State Bar of Wisconsin Return to Wisconsin Tax Appeals Commission





c/o WISC Property Limited Partnership

84 Kensett Road

Manhasset, NY 11030




P.O. Box 8933

Madison, WI 53708


DOCKET NO. 98-T-126



This matter was submitted to the Commission on stipulated facts and briefs of the parties.

Petitioner, Esther D. Miller, is represented by Attorney Luke J. Chiarelli, of Domnitz, Mawicke, Goisman & Rosenberg, S.C., of Milwaukee, Wisconsin. Respondent, Wisconsin Department of Revenue, is represented by Attorney Neal E. Schmidt, of Madison, Wisconsin.

Based on the stipulated facts, related exhibits, and briefs of the parties, the Commission finds, concludes, and orders as follows:


As and for its Findings of Fact, the Commission adopts and summarizes the following facts as stipulated by the parties, omitting references to exhibits:

1. The petitioner is Esther D. Miller ("petitioner").

2. On December 31, 1996, petitioner acquired the Del Rio Shopping Center ("Property") conveyed by a Special Warranty Deed.

3. The Property was valued on December 31, 1996 at $925,000.00, as set forth on a Wisconsin Real Estate Transfer Return.

4. A mortgage, mortgage note, and financing modifications were executed on December 31, 1996, whereby petitioner borrowed $825,000, secured by the Property.

5. On March 9, 1997, a Limited Partnership Agreement (the "Agreement"), dated March 9, 1997, was entered into.

6. On March 28, 1997, petitioner and her other partners filed with the Department of Financial Institutions a written agreement titled "Certificate of Limited Partnership". The name of the limited partnership was stated as "WISC Property Limited Partnership" (the "limited partnership"). The general partner is EDJM Corp., and the limited partners are petitioner; Anne Shain and Warran Than, as joint tenants; Janice and Michael Dietz, as joint tenants; and Marjorie and George Miller Real Estate Investment Trust.

7. On June 6, 1997, petitioner conveyed the Property to the limited partnership's name via a Quit Claim Deed, and a Wisconsin Real Estate Transfer Return was completed and filed.

8. A loan assumption agreement and First Amendment to Mortgage Note were entered into on May 1, 1997, whereby the Partnership assumed petitioner's mortgage obligations.

9. On December 8, 1997, the Wisconsin Department of Revenue ("respondent") issued its Notice of Additional Assessment, assessing a fee for the transfer from petitioner to the limited partnership.

10. Petitioner filed a petition for redetermination with respondent dated January 28, 1998.

11. Respondent's Notice of Action letter denied petitioner's petition for redetermination.


77.22 Imposition of real estate transfer fee.

(1) There is imposed on the grantor of real estate a real estate transfer fee at the rate of 30 cents for each $100 of value or fraction thereof on every conveyance not exempted or excluded under this subchapter....

77.25 Exemptions from fee. The fees imposed by this subchapter do not apply to a conveyance:

* * *

(9) Between agent and principal or from a trustee to a beneficiary without actual consideration.

* * *

(15m) Between a partnership and one or more of its partners if all of the partners are related to each other as spouses, lineal ascendants, lineal descendants, siblings, or spouses of siblings and if the transfer is for no consideration other than the assumption of debt or an interest in the partnership.


Is the June 6, 1997 conveyance of the Property from petitioner to WISC Property Limited Partnership exempt from the Wisconsin real estate transfer fee under Wis. Stat. § 77.25(9) or (15m)?


The June 6, 1997 conveyance of the Property from petitioner to WISC Property Limited Partnership is subject to the Wisconsin real estate transfer fee. It is not exempt under:

1. Section 77.25(15m) because the requirement is not satisfied that all partners in the partnership must be personally related to each other in specified ways.

2. Section 77.25(9) because petitioner has failed to show that her acquisition of the Property on December 31, 1996 was as an agent on behalf of a principal, the limited partnership.


Section 77.25(15m) exempts a conveyance from the transfer fee if two conditions are met. The first is that the conveyance is between a partnership and its partners if all of the partners are personally related to each other in specified ways (e.g., as spouses, lineal ascendants or descendants or siblings). Secondly, the transfer must be for no consideration other than the assumption of debt or an interest in the partnership.

The family relationship between the partners in the limited partnership in this case is not clear from the record. However, one partner is a corporation and another is a real estate investment trust; these legal entities cannot be related to natural person partners. Therefore, the first condition of

§ 77.25(15m) is not met.(1)

Section 77.25(9) exempts a conveyance from the transfer fee if it is "[b]etween agent and principal ... without actual consideration." Petitioner asserts that she acquired the Property on December 31, 1996 as an agent for a principal, i.e., the limited partnership. Petitioner's June 6, 1997 conveyance to the limited partnership is, therefore, merely a conveyance from agent to principal, petitioner claims.

Both parties cite Washington National Development Co. v. Wisconsin Department of Revenue, 194 Wis. 2d 566 (Ct. App. 1995). The parties agree that the case held that a person may acquire real estate as an agent for a principal which is formed at a future date. In other words, an agent status could exist at the time of a conveyance even if the principal (i.e., the partnership) was not in existence at the time of the conveyance.

In the Washington National case, a series of offers, counter-offers, and conveyances involving three parcels of real estate began on February 24, 1986 and continued through the year until December 30, 1986, on which date the principals (partnerships) were formed. During that time period, several indications existed in writing -- including a June 30, 1986 deed; a November 1986 letter from a Mr. Lee to the City of Milwaukee; and by reserving limited partnership names on November 3, 1986 -- that Washington National was acting as agent for a to-be-created principal. These written indications led the trial court and the Court of Appeals to find "that the entire course of conduct culminating in the creation of the ... partnerships and the conveyance of the properties ... to the partnerships led to the 'inescapable conclusion'" of a principal/agent relationship for purposes of an exemption under § 77.25(9). Washington National, supra, at 572.

In this case, unlike Washington National, there was no agency agreement. The only writing indicating that the petitioner may have been acting as an agent for a yet-to-be organized principal is a December 28,1996 letter from First Financial Bank, which held a mortgage on the Property, to petitioner. That letter makes no specific reference to an agency agreement. In the third paragraph of a four-paragraph letter, First Financial Bank simply wrote that it had agreed to two modifications to the terms of petitioner's loan documents. The second modification is stated as follows:

Prior to the first anniversary of the Closing of the Loan you may transfer title to the Property encumbered by the Loan Documents to a general or limited partner-ship of which you are a general partner. You have executed a Guaranty on our standard form to ensure that you remain personally liable at all times for all obligations arising under the Loan Documents.

That sole written reference indicating a principal/agent relation-ship is written by a third party and refers to a mortgage loan document. It was written three days prior to the petitioner acquiring the Property. There is no other evidence of a principal/agent relationship. This lone reference does not lead the Commission to the "inescapable conclusion" of a principal/agent conveyance on June 6, 1997. To the contrary, the language as to petitioner's continuing personal liability strongly suggests she was acting as a principal on her own behalf throughout the transaction. Therefore, the claimed exemption under § 77.25(9) does not apply.


The respondent's action on petitioner's petition for redetermination is affirmed.

Dated at Madison, Wisconsin, this 19th day of March, 1999.



Mark E. Musolf, Chairperson


Don M. Millis, Commissioner


Thomas M. Boykoff, Commissioner


May 4, 1999 Petition for rehearing denied under § 227.49(3)

1 It is noted, however, that the petitioner appears to have abandoned this assertion in her brief. Discussion is unnecessary of the second condition of this exemption because the absence of the first condition makes it moot.