Showing posts with label Analysis. Show all posts
Showing posts with label Analysis. Show all posts
[edit30] Public relations professionals and corporate executives who are savvy about working with the media well understand the time-honored adage that one should “never get in a fight with a guy who buys printers ink by the barrel.”
“Printers ink,” of course, is extended in today’s environment to include airtime and pixels. In any case, the message is the same: Understand and respect the power of the media because they always will have the last word, leave the last impression, and have more staying power that you will.
Then, there’s the corollary adage that guides publicists for companies that thrive on public awareness and that one goes, “Publicity, even bad publicity, is better than no publicity at all.”
Learn more about bare-knuckle public fights with the media, here
“Printers ink,” of course, is extended in today’s environment to include airtime and pixels. In any case, the message is the same: Understand and respect the power of the media because they always will have the last word, leave the last impression, and have more staying power that you will.
Then, there’s the corollary adage that guides publicists for companies that thrive on public awareness and that one goes, “Publicity, even bad publicity, is better than no publicity at all.”
Learn more about bare-knuckle public fights with the media, here
Blogs gone bad
“ASTROTURFING” impression of being spontaneous "grassroots" behavior
Agriprocessors Inc. "Postville Voices" at http://postvillevoices.com/ The blog defended the hiring practices of the plant in the small Iowa community, rebutting allegations in a federal affidavit and railing against the media, government and a labor union.
Just when you thought it couldn't get worse, Tennesseans Against Teen Drinking at http://www.stopteendrinkingtn.org/ was promoted as a font of grassroots opposition to Internet sales of alcohol, but its Web site didn't mention that the group was backed by major alcohol lobbying firms that wanted to kill legislation allowing people to buy wine from other states.
And here's another example of Blog gone BAD. Consumers Organized for Reliable Electricity at http://www.illinoiscore.org/ claiming to be a coalition of individuals, businesses and organizations who support continued reliability in the electric industry ran a Web site warning about the consequences of an electricity rate freeze. It was later revealed the group was largely funded by Illinois electric utility company Commonwealth Edison.
Why is early communications important?
Attempting to education interested parties in a legislative environment will yield a myriad of results and costs.
Our results, based on a early start of proprietary solutions are predictable and sustainable over the duration of the project, based on demographic and psychographic data, acknowledgment of the variances, unique identities and random occurrences while respecting all stakeholders, activist, organizers, opinion leaders and community members ideas, perspectives, values and cultural traditions.
Of course, there is another option to starting a early communication program.
Attempting to education interested parties in a legislative environment will yield a myriad of results and costs.
Our results, based on a early start of proprietary solutions are predictable and sustainable over the duration of the project, based on demographic and psychographic data, acknowledgment of the variances, unique identities and random occurrences while respecting all stakeholders, activist, organizers, opinion leaders and community members ideas, perspectives, values and cultural traditions.
Of course, there is another option to starting a early communication program.
State halts tax-credit program...
California is cutting off applications for a tax credit that was designed to promote sales of new homes.The Franchise Tax Board said it would stop taking applications for the tax credits at midnight Thursday.The program offered $100 million in credits to about 10,000 consumers who buy homes that have never been occupied. The credit is equal to 5% of the purchase price or $10,000, whichever is less.
Buyers must occupy the homes for at least two years immediately after the purchase.The tax board expects to have received 12,000 applications.
But help is on the way …
AB 765 (Caballero) Income tax credit: purchase: principal residence.
Analysis
The Personal Income Tax Law authorizes a credit against the taxes imposed by that law in an amount equal to the lesser of 5% of the purchase price or $10,000 in the case of the purchase of a qualified principal residence on and after March 1, 2009, and before March 1, 2010, but not to exceed an aggregate limitation of $100,000,000 for all credits allowable.
Existing law requires a certification that the residence has never been occupied be provided to the Franchise Tax Board within one week of the sale of the qualified principal residence. This bill would allow a taxpayer to reserve a credit with the Franchise Tax Board and would require that the certification be provided to the Franchise Tax Board within one week of the close of escrow of the qualified principal residence. This bill contains other related provisions.
