Rev. Rul. 56-689

Advice has been requested concerning the applicability of the documentary stamp tax to the conveyance of real property by a college to a theological seminary, both of which are exempt from Federal income tax under section 501(c)(3) of the Internal Revenue Code of 1954.

Section 4361 of the Code imposes a tax on each deed, instrument, or writing whereby any lands, tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, her, or their direction, when the consideration or value of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of the sale, exceeds $100.

Section 113.82 of Regulations 71, made applicable to the Internal Revenue Code of 1954 by Treasury Decision 6091, C.B. 1954-2, 47, provides that the documentary stamp tax shall be computed on the net consideration paid for, or the net value of, the realty conveyed, that is, the gross consideration or gross value less, in either case, the amount of all liens or encumbrances on the realty existing before the sale and not removed thereby.

There is no provision in law whereby an organization operated exclusively for religious, charitable, scientific, literary, or educational purposes is exempt from the documentary stamp tax on the conveyance of real property. Accordingly, it is held that a deed conveying title to real property from a college to a theological seminary is subject to the tax imposed by section 4361 of the Code. Compare Revenue Ruling 54-38, C.B. 1954-1, 242, relating to the issuance or transfer of stock of a corporation organized for religious, charitable, scientific, or literary, or educational purposes. Also, compare M.T. 39, C.B. 1950-1, 141, relating to conveyances of real property to or by a state or a political subdivision or corporate instrumentality thereof.