Strategy Overview • Addresses how deferred capital gains and depreciation recapture are ultimately resolved within long-term real estate plans• Most often applies to highly appreciated assets held through multiple tax deferral strategies• Focuses on aligning investment decisions with estate and generational outcomes• Primary objective is maximizing after-tax wealth by coordinating lifetime strategy with post-death repositioning…
• Internal Revenue Code §168 governs depreciation methods applicable to tangible property, including bonus depreciation.• Bonus depreciation allows eligible property to be depreciated more rapidly than standard depreciation schedules.• Accelerated depreciation increases near-term deductions but can increase future tax exposure under §1250.• §168 plays a central role in cost segregation studies and long-term real estate…
• A Dynasty Trust is an irrevocable trust designed to hold and transfer wealth across multiple generations.• Properly structured dynasty trusts can minimize or eliminate estate and generation-skipping transfer (GST) taxes over time.• The trust allows assets to compound for beneficiaries without repeated transfer taxation at each generation.• Dynasty Trusts are commonly used by high-net-worth…
What It Is A §1031 exchange, governed by Internal Revenue Code §1031(a)(1), permits the deferral of federal capital gains and depreciation recapture taxes when an investor sells qualifying investment or business real estate and reinvests the proceeds into other like-kind real property. Exchanges may be structured as simultaneous exchanges, delayed (forward) exchanges under Treasury Regulations…
• Internal Revenue Code §368 provides for tax-deferred treatment of certain qualifying corporate reorganizations.• §368 allows businesses to restructure ownership, assets, or capital structure without immediate recognition of gain.• Reorganizations must satisfy strict statutory definitions and continuity requirements to qualify for nonrecognition treatment.• §368 is commonly used in mergers, acquisitions, and internal restructurings involving real…
• Internal Revenue Code §1015 governs the determination of tax basis for property acquired by gift.• In most cases, the recipient of a gift assumes the donor’s adjusted basis rather than receiving a step-up in value.• Carryover basis preserves built-in capital gains and depreciation recapture for future disposition.• §1015 plays a critical role in evaluating…
Strategy Overview • Addresses the realignment of legal entities and partnership structures as portfolios mature• Most often applies to multi-asset owners, legacy partnerships, and evolving ownership groups• Focuses on improving governance, tax efficiency, and long-term flexibility• Primary objective is simplifying complexity while preserving economic intent and continuity Entity and partnership restructuring is less about changing…
Strategy Overview • Addresses the challenge of exiting highly appreciated real estate with significant built-in capital gains and depreciation recapture• Most often applies to long-held commercial assets and legacy partnership interests• Requires coordination across tax planning, ownership structures, and estate considerations• Primary objective is preserving capital, income continuity, and long-term flexibility rather than forcing a…
• Internal Revenue Code §453 allows sellers to recognize capital gains over time as payments are received rather than entirely in the year of sale.• The installment method is commonly used when sellers provide financing or receive deferred payments from a buyer.• Taxable gain is generally recognized proportionally with each principal payment received.• §453 may…
• Internal Revenue Code §733 governs how a partner’s basis is adjusted when distributions are received from a partnership.• Distributions generally reduce a partner’s outside basis rather than triggering immediate taxable gain.• Taxable gain is recognized only when cash distributions exceed a partner’s adjusted basis.• §733 is most relevant in partnership, DST, and UPREIT structures…