In Evans v Comm’r, the Tax Court disallows an ordinary loss from a foreclosure sale
The Tax Court released a few days ago Evans v Comm’r, T.C. Memo. 2016-7. This case offers a continued illustration of the perils of “facts and circumstances” Tax Court litigation. “Facts and circumstances” is a term of art in tax law that pops its head in almost every other page of the Internal Revenue Code. One of the few most topical for the investment industry instances of “facts and circumstances” include the “trader v. investor” issue, the “trade or business” issue, and last but not least the “dealer v....
January 13, 2016 read more
Boree v. Comr: Tax Planning Left on the Back Burner, Sometimes it Comes to Bite You
I see this over and over. The reality is that to business people, particularly in M&A, tax is an afterthought. This is more so true for smaller investment funds and investors. Larger entities with more extensive experience, while dreading dealing with tax, at least know what’s at stake. In ordinary income v. capital gain differential situation with penalty exposure, a mishap easily would bite over 20-30% into your profitability. That’s a large percentage! This is what Mr. Boree is learning from experience right now. I am talking about the newest real estate case of Boree v. Comr....
May 15, 2014 read more
Failed Related Party Real Estate Installment Sale in Cordell D. Pool v. Com’r
Real estate investors desire capital gains treatment. Actually receiving such capital gains treatment, however, proves to be difficult particularly when development activities are afoot. The Cordell D. Pool case (T.C. Memo. 2014-3) that came out yesterday presents a cautionary tale to opportunistic private real estate funds that have their hands entrenched in development activities, whether through related, or third-party developers. The facts of the case involve a relatively typical related party installment sale transaction whereby the putative investor purchases land and then sells...
January 09, 2014 read more