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Clarifying Entity Classification Conversions 

Two recent Internal Revenue Service rulings on the tax treatment of converting single member limited liability companies into partnerships and vice versa likely will affect the commercial real estate industry because many transactions take place with partnerships and other entities

The Benefits of Cost-Segregation Studies 

When a commercial property is purchased or constructed, a building asset is created and the dollars are entered into a fixed asset system as 39 or 27.5 year property. Using the straight line method,

Are You a Candidate for an IRS Audit? 

Benjamin Franklin is credited with observing, “In this world, nothing is certain but death and taxes.” To whom taxpayers answer in death is a question of debate, but there is no question that U.S. taxpayers must answer to the Internal

Accrual-Basis Taxpayers Lose the Use of Installment-Sales Tax Break 

Congress periodically has provided taxpayers with relief from the burden of current income tax liabilities generated in qualified transactions. Internal Revenue Code Section 1031, which governs like kind exchanges, is a familiar example of such a provision that allows taxpayers

Analyzing Local Tax Laws Can Save Property Owners Money 

Property taxes are a major expense for commercial property owners often second only to financing costs. Yet many owners resign themselves to rising property tax expenses, accepting their annual assessments as a cost of doing business. Because property values rise

5 Tax Tips for Developers and Investors 

In today&rsquo s economy it is essential for commercial real estate professionals to be aware of tax planning opportunities and the potential cash savings available to their companies. The following five tax tips may help real estate owners and developers

IRS Ruling May Free Up Corporate Real Estate Value 

In June, the Internal Revenue Service issued Revenue Ruling 2001 29, which states that a real estate investment trust might be party to a tax free separation of corporate owned real estate if certain conditions are met. This ruling comes

Improving Economics 

In recent years, many commercial real estate owners have become more familiar with the tax benefits of cost segregation. Due to cost and complexity, these studies were once only practical for large property owners. However, several boutique consulting companies have

The Home Advantage 

Any broker who has worked with Internal Revenue Code Section 1031 tax deferred exchange clients knows the frustration of trying to find a replacement property at the right price with the correct amount of debt before the 180 day window

IRS Provides Guidance on Using Tenancy-in-Common Interests in 1031 Exchanges 

On March 19, the Internal Revenue Service released Revenue Procedure 2002 22, which addresses the use of real property fractional ownership interests as replacement property in Internal Revenue Code Section 1031 tax deferred exchanges. Commercial real estate professionals commonly refer

Job Creation Act Increases Tax Savings for Commercial Property Owners 

In March, Congress passed the Job Creation and Worker Assistance Act of 2002. While the act contains provisions affecting many industries, it may offer commercial real estate property owners and companies specific tax saving benefits. Bonus Depreciation Provision Under the

Cost Segregation Helps Property Owners Maximize Depreciation Deductions 

While most property owners are aware of depreciation benefits, few take full advantage of them. It is rare that a building's entire cost is depreciated over the 39 year or 27.5 year life assigned to real property, but when owners

History in the Making 

By taking advantage of rehabilitation tax credits sprovided under Internal Revenue Code Section 47, owners or developers of historic properties can inject significant equity into their real estate projects to cover funding gaps, increase project amenities, or avoid expensive bridge

Give & Receive 

Is a non productive commercial real estate asset draining your client's cash flow? What can you do to help get rid of this white elephant while still adding value to your business? Many investors and corporate real estate professionals are

IRS Clarifies Reverse Exchange Qualifications 

The Internal Revenue Service's recent Revenue Procedure providing a safe harbor for reverse like kind exchanges adds clarity to what has been a hazy situation. In the past, many taxpayers have been hesitant to enter into reverse exchanges due to

New Tax Rules Offer REITs More Flexibility 

Significant new federal income tax rules governing real estate investment trusts will allow REITs to compete on a more level playing field. Without being penalized, REITs now may operate and maintain control of companies that provide valuable services to their

LLC Self-Employment Regulations Can Be Taxing 

The limited liability company has emerged as the ownership vehicle of choice for real estate in most jurisdictions. Because of federal "check the box" regulations — which allow newly formed entities to choose how they will be taxed for federal

Leasehold Interests Offer Alternative 1031 Exchange Options 

Typical Internal Revenue Code Section 1031 exchanges involve the sale of real estate and the acquisition of like kind replacement property. Basically, property held for investment is like kind with any other property held for investment. Fee title investment real

A PAT Answer 

Editor's note The November December 2006 issue of Commercial Investment Real Estate contains the article "A PAT Answer," which discusses private annuity trusts as a tax deferral strategy. After the magazine was printed, the U.S. Treasury Department issued proposed regulation

Proposed Rules Affect Reorganizations Involving Disregarded Entities 

Proposed Internal Revenue Service regulations could affect tax planning for mergers involving commercial real estate structures such as real estate investment trusts that use disregarded entities. The proposed regulations will limit the number of reorganizational structures available to corporate taxpayers

Reverse Exchanges Offer Investors Tax-Saving Benefits 

In an Internal Revenue Code Section 1031 exchange, when an investor must purchase the replacement property before the relinquished property can be sold, he should consider using a reverse exchange. In September 2000, the Internal Revenue Service clarified its position

QI Questions 

The unregulated Section 1031 exchange industry has suffered instances of misappropriated client funds, breaches of fiduciary duty, theft, and qualified intermediary bankruptcy filings. The task of qualifying a QI has become paramount for real estate investors and their advisers. Understanding

Proposed IRS Changes Ease Income Tax Regulations for Corporate Mergers 

The Internal Revenue Service recently reversed its course in a direction favorable to taxpayers regarding the proposed regulations on the income tax consequences of corporate mergers or consolidations involving entities that are disregarded for federal tax purposes. The regulations are

Cost-Segregation Solutions 

Cost segregation is an accepted Internal Revenue Service method of allocating the purchase price paid for real estate property. Generally, cost segregation enables owners to increase the depreciation deductions from their properties, providing substantial present value benefits by reducing income

Exchange Eligibility 

Joseph and Sara bought a three bedroom rental home that needed repair. After several months, they had completed the repairs and put the refurbished property on the market for substantially more than their original investment. Subsequently, a buyer put a