D.C.C.A. No. 24-TX-0500 | Decided May 14, 2026
In this tax exemption dispute, the D.C. Court of Appeals affirmed summary judgment in favor of the District of Columbia, holding that the 2021 deed conveying residential property from an irrevocable trust to its primary beneficiary was subject to both transfer and recordation taxes — and qualified for neither the supplemental deed exemption nor the nominal grantee exemption under District regulations.
Background
Mr. Barlow’s father created an irrevocable trust naming Milton A. Barlow, Jr. as primary beneficiary, with the trustee, Austin Trust Company (ATC), holding broad powers to manage, sell, and invest trust property as an “absolute owner.” In 2007, at Mr. Barlow’s direction, ATC purchased a D.C. residential property and paid $31,029.98 in transfer and recordation taxes at closing. ATC held record title for fourteen years until the trust dissolved in 2021, at which point it deeded the property to Mr. Barlow for no consideration. Mr. Barlow paid $53,181.36 in transfer and recordation taxes on that conveyance but subsequently sought a refund, arguing his deed qualified for exemption under D.C. law. The Office of Tax and Revenue denied the claim, the Superior Court granted summary judgment to the District, and an appeal followed.
Supplemental Deed Exemption
Mr. Barlow argued the 2021 deed was a “supplemental deed” — one that confirms, corrects, modifies, or supplements a prior recorded deed without additional consideration — under D.C. Code §§ 42-1102(6) and 47-902(8). The court rejected this argument, relying on Columbia Realty Venture v. District of Columbia and Cowan v. D.C. Dep’t of Finance & Revenue. Those decisions establish that a conveyance between two legally distinct entities capable of independently holding property constitutes a “complete change in the legal ownership of the property” and therefore falls outside the supplemental deed exemption. Because the trust and Mr. Barlow were separate legal entities — each with independent capacity to hold and convey real property — the 2021 transfer was a true conveyance, not a mere confirmation of a prior one. The court emphasized that the legislature could have crafted a specific exemption for transfers from irrevocable trusts to beneficiaries, as it did for spousal transfers, and for transfers involving revocable trusts, but did not do so.
Nominal Grantee Regulations
Mr. Barlow alternatively argued that ATC acted as a “nominal grantee” — holding title in name only on his behalf — bringing the transfer within the regulatory exemptions at 9 D.C.M.R. §§ 509.1 and 609.1. This is a common scenario in reverse like-kind exchanges where a single purpose entity is established to effect an exchange of property. The court disagreed. A nominal grantee exists in name only; ATC, by contrast, exercised genuine ownership prerogatives over fourteen years and was not “single purpose”: it paid approximately $200,000 in real estate taxes, managed the property, and held authority to sell and reinvest proceeds under the trust agreement. That conduct was inconsistent with mere titular holding. The court also noted that ATC owed fiduciary duties to seven beneficiaries, precluding any argument that it held the property exclusively for Mr. Barlow’s benefit.
Practical Takeaways
This decision reinforces that D.C. tax exemptions are construed strictly against the claimant. Practitioners structuring trust arrangements involving D.C. real property should carefully evaluate exit-strategy tax exposure at trust dissolution. Where a beneficiary seeks to avoid transfer and recordation taxes, directing the trustee to convey funds rather than property, allowing the beneficiary to buy the property in his own name, may be a more effective approach, as the court itself noted Mr. Barlow could have pursued that path.