- Clarifying Entity Classification Conversions
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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
- Commercial Developers May Gain Basis Allocation Advantage
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A recent U.S. Tax Court decision may provide commercial developers with another creative tax planning tool, based upon a long standing basis allocation rule available to residential developers. In a series of judicial decisions dating back to the 1950s, courts
- Cost-Segregation Solutions
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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
- Creative Planning May Reduce State Taxes
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State and local taxes represent an increasing portion of the overall tax cost of any real estate transaction. As more businesses become national and even global, state and local tax planning become more crucial. In early March, the New Jersey
- Constructive Receipt: Timing Is Everything
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A fundamental principle in efficient tax planning is the contemplation of the timing of income and loss events. While this principle seems relatively elementary, determining when a tax item actually becomes taxable can be more complex. Statutory Background IRC Section
- The Home Advantage
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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
- Exchange With Caution
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Congress addressed what it considered to be abusive sale leaseback transactions involving tax exempt entities, known as sale in, lease out, or SILO transactions, by creating Internal Revenue Code Section 470 as part of the American Jobs Creation Act of
- Reverse Exchanges Offer Investors Tax-Saving Benefits
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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
- Review Tax Changes to Maximize Employee Benefit Plans
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In light of changing legislation, commercial real estate companies should review their employee benefits plans. The Economic Growth and Tax Relief Reconciliation Act of 2001 contained numerous changes to fundamental retirement plan rules for small businesses. Effective for plan years
- Review the Fundamentals of Section 1031 Like-Kind Exchanges
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Taxpayers planning to sell, purchase, or construct real property should review the possibility of conducting an Internal Revenue Code Section 1031 like kind exchange to defer the incurrence of federal and general state income taxes on the capital gain. To
- Retail Tenants Get Tax Break for Construction Allowances
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For years, federal income tax law was unclear about how to treat payments that owners or landlords make to tenants for construction allowances to improve leased retail space. Last September, the Internal Revenue Service adopted final regulations on previously created
- Tax Squeeze
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The feeble transaction market is pushing commercial real estate professionals to expand their scope to include non transaction services that clients need in today&rsquo s shaky economy. Tax consultation, particularly property valuation protests, is a recession resistant service that is
- Taming Your Taxes
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While property taxes are one of the most significant expenses affecting a property's bottom line, many owners don't take advantage of available strategies to reduce them. Especially in a slow economy, market and property specific factors should be considered to
- Partnerships Can Use These Methods to Protect 1031 Gains
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Property owners wishing to dispose of appreciated assets often use Internal Revenue Code Section 1031 exchanges to defer capital gains taxes. However, partnerships wishing to execute exchanges face unique challenges, particularly when individuals in the partnership have diverging investment goals
- Proposed Rules Affect Reorganizations Involving Disregarded Entities
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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
- QI Questions
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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
- QER Expenditures May Provide Tax Breaks for Brownfield Redevelopers
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When commercial real estate professionals advise their clients on redeveloping brownfield properties, they should consider the tax implications. The treatment of costs incurred to remediate environmentally damaged sites might affect a project's economic feasibility. Remediation Cost Considerations The time during
- Proposed IRS Changes Ease Income Tax Regulations for Corporate Mergers
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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
- QRPBI Exception Calculations
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Two calculations must be applied that limit the amount of excludable cancellation of debt income when utilizing the qualified real property business indebtedness exception to COD income. While these calculations are complex and not comprehensively covered in this article, this
- New Tax Rules Offer REITs More Flexibility
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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
- Partnership Abandonment May Not Be a Capital Offense
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When selling real property, individual taxpayers generally prefer to declare the profit as a capital gain rather than ordinary income because of the lower marginal rate on capital gains. But in the case of losses, this logic often is reversed
- Exchange Eligibility
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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
- Give & Receive
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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
- Estate Tax Repeal Affects Property Disposition by Beneficiaries
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On June 7, President Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001, a $1.35 trillion tax cut plan. Among other things, this act provides for a phased in repeal of the estate tax with a full
- Improving Economics
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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