California is cutting off applications for a tax credit that was designed to promote sales of new homes.The Franchise Tax Board said it would stop taking applications for the tax credits at midnight Thursday.The program offered $100 million in credits to about 10,000 consumers who buy homes that have never been occupied. The credit is equal to 5% of the purchase price or $10,000, whichever is less.
Buyers must occupy the homes for at least two years immediately after the purchase.The tax board expects to have received 12,000 applications.
But help is on the way …
AB 765 (Caballero) Income tax credit: purchase: principal residence.
Analysis
The Personal Income Tax Law authorizes a credit against the taxes imposed by that law in an amount equal to the lesser of 5% of the purchase price or $10,000 in the case of the purchase of a qualified principal residence on and after March 1, 2009, and before March 1, 2010, but not to exceed an aggregate limitation of $100,000,000 for all credits allowable.
Existing law requires a certification that the residence has never been occupied be provided to the Franchise Tax Board within one week of the sale of the qualified principal residence. This bill would allow a taxpayer to reserve a credit with the Franchise Tax Board and would require that the certification be provided to the Franchise Tax Board within one week of the close of escrow of the qualified principal residence. This bill contains other related provisions.
Appraisals with little local knowledge
Complaints about lowballed appraisals — from builders, realty agents, consumers and mortgage companies — have erupted since May 1, when government-sponsored Fannie Mae and Freddie Mac put their new appraisal rules — known as the Home Valuation Code of Conduct — into effect nationwide. Critics charge the new system is fostering the use of appraisers willing to work for low fees — sometimes 50 percent below previous standards — and who are willing to conduct home appraisals far outside their typical areas of activity.
Under the code, appraisers are now routinely assigned by appraisal management companies rather than being selected by local mortgage companies or loan officers. The management companies pocket as much as 40 percent to 50 percent of the appraisal fee paid by the consumer.
Frustration with the new system made its way to Capitol Hill late last month.
Help is on the way …
Two congressmen — Travis W. Childers, D-Miss., and Gary G. Miller, R-Brea — have introduced legislation calling for an 18-month moratorium on the appraisal code. In a letter to Fannie Mae and Freddie Mac regulator James B. Lockhart, the National Association of Realtors also requested a moratorium and said the code is raising consumer costs, distorting property values and killing sales.
HR 3044, Moratorium on the Home Valuation Code of Conduct
Introduced 06.25.09
To impose an 18-month moratorium on the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency on December 23, 2008, shall have no force or effect.
Complaints about lowballed appraisals — from builders, realty agents, consumers and mortgage companies — have erupted since May 1, when government-sponsored Fannie Mae and Freddie Mac put their new appraisal rules — known as the Home Valuation Code of Conduct — into effect nationwide. Critics charge the new system is fostering the use of appraisers willing to work for low fees — sometimes 50 percent below previous standards — and who are willing to conduct home appraisals far outside their typical areas of activity.
Under the code, appraisers are now routinely assigned by appraisal management companies rather than being selected by local mortgage companies or loan officers. The management companies pocket as much as 40 percent to 50 percent of the appraisal fee paid by the consumer.
Frustration with the new system made its way to Capitol Hill late last month.
Help is on the way …
Two congressmen — Travis W. Childers, D-Miss., and Gary G. Miller, R-Brea — have introduced legislation calling for an 18-month moratorium on the appraisal code. In a letter to Fannie Mae and Freddie Mac regulator James B. Lockhart, the National Association of Realtors also requested a moratorium and said the code is raising consumer costs, distorting property values and killing sales.
HR 3044, Moratorium on the Home Valuation Code of Conduct
Introduced 06.25.09
To impose an 18-month moratorium on the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency on December 23, 2008, shall have no force or effect.
