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Telecommunications Services May Be Good for REITs 

The rapid advancement of telecommunications technology has made it necessary for property owners, including real estate investment trusts, to upgrade their properties with voice, video, and data communications systems to help attract new tenants. This trend particularly has been menacing

Creative Planning May Reduce State Taxes 

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 

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

Tax Nothings Are Something in Like-Kind Exchanges 

Creative real estate investors have more options in structuring complex like kind exchanges through a recent Internal Revenue Service (IRS) ruling on "tax nothings," or federally untaxed single member limited liability companies (LLCs) that elect not to be treated as

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

Commercial Developers May Gain Basis Allocation Advantage 

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

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

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

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

IRS Ruling on Passive Activity May Offer Tax Break Possibilities 

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

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

Partnership Abandonment May Not Be a Capital Offense 

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