52nd Legislature

                      1991 Special Session

Passed by the House June 28, 1991

  Yeas 90   Nays 0




Speaker of the

       House of Representatives


Passed by the Senate June 28, 1991

  Yeas 47   Nays 0



I, Alan Thompson, Chief Clerk of the House of Representatives of the State of Washington, do hereby certify that the attached is ENGROSSED SUBSTITUTE HOUSE BILL 1831 as passed by the House of Representatives and the Senate on the dates hereon set forth.




President of the Senate

                               Chief Clerk



Approved Place Style On Codes above, and Style Off Codes below.





Governor of the State of Washington

                        Secretary of State

                       State of Washington




                       ENGROSSED SUBSTITUTE HOUSE BILL 1831



                   Passed Legislature - 1991 1st Special Session



State of Washington              52nd Legislature             1991 Regular Session


By House Committee on Revenue (originally sponsored by Representatives Wang and Appelwick).


Read first time March 11, 1991.  Subjecting certain ownership changes to real estate excise taxation.

     AN ACT Relating to subjecting certain ownership changes to real estate excise taxation; adding new sections to Title 82 RCW; creating a new section; and declaring an emergency.




     NEW SECTION.  Sec. 1.      (1) The legislature finds that transfers of ownership of a corporation may be, in some circumstances, essentially equivalent to the sale of real property held by the corporation.  The legislature further finds that all transfers of possession or use of real property should be subject to the same excise tax burdens.

     (2) The intent of this act is to apply an excise tax to transfers of corporate ownership when the transfer of ownership is comparable to a sale of real property.  The excise tax imposed under this act is intended to be equivalent in burden to the excise tax imposed on sales of real estate under chapter 82.45 RCW.


     NEW SECTION.  Sec. 2.      Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

     (1) "Ownership transfer" means a transfer or series of transfers in any consecutive twelve-month period, for a valuable consideration, of ownership of stock possessing more than fifty percent of the total combined voting power of the issued and outstanding shares of each class of stock entitled to vote.

     (2) "Value of real property assets" means the true and fair value in money, at the time an ownership transfer is completed, of any estate or interest in real property located in this state.


     NEW SECTION.  Sec. 3.      (1) An excise tax is imposed on each ownership transfer of a corporation, to be paid by the corporation, at the rate of one and twenty-eight one-hundredths percent of the value of the real property assets of the corporation.

     (2) Chapter 82.32 RCW applies to the tax imposed in this chapter.  The tax due dates, reporting periods, and return requirements applicable to chapter 82.04 RCW apply equally to the tax imposed in this chapter.


     NEW SECTION.  Sec. 4.      The tax imposed in this chapter does not apply to ownership transfers:

     (1) When the taxpayer demonstrates by a preponderance of the evidence that the primary intent of the ownership transfer is for purposes other than avoidance of the tax imposed in chapter 82.45 RCW.

     (2) When the value of the real property assets of the corporation is less than fifty percent of the true and fair value in money of all assets held by the corporation at the time of the ownership transfer.

     (3) Of interests that are required to be registered with the federal securities and exchange commission under the securities act of 1933 or the securities exchange act of 1934.

     (4) By gift, devise, or inheritance.

     (5) From one spouse to the other in accordance with the terms of a decree of divorce or in fulfillment of a property settlement agreement incident thereto.

     (6) Solely for the purpose of securing a debt.

     (7) Upon execution of a judgment.

     (8) To a corporation that is wholly owned by the transferor and/or the transferor's spouse or children.  If such transferee corporation voluntarily transfers the ownership interest, or the real property represented by the ownership interest, or such transferor, spouse, or children voluntarily transfer stock in the transferee corporation or interest in the transferee partnership capital, as the case may be, to other than (a) the transferor and/or the transferor's spouse or children, (b) a trust having the transferor and/or the transferor's spouse or children as the only beneficiaries at the time of the transfer to the trust, or (c) a corporation or partnership wholly owned by the original transferor and/or the transferor's spouse or children, within five years after the original transfer to which this exemption applies, excise taxes shall become due and payable on the original transfer as otherwise provided by law.


     NEW SECTION.  Sec. 5.      Sections 2 through 4 of this act shall constitute a new chapter in Title 82 RCW.


     NEW SECTION.  Sec. 6.      This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.