Leadership: Inventing the Future Now
In this unprecedented downturn, many leaders are focused only on survival, but rebounds belong to the ready ... essential paradox of leadership is the ability to do and dream at the same time.In normal times, the central challenge of leadership is balancing your organization's short- and long-term needs.
Everyone knows that.
You manage people, sales, and costs to hit immediate financial commitments, and you simultaneously invest in future projects to capture market trends and ensure a going concern.
As we've characterized it before, this essential paradox of leadership is the ability to do and dream at the same time.
Today, however, most managers are only doing.
They're fixated on the short term. We understand; they have tobe, for sheer survival. They're reducing staff, slashing costs, and squeezing productivity. They're sweating the details like never before and pushing people to find the innovative killer app that could save the organization.
Leaders need to exude positive energy. Define vision. Build great teams. Care. Reward. Teach. Decide. Innovate. Execute.
Inventing the future is one crucial definition of leadership ... more
Project going south? You need a Paladin.
Have Paladin will travel
Champion-for-Hire
A knight without armor in a savage land.
Ten Things You MUST Measure on Your Website
Investing more in your website without measuring how well it's working is simply gambling. You may as well be flipping a coin. How should you measure online success? Here are the ten things you must measure in order to validate your investment.
1. How Fast Is It?
2. How Often Does It Spit Up or Fall Over?
3. How Many People Show Up?
4. Which Are the Most Popular Pages?
5. Which Way Did They Go?
6. What Are They Looking For?
7. How Did They Get Here?
8. Did We Achieve Our Goals?
9. Are They Happy About Their Visit?
10. Are We Using Our Own Metrics?
Set goals. Make changes. Track results, Repeat. Those are the instructions for a bigger, better, faster, stronger website. Full Article
In the News
NAR Foresees Increase in Home, Condo Sales by Summer as a Result of Very Favorable Buying Conditions; Inventory is Almost Back to Normal
Washington, D.C.--Existing-home sales declined in January with some buyers waiting to see how details of the economic stimulus package would affect them, according to the National Association of Realtors. At the same time, inventories fell to a two-year low.
NLIHC Study Highlights Plight of Renters in Market Going Through High Number of Foreclosures
Washington, D.C.--While there has been ample coverage on foreclosures and how they are affecting buyers, the impact of foreclosed homes on renters is often ignored.
What's in the Stimulus for You?
Companies, industries, and individuals in the U.S. are wondering how the stimulus package will affect their bottom line, market, and wallet.
HUD Allocates More Than $10 Billion of Recovery Act Funding One Week After Bill Signing
1. How Fast Is It?
2. How Often Does It Spit Up or Fall Over?
3. How Many People Show Up?
4. Which Are the Most Popular Pages?
5. Which Way Did They Go?
6. What Are They Looking For?
7. How Did They Get Here?
8. Did We Achieve Our Goals?
9. Are They Happy About Their Visit?
10. Are We Using Our Own Metrics?
Set goals. Make changes. Track results, Repeat. Those are the instructions for a bigger, better, faster, stronger website. Full Article
In the News
NAR Foresees Increase in Home, Condo Sales by Summer as a Result of Very Favorable Buying Conditions; Inventory is Almost Back to Normal
Washington, D.C.--Existing-home sales declined in January with some buyers waiting to see how details of the economic stimulus package would affect them, according to the National Association of Realtors. At the same time, inventories fell to a two-year low.
NLIHC Study Highlights Plight of Renters in Market Going Through High Number of Foreclosures
Washington, D.C.--While there has been ample coverage on foreclosures and how they are affecting buyers, the impact of foreclosed homes on renters is often ignored.
What's in the Stimulus for You?
Companies, industries, and individuals in the U.S. are wondering how the stimulus package will affect their bottom line, market, and wallet.
HUD Allocates More Than $10 Billion of Recovery Act Funding One Week After Bill Signing
Housing Bill Won't 'Perform Miracles'
Senate Approves Measure, but Critics Say Law Unlikely to Prevent Most Foreclosures
By Lori Montgomery and Paul Kane Washington Post Staff Writers
Sunday, July 27, 2008; Page A01
Even as a huge bipartisan majority in the Senate voted yesterday to send a sprawling housing bill to the White House, economists, consumer advocates and other analysts said the package of programs for struggling homeowners and shaken mortgage lenders is unlikely to relieve the foreclosure crisis that is driving the nation toward recession.
