State Bar of Wisconsin Return to Wisconsin Tax Appeals Commission





c/o Attorney Lawrence A. Trebon

Trebon & Mayhew

733 N. Van Buren Street

Milwaukee, WI 53202




P.O. Box 8933

Madison, WI 53708-8933


DOCKET NO. 99-T-09



This case was submitted to the Commission on stipulated facts and briefs.

Petitioner, Joel S. Lee, is represented by Attorney Lawrence A. Trebon of Trebon & Mayhew, Milwaukee, Wisconsin. Respondent, Wisconsin Department of Revenue ("Department"), is represented by Attorney Neal E. Schmidt.

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


For its Findings of Fact, the Commission adopts the following stipulated findings, with minor modifications and with references to exhibits omitted:

1. Petitioner, acting as both the sole general partner and the sole limited partner, established Cathedral Square Limited Partnership, a Wisconsin limited partnership ("Partnership"), by entering into a Limited Partnership Agreement dated January 1, 1995.

2. Dated January 1, 1995, petitioner executed two quit claim deeds transferring his interest in the real properties commonly known as 813 North Jefferson Street and 418-432 East Wells Street, Milwaukee, Wisconsin (collectively the "Properties"), to the Partnership, without consideration other than an interest in the Partnership.

3. On the real estate transfer fee returns, petitioner claimed that the transfers of the Properties to the Partnership were exempt from the real estate transfer fee under Wis. Stats. § 77.25(15m), as a transfer from a partner to a partnership for no consideration other than an interest in the partnership.

4. On June 30, 1995, petitioner assigned his 1% general partnership interest in the Partnership to Van Buren Management, Inc.

5. From June 30, 1995 to June 30, 1999, petitioner was the sole stockholder of Van Buren Management, Inc.

6. On October 23, 1998, the Department assessed petitioner real estate transfer fees of $797.00 on the transfer of 813 North Jefferson Street and $1,098.00 on the transfer of 418-432 East Wells Street, plus interest and 25% penalties, for a total of $3,170.02.

7. On October 28, 1998, petitioner filed a petition for redetermination with the Department, objecting to the assessment.

8. On November 11, 1998, the Department mailed its notice denying the petition for redetermination. Petitioner received the notice on November 13, 1998.

9. On January 6, 1999, petitioner timely appealed to the Commission.


1. Has there been a conveyance subject to the real estate transfer fee?

2. If so, are petitioner's two transfers of real property (dated January 1, 1995) to Cathedral Square Limited Partnership, a Wisconsin limited partnership, exempt from the real estate transfer fee under Wis. Stats. § 77.25(15m)?


77.21 Definitions. In this subchapter:

(1) "Conveyance" includes deeds and other instru-ments for the passage of ownership interests in real estate.... [Emphasis added.]

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. ... [Emphasis added.]


The quit claim deeds executed and recorded in 1995 from petitioner to Cathedral Square Limited Partnership did not constitute a "conveyance" as that term is defined in Wis. Stats. § 77.21(1) and used in Wis. Stats. § 77.22(1), because they did not effect the passage of an ownership interest from one entity to another.


Petitioner claims that these transfers were exempt from the real estate transfer fee under Wis. Stats. § 77.25(15m).(1) Alternatively, petitioner claims that if no partnership existed, then there could be no conveyance.

The parties briefed the issues of whether a partnership may consist of one person; if not, what the consequences are here; and if so, whether the transfers are exempt under § 77.25(15m).

Is There A Limited Partnership?

"Limited partnership" is defined in Wis. Stats. § 179.01(7) as follows:

"Limited partnership" ... mean a partnership formed by 2 or more persons under this chapter and having one or more general partners and one or more limited partners. [Emphasis added.]

The description of a partnership that is not a limited partnership is very similar to the language above and is set out in Wis. Stats. § 178.03(1):

A partnership is an association of 2 or more persons to carry on as coowners a business for profit. A partnership includes a registered limited liability partnership and a foreign registered limited liability partnership. [Emphasis added.]

