Justia Tax Law Opinion Summaries

Petitioner Liberty Assembly of God (Assembly) appealed a decision of the New Hampshire Board of Tax and Land Appeals (BTLA) which upheld a 2008 decision of Respondent City of Concord (City), denying the Assembly's request for a religious use tax exemption. Assembly owns 26.13 acres of land in Concord; approximately twenty acres are in "current use." The undeveloped land is used primarily for agricultural or forestry purposes, although there is a "prayer trail" around its perimeter. From 1994, when Assembly acquired its property, until 2008, the City granted Assembly a religious use tax exemption on all of its property. However, in 2008, the City granted Assembly an exemption on only forty percent of its property, concluding that sixty percent of the property was not used and occupied for religious training or other religious purposes, and was therefore taxable. The City subsequently revised its determination and exempted sixty percent of the property. The City considered the entire second floor of the main building taxable as not being used for religious purposes. Following appeal, the BTLA upheld the City’s apportionment for tax year 2008. Assembly asserted that the BTLA’s ruling was erroneous on three interrelated grounds: (1) the City and the BTLA misinterpreted RSA 72:23, III because it should be read as fully exempting houses of worship from taxation; (2) the City’s inquiries into the religious uses and purposes of each room within the church building unconstitutionally “entangled” the government with religion; and (3) even if the statute and constitution permit parsing taxable from exempt space within a house of worship, all of Assembly's space should be exempt as serving a religious purpose. Having decided that the City’s methodology was not flawed, the Supreme Court deferred to the BTLA’s judgment in determining the weight to be given evidence: "Because Assembly has not demonstrated by a clear preponderance of the evidence that the second-floor restroom was "owned, used and occupied directly for religious training or for other religious purposes," the Court could find error in the BTLA's finding such space taxable. View "Appeal of Liberty Assembly of God" on Justia Law

The New Hampshire Department of Revenue Administration (DRA) appealed a superior court order that reversed its decision assessing a real estate transfer tax against Petitioners Say Pease, LLC and Say Pease IV, LLC. Two International Group, LLC (TIG) is a real estate holding company. It owned a ground lease on property near Pease International Tradeport that it wanted to use to secure a mortgage loan. To obtain the loan, TIG’s prospective lender required that TIG, and all of its members, be "single purpose bankruptcy remote entities." To comply with the lender’s requirement, the members of Say Pease formed Say Pease IV, a new limited liability company (LLC) with the same members. Say Pease IV’s LLC agreement provides that it was "formed for the sole purpose of being a Managing Member and Member of [TIG]" and was not authorized "to engage in any other activity[,] business or undertaking so long as [TIG] shall be indebted under any mortgage or other securitized loan." Say Pease’s interest in TIG was transferred to Say Pease IV, and Say Pease IV replaced Say Pease as TIG’s managing member. As a result of these transactions, Say Pease IV owned a 47.5% interest in TIG as a sole purpose remote bankruptcy entity, Say Pease held no interest in TIG, and TIG obtained the loan. Based upon this transfer, DRA issued notices assessing the real estate transfer tax against Say Pease and Say Pease IV. After appealing unsuccessfully through DRA’s administrative appeal process, Say Pease and Say Pease IV appealed to the superior court. The parties filed cross-motions for summary judgment, and the trial court reversed DRA's order, ruling that the transfer at issue was not a "[c]ontractual transfer," RSA 78-B:1-a, II (2003), and, therefore, the real estate transfer tax did not apply. Upon review, the Supreme Court found that the parties did not employ a business entity as a shield for an otherwise taxable exchange of value for an interest in property. Instead, those that executed Say Pease IV’s LLC agreement sought to maintain TIG’s original ownership while placing it in a suitable financing vehicle; the promises exchanged related to the creation of the financing vehicle, Say Pease IV, not the subsequent property transfer. Thus, the substance of the transaction here failed to create a bargained-for exchange because there was no "exchange of money, or other property and services, or property or services valued in money for an interest in real estate." View "Say Pease IV, LLC v. New Hampshire Dept. of Rev. Admin. " on Justia Law

Respondent, the New Hampshire Department of Revenue Administration (DRA), appealed a Superior Court ruling. Money distributions from the Lyme Timber Company (Lyme) paid to limited partners that lived in New Hampshire were not considered taxable income under the state tax code. The court reasoned that the Lyme partners' interests were not "transferable shares" within the meaning of the tax code, and therefore not taxable. On appeal to the Supreme Court, the DRA argued that the trial court misinterpreted and misapplied the tax regulations, and failed to consider portions of the Lyme partnership agreement. In its review, the Supreme Court engaged in defining the pertinent terms of the tax code and the Lyme partnership agreement. The Court concluded that the trial court did misinterpret many of the pertinent terms that were the basis of this appeal. The Court reversed the trial court and remanded the case for further proceedings.