"This is not the end of the housing crunch," said Jared Bernstein, a senior economist at the Economic Policy Institute. "Housing prices have already fallen 15 percent and they need to fall 10 percent more. This bill isn't going to change that equation."
By Lori Montgomery and Paul Kane Washington Post Staff Writers
Sunday, July 27, 2008; Page A01
Even as a huge bipartisan majority in the Senate voted yesterday to send a sprawling housing bill to the White House, economists, consumer advocates and other analysts said the package of programs for struggling homeowners and shaken mortgage lenders is unlikely to relieve the foreclosure crisis that is driving the nation toward recession.
"This is not the end of the housing crunch," said Jared Bernstein, a senior economist at the Economic Policy Institute. "Housing prices have already fallen 15 percent and they need to fall 10 percent more. This bill isn't going to change that equation."
Conversion Conundrum
By W. Michael Howlett
During the recent residential housing boom, many apartment building owners converted their rental units to condominiums. Though the market has cooled a bit over the last year and a half, interest in condo conversions remains strong. But with the current downward pressure on prices and the increased expectation of seller assistance with closing costs, property owners need to reexamine the potential income tax cost associated with these conversions.
Structuring a condo conversion properly can yield capital gains instead of ordinary income, subjecting earnings to the 15 percent federal capital gains tax rate as opposed to the 35 percent top ordinary tax rate. When successful, these savings can restore much of the financial luster that has been lost due to softening market conditions.
However, capital gains treatment is available as an option only in those instances where individuals own a property either directly or indirectly via a pass-through entity (i.e., partnership, limited liability company [LLC], or S corporation). It also is important to note from the outset, especially with apartments, that the portion of the capital gain attributable to the depreciation taken is subject to a 25 percent tax rate.
Avoiding dealer status is generally the key to achieving capital gains treatment for the sale of property. Section 1221 of the Internal Revenue Code disallows capital gains treatment for the sale of property held by a taxpayer primarily for sale to customers in the ordinary course of business. Whether property is being held for sale in the ordinary course of business is very dependent on facts and circumstances. Over the years, published Internal Revenue Service (IRS) rulings and decisions rendered by the courts have developed several factors used to make this determination.
As with any planning technique driven by facts and circumstances, there are favorable as well as unfavorable rulings to consider, but the orderly liquidation approach receives support from some very favorable case law. The approach relies on the owner’s ability to show that the conversion to condominiums and the sale of the units can be classified as the orderly liquidation of trade or business assets (i.e., rental property) and not a change of status to being in the trade or business of selling condominiums.
The Goldberg v. the United States case from the 1950s was one of the first to explore this theory. During World War II, rental units were built to provide housing for defense workers.
After the war, the rental market dropped off and housing sales boomed with the return of the troops. Due to this significant change in market conditions, the property owner decided that it would be better to sell off its rental portfolio and, in 1946, 90 houses were sold.
In fact, demand was so strong that no sales or marketing activities were undertaken, the houses were sold by word of mouth, and there were no real estate commissions paid. The court agreed with the taxpayer that the sales were not a result of changing the nature of their business from rental to sales, but a strategy to exit from the business of rental real estate in light of changing market conditions.
A case that dealt directly with apartments being converted to condominiums is the 1987 Gangi case. In Gangi, two individuals formed a partnership and constructed a 36-unit apartment building as part of their retirement planning. After eight years of renting, the business relationship between the partners had soured and the two decided to part ways. An analysis of the property showed that the value could be maximized by selling condo units versus selling the building intact. The partnership went through the conversion process, listed the units, and sold 26 of them within one year.
