THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY FERLO, FONTANA, ORIE, SCHWANK, VANCE, HUGHES, GREENLEAF, FARNESE AND WASHINGTON, JANUARY 26, 2012

SENATOR BRUBAKER, FINANCE, AS AMENDED, MAY 9, 2012  

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 and for acquired company.

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The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definition of "real estate company" in

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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), is 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:

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"Real estate company."  Either of the following:

(1)  A corporation or association which is primarily engaged

in the business of holding, selling or leasing real estate

ninety per cent or more of the ownership interest in which is

held by thirty-five or fewer persons and which:

[(1)] (i)  derives sixty per cent or more of its annual gross

receipts from the ownership or disposition of real estate; or

[(2)] (ii)  holds real estate, the value of which comprises

[ninety] fifty per cent or more of the value of its entire

tangible asset holdings exclusive of tangible assets which are

freely transferable and actively traded on an established

market.

(2)  A corporation or association which holds, directly or

indirectly, as ninety per cent or more of the value of its

assets, an interest in a real estate company.

For purposes of this definition only, real estate shall not be

limited to interests located within this Commonwealth.

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Section 2.  Section 1102-C.5 of the act, amended or added

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

No.48), is amended to read:

Section 1.  Section 1102-C.5 of the act of March 4, 1971

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(P.L.6, No.2), known as the Tax Reform Code of 1971, amended or

added 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.

For purposes of this subsection, a transfer shall be deemed to

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have occurred within a period of three years of another transfer

or transfers if a legally binding commitment to execute that

transfer was made within that period. The tax shall be measured

by the value of the cumulative percentage of change.

(3)  For the purposes of paragraph (2), a transfer occurs

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within a period of three years of another transfer or transfers

if, during the period:

(i)  the transferring party provides a legally binding

commitment, enforceable at a future date, to execute the

transfer;

(ii)  the terms of the transfer are fixed and not subject to

negotiation; and

(iii)  the transferring party receives full consideration, in

any form, in exchange for the transfer.

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

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 is an acquired company when,

because of voluntary or involuntary dissolution, it ceases to be

a family farm partnership or when, because of transfer of

partnership 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

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 3.  This act shall take effect in 60 days.

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Section 2.  This act shall not apply to a transaction or a

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series of transactions occurring in part or entirely before the

effective date of this act.

Section 3.  This act shall take effect January 1, 2013.