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2010

INSTRUCTIONS FOR APPLICATION FOR

MARYLAND FORM

MW506AE

CERTIFICATE OF FULL OR PARTIAL EXEMPTION

The Comptroller’s decision to issue or deny a certificate and the amount of tax is final and not subject to appeal.

GENERAL INSTRUCTIONS

(SDAT). If the property does not have a

Required documentation: Copy of

street address, provide the full property

the agreement of sale; Certificate of Good

Purpose of Form

account ID numbers used by SDAT to

Standing of transferee issued by the state in

identify the property.

which transferee is incorporated; notarized

Use Form MW506AE to apply for a

affidavit executed on behalf of transferee

Enter the date of closing for the sale or

Certificate of Full or Partial Exemption

by its President and its Treasurer stating

transfer of the property.

from the withholding requirements on the

that immediately after the exchange the

proceeds of the sale of real property and

transferor(s) will own stock in the transferee

Enter the contract sales price of the

associated personal property in Maryland

possessing at least eighty percent (80%)

property being sold or transferred.

by nonresident individuals and nonresident

of the total combined voting power of all

entities. A nonresident entity is defined to

classes of transferee’s stock entitled to

Enter the property account ID number.

mean an entity that: (1) is not formed under

vote and at least eighty percent (80%)

If the property is made up of more than

the laws of Maryland; and (2) is not qualified

of the total number of shares of all other

one parcel and has more than one property

by or registered with the Department of

classes of stock of the transferee; and an

tax account number, include all applicable

Assessments and Taxation to do business

appraisal establishing the fair market value,

property account ID numbers.

in Maryland.

at the time of the exchange, of any property

other than stock in the transferee which is

Check the box that describes the

Who May File an Application

part of the consideration for the exchange.

transferor/seller’s acquisition of the

The fair market value of any such other

property. Check the box that describes the

An individual, fiduciary, C corporation,

property and/or any money which is part

transferor/seller’s use of the property at

S corporation, limited liability company,

of the consideration for the exchange must

the time of the current sale, and enter the

or partnership transferor/seller may file

be stated on the application as the taxable

length of time the property has been used

Form MW506AE. Unless the transferors/

amount.

for this purpose.

sellers are a husband and wife filing a joint

Maryland income tax return, a separate

Line 2. Transfer is pursuant to a tax-free

Complete the transferor/seller’s adjusted

Form MW506AE is required for each

reorganization as described in §361 of the

basis section by entering the purchase

transferor/seller.

Internal Revenue Code.

price when the transferor/seller acquired

the property, adding the cost of capital

IMPORTANT: The completed Form

Required documentation: Copy of

improvements (including acquisition costs

MW506AE must be received by the

agreement governing the transfer between

such as commissions and state transfer

Comptroller of Maryland no later than 21

transferor and transferee; Certificates of

taxes), and subtracting depreciation, if

days before the closing date of the sale

Good Standing of transferor and transferee

applicable.

or transfer to ensure timely receipt of a

issued by the state(s) in which transferor

Certificate of Full or Partial Exemption.

and transferee are incorporated; copy

Transferee/Buyer’s Information

of the plan or reorganization showing

The Comptroller’s decision to issue

that transferor and transferee are parties

Enter the name and address.

or deny a Certificate of Full or Partial

to the reorganization; and an appraisal

Exemption and the determination of the

establishing the fair market value, at the

Check the box indicating the transferee/

amount of tax to be withheld if a partial

time of the exchange, of any property other

buyer’s entity type.

exemption is granted are final and not

than stock or securities in the transferee

subject to appeal.

Attach schedule if there are multiple

which is part of the consideration for the

transferees/buyers.

exchange and will not be distributed by

SPECIFIC INSTRUCTIONS

the transferor in pursuance of the plan of

Reason for Full or Partial Exemption

reorganization. The fair market value of any

Enter the tax year of the transferor/seller

from Withholding

such other property and/or any money

if other than a calendar year.

which is part of the consideration for the

Check the box in the “Reason for

exchange and will not be distributed by

Transferor/Seller’s Information

Exemption” column that indicates the

the transferor in pursuance of the plan

reason you are requesting a full or partial

or reorganization must be stated on the

Enter the name, address and

exemption from the income tax withholding

application as the taxable amount.

identification number (Social Security

requirements.

number or federal employer identification

Line 3. Transfer is pursuant to an

number) of the transferor/seller applying for

Check one of the boxes in the “Amount

installment sale under §453 of the Internal

the exemption. If the transferor/seller was

of Total Payment Subject to Tax” column

Revenue Code.

issued an individual taxpayer identification

to indicate that you are: (1) claiming a

number (ITIN) by the IRS, enter the ITIN.

total exemption, or (2) providing the dollar

Required documentation: Copy

amount that you are claiming as subject

of contract of sale or copy of HUD-1

Check the box indicating the transferor/

to tax and upon which the income tax

settlement sheet; copy of promissory note

seller’s entity type.

withholding should be calculated.

to transferor which will be executed by

transferee at settlement. That portion of the

Enter the transferor/seller’s ownership

Specific Line Instructions for Reason for

total payment that the transferor receives at

percentage of the property.

Full or Partial Exemption

or within sixty (60) days of settlement must

be stated on the application as the taxable

Property Information

Line 1. Transfer is to a corporation

amount.

controlled by the transferor for purposes of

Enter the description of the property,

§351 of the Internal Revenue Code.

including the street address(es) for

the property as listed with the State

Department of Assessments and Taxation

Maryland Form Mw506ae Draft - Application For Certificate Of Full Or Partial Exemption - 2010 Page 3

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