The IRS argued that the conversion had changed the intent from investment and rental to holding property for sale in the ordinary course of business. The court, however, held that the taxpayers had merely liquidated their investment, a business decision based on market conditions and a desire to part ways. The conversion was just a step taken to effect the liquidation.
What these cases and others show is that it is possible to have a high number of sales and not necessarily be viewed as having sales in the ordinary course of business. As with any fact-based argument, extreme care must be taken to apply these cases to a different situation.
Another avenue to explore that may yield the desired result of capital gains treatment is to sell the apartment building to another entity prior to converting it to condos. A sale at market value will trigger the gain in the entity that held the property for rental purposes, and that gain will be subject to capital gains rates. This technique has been used successfully in connection with raw land in both the Richard H. and Patsy J. Bramblett v. Commissioner and Timothy J. and Deborah A. Phelan v. Commissioner cases. The key to this strategy is that there must be a business reason, aside from tax planning, behind the sale. Two of the most common reasons would be the de-sire to limit liability exposure and the involvement of different partners in the sales activity.
In addition to the normal issues faced whenever contemplating a sale to another entity, such as arm’s-length dealing, avoiding agency relationships, and establishing a business purpose, the sale of an apartment building to an entity that will convert it to condos and market them for sale has one additional hurdle—Section 1239 of the Internal Revenue Code. Section 1239 recharacterizes what would normally be capital gains into ordinary income when a related party acquires depreciable property. However, there are two possible ways to deal with this rule.
The first is to plan to avoid the related party designation. In this case, if more than 50 percent of the ownership of the two entities is under common control, then they are considered related.
Ownership by various family members will be attributed to each family member. For example, if a father owns 40 percent and his son owns 20 percent, they are each deemed to own 60 percent.
This keeps owners from spreading ownership across various family members to avoid the related party rules. Therefore, 50 percent of the entity buying the apartment building must be unrelated to the existing ownership.
At first glance, it would appear that this hurdle would be insurmountable. Why give away 50 percent of the profit to a new partner in order to get a better tax rate? Though a new 50 percent partner would have to be found to participate in the condo sales entity, that new partner would not be getting 50 percent of the overall profits. Most of the profit would be triggered in the existing entity that owns the property. In selling the building to the condominium sales entity, the price would normally capture most of the profit back in the rental entity.
In addition to how the pricing is set, another way to deal with the related party rules is to look more closely at who is considered related. Some family relations (e.g., stepparents and in-laws) fall outside the rule’s definition, so it may be possible to keep the ownership within the expanded family and not trigger the related party rules.
Another way to deal with Section 1239 is to look at whether the property fits the definition of depreciable property. A literal interpretation of Section 1239 implies that the property is depreciable in the hands of the acquirer. Since the entity acquiring the property intends to convert it to condo units and sell them, it can be argued that the acquiring entity is a dealer with respect to the condominiums. Therefore, the condos are dealer property and are not depreciable.
With this last approach, it is very important to be very clear that the acquiring entity is a property dealer. By choosing this approach, the related party rules under 1239 are rendered moot, making it possible to use identical or nearly identical ownership to the selling entity. While this strategy is consistent with the wording of Section 1239, there is no case law at present to either support or deny this position.
A conversion from apartments to condominiums does not automatically taint what would have been a capital gain and convert it to ordinary income, but preserving capital gains status cannot be assumed. Several avenues do exist that can be employed to structure your conversion either to preserve capital gains treatment or to claim most of the profits as capital gains. Each approach has its own strengths and pitfalls, so proper planning with a certified public accountant is essential in order to maximize the potential tax savings.
W. Michael Howlett is a tax partner with Cherry, Bekaert & Holland, LLP, and a member of the firm’s Real Estate and Construction Industry Group. He is licensed as a certified public accountant in Virginia.
During the recent residential housing boom, many apartment building owners converted their rental units to condominiums. Though the market has cooled a bit over the last year and a half, interest in condo conversions remains strong. But with the current downward pressure on prices and the increased expectation of seller assistance with closing costs, property owners need to reexamine the potential income tax cost associated with these conversions.
