Code of Maine Rules
18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES
125 - BUREAU OF REVENUE SERVICES
Chapter 207 - CONTROLLING INTEREST TRANSFERS
Section 125-207-03 - Controlling interest transfers

Universal Citation: 18 ME Code Rules ยง 125-207-03

Current through 2024-38, September 18, 2024

A. A controlling interest transfer occurs when a person, or a group of persons acting in concert, transfers or acquires more than a 50% interest in an entity that owns real property in Maine within a 12-month period. When such a transfer occurs, there is ordinarily no deed to convey title to the real property owned by the transferred entity because the real property owned by the entity being transferred is not being sold directly. Instead, the ownership of the entity itself is being transferred. The real estate transfer tax is imposed equally on the transferor and transferee based on the value of the transferred portion of the real property. For example, within a 12-month period, Company A acquires from an unrelated individual a 75% interest in Company B, which owns a warehouse in Maine. If the value of the Maine warehouse at the time of the final transfer is $1,000,000, the real estate transfer tax is imposed on the portion of Company B that is being transferred (75%) multiplied by the value of Maine real property owned by Company B ($1,000,000), or $750,000. The real estate transfer tax is imposed half on the transferor (the individual seller) and half on the transferee (Company A).

B. All acquisitions involving persons acting in concert must be aggregated to determine if a controlling interest has been transferred. Factors relevant in determining whether two or more persons are acting in concert include but are not limited to the following:

1. Common ownership. Persons are treated as acting in concert if they have a relationship with each other such that one person influences or controls the actions of another through common ownership. For example, if a parent corporation and its wholly-owned subsidiary each purchase a 30% interest in Company A, the parent corporation and its wholly-owned subsidiary are treated as acting in concert in acquiring a controlling interest (60% total) in Company A.

2. Unity. For situations when common ownership or control is not present, persons will be treated as acting in concert only if the unity with which the purchasers have negotiated and will consummate the transfer of ownership interest supports a finding that they are acting as a single entity. For example, if three partnerships, which are neither commonly owned nor controlled, each purchase a 20% interest in Company A (60% total) as part of a collective negotiation to acquire a controlling interest in Company A, the unity with which the three partnerships acted will support a finding that they are acting as a single entity. If, however, the acquisitions are completely independent, with each purchaser buying without regard to the identity of the other purchasers, the acquisitions must be considered separate acquisitions.

3. Other factors. Other factors to be considered in determining whether persons are acting in concert include, without limitation, the following:
a. The timing of the separate transfers or acquisitions of interests in an entity;

b. Contractual terms indicating unity;

c. Agreements between the purchasers that bind them to a course of action with respect to the transfer or acquisition; and

d. The number of purchasers; or

e. The nature of relationships (e.g., close personal or family relationships).

C. All transfers within a 12-month period by persons acting in concert are aggregated for the purpose of determining whether a controlling interest transfer has taken place.

Disclaimer: These regulations may not be the most recent version. Maine may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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