Rev. Rul. 58-50

Advice has been requested concerning the applicability of the documentary stamp tax to conveyances of realty from a corporation to a trustee in dissolution and also whether such tax is applicable to the conveyance of the realty from the trustee to the individual shareholders.

In the instant case, a corporation in liquidation sold all of its assets with the exception of certain parcels of real property which were conveyed to its president as trustee in dissolution acting in behalf of the corporation. The corporation was then dissolved. Subsequently, the trustee conveyed the property to the former shareholders in pro rata liquidation of their holdings. All conveyances were made by quitclaim deeds and no monetary consideration was involved.

Section 4361 of the Internal Revenue Code of 1954 imposes a tax on deeds or other instruments by which title to realty sold is conveyed.

Section 113.81(b) of Regulations 71, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, provides that the term `sold' imparts a transfer of title for a valuable consideration which may involve money or anything of value. Section 113.83(g) of the regulations provides that the documentary stamp tax is applicable where there is a conveyance of realty by a corporation in liquidation or in dissolution to its shareholders subject to the debts of the corporation; however, if there are no corporate debts and the conveyance is made solely for the cancellation and retirement of the capital stock, the tax does not apply. Included in section 113.84(b) of the regulations as examples where the tax does not apply are `conveyances of realty without consideration and otherwise than in connection with a sale,' and `a deed to or by a trustee not pursuant to a sale.

The trustee in dissolution for the corporation stands in the place of and acts for the corporation. Accordingly, it is held that conveyances of realty by such corporation to its trustee in dissolution are not subject to the documentary stamp tax imposed by section 4361 of the Code. However, the delivery of the deeds by the trustee to the stockholders is taxable if the conveyances are subject to the debts of the corporation or the stockholders assume such debts. The measure of the tax would be the amount of the debts of the corporation. If the realty is conveyed to the stockholders and there are no debts of the corporation and no other consideration is involved, no tax would be incurred on the delivery of such deeds.