Structuring a condo conversion properly can yield capital gains instead of ordinary income, subjecting earnings to the 15 percent federal capital gains tax rate as opposed to the 35 percent top ordinary tax rate. When successful, these savings can restore much of the financial luster that has been lost due to softening market conditions.
However, capital gains treatment is available as an option only in those instances where individuals own a property either directly or indirectly via a pass-through entity (i.e., partnership, limited liability company [LLC], or S corporation). It also is important to note from the outset, especially with apartments, that the portion of the capital gain attributable to the depreciation taken is subject to a 25 percent tax rate.
Avoiding dealer status is generally the key to achieving capital gains treatment for the sale of property. Section 1221 of the Internal Revenue Code disallows capital gains treatment for the sale of property held by a taxpayer primarily for sale to customers in the ordinary course of business. Whether property is being held for sale in the ordinary course of business is very dependent on facts and circumstances. Over the years, published Internal Revenue Service (IRS) rulings and decisions rendered by the courts have developed several factors used to make this determination.
They are as follows:
- the frequency, number, and substantiality of sales;
- the taxpayer’s intent or purpose for the purchase of the property;
- sales and marketing activities undertaken by the taxpayer either directly or through the use of brokers or agents; and
- the extent of subdividing and de-veloping the property to increase its value.
As with any planning technique driven by facts and circumstances, there are favorable as well as unfavorable rulings to consider, but the orderly liquidation approach receives support from some very favorable case law. The approach relies on the owner’s ability to show that the conversion to condominiums and the sale of the units can be classified as the orderly liquidation of trade or business assets (i.e., rental property) and not a change of status to being in the trade or business of selling condominiums.
The Goldberg v. the United States case from the 1950s was one of the first to explore this theory. During World War II, rental units were built to provide housing for defense workers.
After the war, the rental market dropped off and housing sales boomed with the return of the troops. Due to this significant change in market conditions, the property owner decided that it would be better to sell off its rental portfolio and, in 1946, 90 houses were sold.
In fact, demand was so strong that no sales or marketing activities were undertaken, the houses were sold by word of mouth, and there were no real estate commissions paid. The court agreed with the taxpayer that the sales were not a result of changing the nature of their business from rental to sales, but a strategy to exit from the business of rental real estate in light of changing market conditions.
A case that dealt directly with apartments being converted to condominiums is the 1987 Gangi case. In Gangi, two individuals formed a partnership and constructed a 36-unit apartment building as part of their retirement planning. After eight years of renting, the business relationship between the partners had soured and the two decided to part ways. An analysis of the property showed that the value could be maximized by selling condo units versus selling the building intact. The partnership went through the conversion process, listed the units, and sold 26 of them within one year.
The IRS argued that the conversion had changed the intent from investment and rental to holding property for sale in the ordinary course of business. The court, however, held that the taxpayers had merely liquidated their investment, a business decision based on market conditions and a desire to part ways. The conversion was just a step taken to effect the liquidation.
What these cases and others show is that it is possible to have a high number of sales and not necessarily be viewed as having sales in the ordinary course of business. As with any fact-based argument, extreme care must be taken to apply these cases to a different situation.
Another avenue to explore that may yield the desired result of capital gains treatment is to sell the apartment building to another entity prior to converting it to condos. A sale at market value will trigger the gain in the entity that held the property for rental purposes, and that gain will be subject to capital gains rates. This technique has been used successfully in connection with raw land in both the Richard H. and Patsy J. Bramblett v. Commissioner and Timothy J. and Deborah A. Phelan v. Commissioner cases. The key to this strategy is that there must be a business reason, aside from tax planning, behind the sale. Two of the most common reasons would be the de-sire to limit liability exposure and the involvement of different partners in the sales activity.
