No. Such transfers are not gifts because the owner receives consideration in exchange. The consideration comes either in the form of additional shares (or other indications of ownership interests) in the business entity and the business will have additional assets as a result of the transfer, or in the form of the enhanced value of the owner’s shares (or other ownership interests) as a result of the transfer. Any transfer of real estate between a business and it’s owners is taxable based on the fair market value of the assets transferred.

Transfers involving revocable trusts are taxable, but the Department will not challenge the price or consideration on which the tax is calculated, even if it was below FMV, if the beneficial interests in the trust are represented by non-transferable shares and the trust was set up and funded for estate-planning purposes as a testamentary substitute. The only transfers into such a revocable trust that qualify for the tax treatment described above are those that are conveyed by the creator of the trust into the trust and are designated under the trust’s terms to be conveyed to the trust beneficiaries as a result of the creator’s death. The only transfers out of such a revocable trust that qualify for the tax treatment described above are those that are conveyed directly to the beneficiaries of the trust as a result of the creator’s death. Any other transfers into or out of the trust are taxable on the FMV of the property transferred. Transfers out of a revocable trust that qualify for one of the exemptions specified in RSA 78-B:2 are, of course, exempt.