Rev. Rul. 57-373

Advice has been requested concerning the applicability of the documentary stamp tax imposed by section 4361 of the Internal Revenue Code of 1954 on a conveyance of real property to a Federal savings and loan association by a sheriff's deed.

Section 4361 of the Code imposes a tax on each deed, instrument, or writing, whereby any lands, tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers when the consideration or value of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of sale, exceeds $100.

Section 4383 of the Code provides that the documentary stamp tax shall be paid by any person who makes, signs, issues, or sells any of the documents or instruments subject to the tax, or for whose use or benefit the same are made, signed, issued, or sold. The United States or any agency or instrumentality thereof shall not be liable for the tax with respect to an instrument to which it is a party, and the affixing of stamps thereby shall not be deemed payment for the tax, which may be collected by assessment from any other party liable therefor.

Section 113.83(d) of Regulations 71, made applicable to the Internal Revenue Code of 1954 by Treasury Decision 6091, C.B. 1954-2, 47, cites, as examples of conveyances subject to documentary stamp tax, deeds given by masters in chancery, sheriffs, clerks of court, etc., for realty sold under foreclosure or execution. The tax is computed on the amount bid for the property plus the costs if paid by the purchaser, whether the purchaser is the mortgagee or judgment creditor, or other person.

Section 5(h) of the Home Owners' Loan Act of 1933, as amended, 48 Stat. 128, at 133, 12 U.S.C. 1464(h), exempts Federal savings and loan associations organized under the Home Owners' Loan Act from all Federal taxation, including the documentary stamp tax.

The documentary stamp tax imposed on deeds, when title to real estate is conveyed, is a tax on the transaction and is applicable to conveyances in foreclosure proceedings, as well as to voluntary conveyances. There is no distinction under the stamp tax law or regulations between voluntary and involuntary conveyances and the tax applies equally to both.

In view of the foregoing, a Federal savings and loan association is not liable for the documentary stamp tax imposed by section 4361 of the Code with respect to a conveyance of real property acquired in a mortgage foreclosure proceeding. This exemption, however, does not relieve the other party to the transaction from liability for the tax, in view of the dual liability provisions of section 4383 of the Code, under which the tax is payable by and collectible from the grantor or the grantee, unless otherwise specifically exempt. Accordingly, it is held that when real property is conveyed by sheriff's deed to a Federal savings and loan association in a mortgage foreclosure proceeding, the instrument of conveyance is subject to the documentary stamp tax and such tax is payable by the nonexempt party to the transaction. See also Rev. Rul. 57-72, C.B. 1957-1, 415, and Mimeograph 4497, C.B. XV-2, 354 (1936).