THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY MIRABITO, CUTLER, BAKER, BEAR, BRADFORD, CALTAGIRONE, DALEY, FARRY, FREEMAN, GIBBONS, GODSHALL, HELM, HENNESSEY, HORNAMAN, HOUGHTON, KORTZ, LONGIETTI, MARSHALL, MOUL, MURPHY, PETRI, ROHRER, ROSS, SEIP, SIPTROTH, STERN, SWANGER, TOEPEL AND VULAKOVICH, JULY 22, 2010

REFERRED TO COMMITTEE ON FINANCE, JULY 22, 2010  

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," further providing for definitions, for excluded

transactions and for acquired company.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definitions of "association," "corporation,"

"family farm corporation" and "family farm partnership" in

section 1101-C of the act of March 4, 1971 (P.L.6, No.2), known

as the Tax Reform Code of 1971, amended July 2, 1986 (P.L.318,

No.77) and April 22, 1998 (P.L.239, No.45), are amended to read:

Section 1101-C.  Definitions.--The following words when used

in this article shall have the meanings ascribed to them in this

section:

"Association."  A partnership, limited partnership, limited

liability partnership or any other form of unincorporated

enterprise, owned or conducted by two or more persons other than

a private trust or decedent's estate.

"Corporation."  A corporation, limited liability company, 

joint-stock association, business trust or banking institution

which is organized under the laws of this Commonwealth, the

United States, or any other state, territory, or foreign

country, or dependency.

* * *

"Family farm corporation."  A corporation of which at least

seventy-five per cent of its assets are devoted to the business

of agriculture and at least seventy-five per cent of each class

of stock of the corporation is continuously owned by members of

the same family. The term includes any corporation that may be

formed to succeed the business operations of a family farm

corporation or a family farm partnership. The business of

agriculture shall include the leasing to members of the same

family of property which is directly and principally used for

agricultural purposes. The business of agriculture shall not be

deemed to include:

(1)  Recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  The raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  Fur farming;

(4)  Stockyard and slaughterhouse operations; or

(5)  Manufacturing or processing operations of any kind.

"Family farm partnership."  A general, limited or limited

liability partnership of which at least seventy-five per cent of

its assets are devoted to the business of agriculture and at

least seventy-five per cent of the interests in the general,

limited or limited liability partnership are continuously owned

by members of the same family. The business of agriculture shall

include the leasing to members of the same family of property

which is directly and principally used for agricultural

purposes. The business of agriculture shall not be deemed to

include:

(1)  recreational activities such as, but not limited to,

hunting, fishing, camping, skiing, show competition or racing;

(2)  the raising, breeding or training of game animals or

game birds, fish, cats, dogs or pets or animals intended for use

in sporting or recreational activities;

(3)  fur farming;

(4)  stockyard and slaughterhouse operations; or

(5)  manufacturing or processing operations of any kind.

* * *

Section 2.  Section 1102-C.3(19.1) and (20) of the act,

amended or added June 16, 1994 (P.L.279, No.48), are amended to

read:

Section 1102-C.3.  Excluded Transactions.--The tax imposed by

section 1102-C shall not be imposed upon:

* * *

(19.1)  A transfer of real estate devoted to the business of

agriculture to a family farm, general, limited or limited

liability partnership by a member of the same family, which

family directly owns at least seventy-five per cent of the

interests in the partnership.

(20)  A transfer between members of the same family of an

ownership interest in a real estate company, family farm

corporation or family farm, general, limited or limited

liability partnership which owns real estate.

* * *

Section 3.  Section 1102-C.5 of the act, amended or added

July 2, 1986 (P.L.318, No.77) and June 16, 1994 (P.L.279,

No.48), is amended to read:

Section 1102-C.5.  Acquired Company.--(a)  A real estate

company is an acquired company upon a change in the ownership

interest in the company, however effected, if the change:

(1)  does not affect the continuity of the company; and

(2)  of itself or together with prior changes has the effect

of transferring, directly or indirectly, ninety per cent or more

of the total ownership interest in the company within a period

of three years.

(b)  With respect to real estate acquired after February 16,

1986, a family farm corporation is an acquired company when,

because of voluntary or involuntary dissolution, it ceases to be

a family farm corporation or when, because of issuance or

transfer of stock or because of acquisition or transfer of

assets that are devoted to the business of agriculture, it fails

to meet the minimum requirements of a family farm corporation

under this act.

(b.1)  A family farm partnership or family farm corporation

is an acquired company when, because of voluntary or involuntary

dissolution, it ceases to be a family farm partnership or family

farm corporation or when, because of transfer of partnership or

other interests or because of acquisition or transfer of assets

that are devoted to the business of agriculture, it fails to

meet the minimum requirements of a family farm partnership or

family farm corporation under this act.

(b.2)  The conveyance of assets held by a family farm

corporation or family farm partnership to a limited partnership,

limited liability partnership or limited liability company in

which at least seventy-five per cent of the ownership interest

is held by members of the same family as the family holding

ownership interest in the conveying corporation or partnership

shall not be considered to be a transfer of assets under this

article.

(c)  Within thirty days after becoming an acquired company,

the company shall present a declaration of acquisition with the

recorder of each county in which it holds real estate for the

affixation of documentary stamps and recording. Such declaration

shall set forth the value of real estate holdings of the

acquired company in such county.

Section 4.  This act shall be applied retroactively to

transactions on or after December 15, 2007.

Section 5.  The provisions of 61 Pa. Code 91.222 (relating to

family farm corporation) are abrogated.

Section 6.  This act shall take effect immediately.