The Wisconsin Supreme Court has clearly stated that a partner-ship may not consist of one person. In Heck & Paetow Claim Service, Inc. v. Heck, 93 Wis. 2d 349, 359, 286 N.W. 2d 831 (1980), the Court wrote (citations omitted):

Wisconsin case law recites that a partnership is an association of two or more persons formed to carry on a business as co-owners for profit. Sec. 178.03(1), Stats. A partnership agreement, whether expressed or implied, may be in writing or proven by circumstantial evidence demonstrating that the conduct of the parties was of such a nature as to clearly express the mutual intent of the parties to enter into a contractual relationship. ... Every partnership depends on the mutual consent and understanding of its members, and as a result, there must be a meeting of minds of the parties, and thus the intention of one party alone cannot create a partnership. The burden of proof of establish-ing a partnership relationship is on the party claiming that such a valid relationship exists. ... [Emphasis added]

Because the statutory language defining a general partnership and a limited partnership are virtually identical, we hold that the above case involving general partnerships also applies to the limited partnership currently before the Commission. For this reason, a valid limited partnership was not formed by petitioner in this case.

Was There A Conveyance?

Wisconsin Statute § 77.21(1) defines "conveyance" for purposes of the real estate transfer fee as follows:

(1) "Conveyance" includes deeds and other instru-ments for the passage of ownership interests in real estate.... [Emphasis added]

The Partnership was not a valid legal entity. While the petitioner's 1995 quit claim deeds purported to convey the Properties to the Partnership, they did not effect the passage of ownership from him to the Partnership because the Partnership was a non-entity. Since neither deed was a "conveyance" under § 77.21(1), no real estate transfer fees are due.

In Concord Associates I v. Wisconsin Department of Revenue, 1997 Wisc. Tax LEXIS 5 (WTAC 1997), the Commission held that there can be no conveyance unless there exists two different entities between whom the property is transferred. Id. at 8. In Concord, the grantor listed on a quit claim deed did not exist. Id. In this case, it is the grantee that did not exist. Therefore, the 1995 deeds did not constitute conveyances under the real estate transfer fee statutes, and no transfer fees are due.

Because no "conveyance" occurred and no transfer fees are due, there is no need to address the exemption issue briefed by the parties.

Effect of Petitioner's Assignment of His Partnership

Interest to Van Buren Management, Inc.

Respondent argues that petitioner's transfer of his 1% general partnership interest in the Partnership on June 30, 1995, triggered the transfer fee after the fact. We disagree with respondent to the extent that this issue is not before us. The matter before us arises out of respondent's review of real estate transfer returns filed with respect to the two quit claim deeds described in Finding 2. We have concluded that these deeds were not conveyances.

This is not to say that under these circumstances the assignment to Van Buren was not a conveyance. It could be that upon the recording of this assignment or other indicia of this assignment, liability under the transfer fee statute might accrue. See, e.g., Wolter v. Dep't of Revenue, 1998 Wisc. Tax LEXIS 16 at 9-10 (WTAC 1998) (holding that a recorded memorandum giving notice of a partnership reorganization was a conveyance for transfer fee purposes). However, the record does not indicate that the assignment or any indicia of the assignment have been recorded. Therefore, this issue is not before the Commission.(2)



That respondent's action on petitioner's petition for redetermination is reversed.

Dated at Madison, Wisconsin, this 24th day of November, 1999.



Mark E. Musolf, Chairperson


Don M. Millis, Commissioner


Thomas M. Boykoff, Commissioner


1 The exemption applies to a transfer "[b]etween 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."

2 Petitioner argues that in the event that the assignment is a conveyance, the measure of the transfer fee should be limited to 1% of the Properties' value since the assignment conveyed only a 1% interest in the Partnership. We do not decide this issue because it is not before us.