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Bill to tax transfers of controlling interests aims to close 'drop‑kick' transfer tax loophole, sponsors say
Summary
Assembly Bill 362 would impose a tax on sales or transfers of a controlling interest in an entity that owns Nevada real property, a measure sponsors say closes a legal workaround used to avoid the state's real property transfer tax; industry groups cautioned about valuation complexity and potential project‑level impacts.
CARSON CITY — Assembly Bill 362, presented March 26, 2025, by Vice Chair Venetia Considine, would tax the sale or transfer of a controlling interest in an entity that possesses an interest in Nevada real property. Considine said the intent is to close a practice—sometimes called a "drop‑kick"—in which buyers acquire a company that owns real property rather than buying the property directly and thereby avoid the real property transfer tax.
Considine walked the committee through bill sections and a proposed conceptual amendment. The amendment clarifies the taxable base as the fair‑market value of the real property when an entity holds a controlling interest, extends a related lookback period from six to 24 months for related transactions, adds a 25% penalty for inaccurate self‑reporting, and provides that counties — rather than the Department of Taxation — receive tax deposits and retain a 2% administrative fee for five years.
Don Griswold, a senior fellow at the Center on Budget and Policy Priorities who previously advised corporations on state tax strategies, described the drop‑kick technique and urged the committee to tax the "kick" (the stock/interest sale) as New York City did after a similar problem decades ago. Griswold said Nevada's earlier fix left a purpose‑based anti‑abuse rule that was easy to litigate around; AB362, he said, closes the remaining avoidance pathways.
Support, opposition, and neutral perspectives
Supporters, including the Nevada State Education Association, New Day Nevada and housing advocates, told the committee the measure would restore revenue that currently erosion of the property transfer tax account for affordable housing and school capital funds.
Opponents included the Nevada Resort Association, the Vegas Chamber, renewable energy developers and trade groups. They cautioned that many corporate transactions transfer more than real estate — they argued the value of a casino or utility‑scale renewable project includes operations, customer lists and out‑of‑state assets that complicate apportioning the real‑estate share. Renewable energy developers warned the bill could raise project development costs and ultimately increase rates for utility customers.
Neutral witnesses recommended clearer definitions and implementation details. The Nevada Assessors Association said the measure would increase assessor workload and urged that counties receive funds and administrative support to implement the requirement. The Nevada Taxpayers Association said clear definitions of "controlling interest" and indirect sales are essential to limit double taxation and unintended consequences.
Procedure and next steps
No fiscal estimate to quantify annual revenues was provided at the hearing. Michael Nakamoto of the Fiscal Analysis Division told the committee the office had not produced a revenue estimate and would do so if the bill moves forward. The committee kept the record open for further written materials and stakeholder input.
Selected direct quotes (from committee hearing)
"This loophole is coming at a significant cost to the state. 1 estimate projected that at least $27,500,000,000 worth of transactions have occurred since 2007 in Southern Nevada with the majority on or near the Strip with no publicly reported transfer taxes," Vice Chair Venetia Considine said when explaining the bill's purpose. (Transcript block s=5990.85)
"The drop is very easy to manipulate around a rule... Shell companies that we're talking about here... they've been created years ago. So you pull one out for a dropkick," Don Griswold said while describing past avoidance strategies and why a purpose clause is weak. (Transcript block s=6794.355)
Evidence (selected transcript excerpts)
Topic intro: "Thank you, Chair Backus and members of the committee. I am Venetia Considine... I will be presenting Assembly Bill 362..." (Transcript block s=5818.905)
Topic finish: "If appropriate, I'd be happy to, take any questions," Don Griswold said after his presentation. (Transcript block s=6938.19)
Ending
AB362 drew support from school and housing advocates and resistance from business groups and renewable developers. The committee requested additional technical drafting and fiscal work; no committee vote was taken at the hearing.