In addition to the normal issues faced whenever contemplating a sale to another entity, such as arm’s-length dealing, avoiding agency relationships, and establishing a business purpose, the sale of an apartment building to an entity that will convert it to condos and market them for sale has one additional hurdle—Section 1239 of the Internal Revenue Code. Section 1239 recharacterizes what would normally be capital gains into ordinary income when a related party acquires depreciable property. However, there are two possible ways to deal with this rule.
The first is to plan to avoid the related party designation. In this case, if more than 50 percent of the ownership of the two entities is under common control, then they are considered related.
Ownership by various family members will be attributed to each family member. For example, if a father owns 40 percent and his son owns 20 percent, they are each deemed to own 60 percent.
This keeps owners from spreading ownership across various family members to avoid the related party rules. Therefore, 50 percent of the entity buying the apartment building must be unrelated to the existing ownership.
At first glance, it would appear that this hurdle would be insurmountable. Why give away 50 percent of the profit to a new partner in order to get a better tax rate? Though a new 50 percent partner would have to be found to participate in the condo sales entity, that new partner would not be getting 50 percent of the overall profits. Most of the profit would be triggered in the existing entity that owns the property. In selling the building to the condominium sales entity, the price would normally capture most of the profit back in the rental entity.
In addition to how the pricing is set, another way to deal with the related party rules is to look more closely at who is considered related. Some family relations (e.g., stepparents and in-laws) fall outside the rule’s definition, so it may be possible to keep the ownership within the expanded family and not trigger the related party rules.
Another way to deal with Section 1239 is to look at whether the property fits the definition of depreciable property. A literal interpretation of Section 1239 implies that the property is depreciable in the hands of the acquirer. Since the entity acquiring the property intends to convert it to condo units and sell them, it can be argued that the acquiring entity is a dealer with respect to the condominiums. Therefore, the condos are dealer property and are not depreciable.
With this last approach, it is very important to be very clear that the acquiring entity is a property dealer. By choosing this approach, the related party rules under 1239 are rendered moot, making it possible to use identical or nearly identical ownership to the selling entity. While this strategy is consistent with the wording of Section 1239, there is no case law at present to either support or deny this position.
A conversion from apartments to condominiums does not automatically taint what would have been a capital gain and convert it to ordinary income, but preserving capital gains status cannot be assumed. Several avenues do exist that can be employed to structure your conversion either to preserve capital gains treatment or to claim most of the profits as capital gains. Each approach has its own strengths and pitfalls, so proper planning with a certified public accountant is essential in order to maximize the potential tax savings.
W. Michael Howlett is a tax partner with Cherry, Bekaert & Holland, LLP, and a member of the firm’s Real Estate and Construction Industry Group. He is licensed as a certified public accountant in Virginia.
Affordability disaster wrapped in blue ribbon
OAKLAND'S BLUE Ribbon Housing Commission recommendations — released in a 105-page report after months of deliberation — would, if implemented, be a disaster for housing affordability. They ignore the laws of economics, common sense and even the most important findings of the commission's own consultant.
I was the only economist on the commission. -more-
I was the only economist on the commission. -more-
Public Relations-Real Estate Industry
The intent of this blog is to provide a temporary web presence while the official Amstutz Associates website undergoes construction. Enjoy!
Amstutz Associates (brief)
We are consultants and advocates on every phase of development including the initial inception, planning, entitlement and construction through sales and marketing.
Our Boutique Philosophy allows us to concentrate our business development efforts in developing partnerships with a limited number of clients, while controlling our growth to maintain a small and personable culture that anticipate our client’s needs.
We partner with successful consulting firms with demonstrated expertise and carefully select clients that are committed to winning solutions.
We use models developed for opportunities to address challenged areas distressed by market conditions, poverty, crime, unemployment, inadequate infrastructure, lack of retail and insufficient housing.
Our Services:
Community Activities: Outreach, Education, Research and Analysis
Monitoring: Internet, Neighborhood/Community, Project
Consensus Building
Media Relations
Project Advocacy
Government Affairs
Strategy Development
Print Collateral: Advertising, Brochures, Newsletters, Press Releases
Survey/Polls
and other supportive services
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