In 926 North Ardmore Avenue, LLC v. County of Los Angeles, the Supreme Court today holds that, after an array of transactions moving interests in one building among various entities of various members of one family, one set of transactions allowed Los Angeles County to impose a documentary transfer tax. The court’s opinion by Justice Carol Corrigan finds the trigger was that the latter transactions caused a “change in ownership” under the Revenue and Taxation Code. The conclusion is reached by reading one section of that Code “in context,” something not recommended for the faint of heart. The court says, “the critical factor in determining whether the documentary transfer tax may be imposed is whether there was a sale that resulted in a transfer of beneficial ownership of real property.”
The opinion is not unanimous. Justice Leondra Kruger dissents. She says, “neither the [Documentary Transfer Tax Act] itself, nor the federal statutes on which it was modeled, has before been held to apply to run-of-the-mill transfers of interests in legal entities that happen to own real estate,” and she would leave to the Legislature any such expansion of the Act.
The court affirms the Second District, Division Seven, Court of Appeal. It also disapproves dictum in a 1985 decision by the Second District, Division Three.