Ocean Avenue LLC v. County of Los Angeles CA2/2

Raised herein is the following tax issue; Is there a Proposition 13 change in ownership of property held by a limited liability company when all of its membership interests are sold but no one person or entity obtains, directly or indirectly, more than a 50 percent interest in the capital and profits? The answer is no. Accordingly, the trial court properly concluded that the Los Angeles County Assessor (Assessor) should not have reassessed Ocean Avenue LLC’s (Ocean Avenue) property as of July 7, 2006, and that Ocean Avenue was entitled to a judgment for a tax refund. The County of Los Angeles (County) urges us to uphold the reassessment on the theory that a single person obtained majority control of the capital and profits; an aborted sales contract entered into on July 7, 2006, triggered the doctrine of equitable conversion; the substance over form test applied in federal tax cases should be applied in California; and the existing tax legislation is unconstitutional because it conflicts with either the letter or spirit of Proposition 13. Due to a lack of evidence, supporting law, or both, these arguments lack traction. Consequently, we affirm the judgment.

Ocean Avenue…