections 1102-

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C.3(19), (19.1) and (20) and 1102-c.5 of the act, amended or

added July 2, 1986 (P.L.318, No.77) and June 16, 1994 (P.L.279,

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No.48), are amended to read:

Section 1102-C.3.  Excluded Transactions.--The tax imposed by

section 1102-C shall not be imposed upon:

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(19)  A transfer of real estate devoted to the business of

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agriculture to a family farm [corporation] business by a member

of the same family which directly owns at least seventy-five per

cent of each class of the stock thereof or interest therein.

[(19.1)  A transfer of real estate devoted to the business of

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agriculture to a family farm, general, limited or limited

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liability partnership by a member of the same family, which

family directly owns at least seventy-five per cent of the

interests in the partnership.]

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(20)  A transfer between members of the same family of an

ownership interest in a real estate company[,] or family farm

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[corporation or family farm, general, limited or limited

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liability partnership which] business that owns real estate.

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* * *

Section 3.  Section 1102-C.5 of the act, amended or added

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July 2, 1986 (P.L.318, No.77) and June 16, 1994 (P.L.279,

No.48), is amended to read:

Section 1102-C.5.  Acquired Company.--(a)  A real estate

company is an acquired company upon a change in the ownership

interest in the company, however effected, if the change:

(1)  does not affect the continuity of the company; and

(2)  of itself or together with prior changes has the effect

of transferring, directly or indirectly, ninety per cent or more

of the total ownership interest in the company within a period

of three years.

(b)  [With respect to real estate acquired after February 16,

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1986, a family farm corporation is an acquired company when,

because of voluntary or involuntary dissolution, it ceases to be

a family farm corporation or when, because of issuance or

transfer of stock or because of acquisition or transfer of

assets that are devoted to the business of agriculture, it fails

to meet the minimum requirements of a family farm corporation

under this act.

(b.1)  A family farm partnership or family farm corporation 

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is an acquired company when, because of voluntary or involuntary

dissolution, it ceases to be a family farm partnership or family

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farm corporation or when, because of transfer of partnership or

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other interests or because of acquisition or transfer of assets

that are devoted to the business of agriculture, it fails to

meet the minimum requirements of a family farm partnership or

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family farm corporation under this act.

(b.2)  The conveyance of assets held by a family farm

corporation or family farm partnership to a limited partnership,

limited liability partnership or limited liability company in

which at least seventy-five per cent of the ownership interest

is held by members of the same family as the family holding

ownership interest in the conveying corporation or partnership

shall not be considered to be a transfer of assets under this

article. under this act.] A family farm business is an acquired

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company when, because of voluntary or involuntary dissolution,

it ceases to be a family farm business, or when, because of the

issuance or transfer of stock in the corporation or transfer of

interests in the association or because of an acquisition or

transfer of assets that are devoted to the business of

agriculture, it fails to meet the minimum requirements of a

family farm business under this act.

(c)  Within thirty days after becoming an acquired company,

the company shall present a declaration of acquisition with the

recorder of each county in which it holds real estate for the

affixation of documentary stamps and recording. Such declaration

shall set forth the value of real estate holdings of the

acquired company in such county.

Section 4 3.  This act shall apply retroactively to

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transactions occurring after December 31, 2008.

Section 5 4.  The provisions of 61 Pa. Code 91.222 (relating

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to family farm corporation) are abrogated.

Section 6 5.  This act shall take effect immediately.

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