Laws, Regulations & Annotations

C

220.0000 CHANGE IN OWNERSHIP

Annotation 220.0453.005

220.0453.005 Original Co-owners. A historical property is owned by a limited liability company (LLC), which is owned by a corporation, which in turn is wholly owned by a charitable trust. The trustees of the trust organized a new California nonprofit public benefit corporation having as its sole purpose and function the preservation and maintenance of the historical property. Since its formation, the same three trustees of the trust have served and continue to serve as the three directors of the public benefit corporation. The trustees of the Trust then caused corporation to transfer all of its LLC interests to the public benefit corporation for no consideration.

A charitable trust is a gift in trust for the benefit of the public or for the establishment or support of an institution dedicated to the welfare of the public or to a class or part thereof. Therefore, charitable trusts do not have ascertainable beneficiaries. Since the subject trust is a charitable trust, the beneficial owners of the property in the trust are, by definition, not ascertainable. Similarly, nonprofit public benefit corporations are organized in such a way that beneficial "owners" of property held by such corporations technically do not exist. In the case of nonprofit public benefit corporations, members, or if there are no members, then directors, of such organizations will be considered owners of the entity's property for property tax purposes, such that property transferred between public benefit corporations is excluded under Revenue and Taxation Code section 62(a)(2) if the members/directors of the transferor corporation were identical to the members/directors of the transferee corporation before and after the transfer. It follows, then, that if proportional ownership interest is measured by members or by the board of directors for purposes of the section 62(a)(2) exclusion, the members or board of directors must then become "original co owners" in the nonprofit public benefit corporation pursuant to section 64(d), such that if a voting interest change in the members or board of directors of more than 50 percent occurs, there would be a change in ownership of the property previously excluded under section 62(a)(2). Until an original co-owner interest is transferred and counted and cumulated for purposes of section 64(d), the interest as held by the transferee is an original co-owner interest. Therefore, if an original co-owner interest is transferred and excluded from counting and cumulating under Rule 462.180(d)(2), the transferee takes the interest as an original co owner. C 9/4/2015.