Cite as B298794
Filed December 7, 2020, Second District, Div. Five
By Daniel C. Kim
Weintraub Tobin Chediak Coleman Grodin Law Corporation
Headnote: Reassessment on Transfer to Trust – Corporate Stock
Summary: The term “stock” includes all classes of stock for purposes of determining whether a transfer of ownership has occurred.
Super A Foods, Inc. held title to real property in Los Angeles. All of the corporation’s voting stock was issued to a Trust. The corporation’s non-voting stock was issued to the Trust and other individuals, including non-trust beneficiaries. In 2014, the corporation transferred the real property entirely to the Trust. The county assessor concluded the transfer constituted a change of ownership from the corporation to a trust and reassessed the property value. The Assessment Appeals Board reversed the reassessment. The assessor petitioned for a writ of administrative mandate to vacate the Board’s decision, which the trial court granted. The Trust appealed.
The appellate court affirmed. The main issue on appeal was whether the term “stock” in the relevant Revenue and Taxation Code section referred only to voting stock or all classes of stock, including non-voting stock. The court disagreed with the Trust’s view that ownership interests in real property held by a corporation should be measured by voting stock alone. The common meaning of stock includes non-voting stock, and the relevant statutory schemes did not use the terms “stock” and “voting stock” interchangeably, as the Trust argued. Moreover, the fact that the general term “stock” includes other subcategories such as voting and non-voting stock did not result in an ambiguity in the term “stock.” Rather, it simply showed that the general term included subcategories. Lastly, the court found that the economic interests of the prior owners of the corporation changed as a result of the transfer, supporting the argument for reassessment. The court’s dissenting opinion stated that insufficient weight was given to arguments presented by the State Board of Equalization, the entity responsible for promulgating property tax assessment regulations, and that the majority’s oversimplified interpretive approach failed to harmonize inconsistencies in the statutory scheme.