- Are You a Candidate for an IRS Audit?
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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
- Analyzing Local Tax Laws Can Save Property Owners Money
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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
- Accrual-Basis Taxpayers Lose the Use of Installment-Sales Tax Break
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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
- 5 Tax Tips for Developers and Investors
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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
- The Benefits of Cost-Segregation Studies
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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,
- 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
- 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
- IRS Guides Taxpayers on Repeal of Installment-Sales Repeal
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The Internal Revenue Service has clarified the implications of Congress' recent change of heart about repealing the installment sales method for accrual basis taxpayers. Signed in December 2000, the Installment Tax Correction Act repeals former Internal Revenue Code Section 453(a)(2),
- IRS Ruling May Free Up Corporate Real Estate Value
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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
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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
- IRS Provides Guidance on Using Tenancy-in-Common Interests in 1031 Exchanges
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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
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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
- IRS Clarifies Reverse Exchange Qualifications
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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
- LLC Self-Employment Regulations Can Be Taxing
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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
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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
- 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
- IRS Ruling on Passive Activity May Offer Tax Break Possibilities
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Taxpayers often consider depreciable real estate a viable investment vehicle because of its potential for capital appreciation and cash flow and its inherent qualities as a tax shelter. From a purely tax perspective, depreciable real estate historically provides a positive
- S Corporation Shareholders Benefit From Supreme Court Ruling
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The U.S. Supreme Court recently ruled in favor of taxpayers in a potential windfall decision for shareholders of S corporations. Many small companies, including real estate related ventures, elect to be treated as S corporations with the Internal Revenue Service.
- 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
- 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
- Cost Segregation Helps Property Owners Maximize Depreciation Deductions
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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
- 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