Uncapping of the taxable value (TV) of real property; Const 1963, art. 9, § 3; MCL 211.27a; Effect of the transfer of shares in petitioner-property owner (a co-operative); Whether evidence was substantial, material, & competent; Motion for reconsideration; IRS guidance on the cost-basis of the transferred shares; Tax Tribunal (TT)

The court held that the TT did not err in upholding respondent-township’s uncapping of the TV of petitioner-co-operative’s real property after a threshold of petitioner’s shares were cumulatively transferred in one calendar year. Petitioner “owns a ‘family cottage’ for its shareholders’ use.” Two individuals owned 24% of its shares and then bought another 48%. After this “purchase, and in the same calendar year,” they sold 20% of the shares to others. Respondent “determined that 68% of petitioner’s ownership had been conveyed in the same calendar year, and, under MCL 211.27a(6)(h), an uncapping was triggered because more than 50% of petitioner’s ownership interest had been conveyed.” Petitioner contended the TT erred in “interpreting MCL 211.27a(6)(h) to consider conveyances cumulatively when discerning whether 50% of the ownership interest of the corporation had been conveyed.” Reading the provision as a whole, the court found this argument was “misplaced because MCL 211.27a(6)(h)(ii) would be rendered surplusage if MCL 211.27a(6)(h) prohibited a cumulative accounting of the conveyances for all corporations.” Thus, the court held that the TT did not err in ruling “that respondent correctly considered the conveyances cumulatively when uncapping petitioner’s cottage under MCL 211.27a(6)(h).” Next, the court rejected petitioner’s argument the evidence relied on by the TT was not substantial, material, or competent. The TT “was presented with affidavits of transfer that were signed by petitioner’s shareholders,” which indicated the amount of its shares that were transferred. And there was no dispute “there was one conveyance for 48% of petitioner’s shares and one for an additional 20% within a single year, which indicated that more than 50% of the shares were transferred.” Finally, petitioner asserted the TT “incorrectly relied on IRS guidance concerning the cost-basis of the shares that were transferred.” But the TT did not rely “on the IRS guidance to state that the shareholders must have structured their conveyances in a particular way, but rather that petitioner had not provided any evidence for its proposition that the shares that were subsequently sold were the same shares that were first purchased that same year. If shareholders intend a specific conveyance to be from a specific source for tax purposes, then they need to specify and justify it.” Affirmed.