Emerging issues in UPREIT transactions

Article Abstract:

IRS Letter Ruling 9829027 provides guidance under IRC sections 707 and 721 regarding partnership taxation which is useful for tax issues concerning real estate investment trusts (REITs). Provisions of the section 1.707 regulations were relied upon in the ruling which determined whether REIT-related money distributions were to be treated as partnership contributions or as sale or exchange transactions. Disguised sale treatment was not applicable to the transactions concerned, which may provide some tax planning leeway for the REIT industry.

Finance, Investments, Real estate industry, Real estate, Real property

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Recent rulings favorable to umbrella partnerships

Article Abstract:

Several favorable IRS private letter rulings provide information regarding IRS treatment of transactions and tax accounting concerning real estate investment trust umbrella partnerships. Letter Ruling 9815001 contains treatment of nonrecourse debt issued in light of IRC section 704(c) and 465(b)(6). The IRS in Letter Ruling (Technical Advise Memorandum) 9822002 treated a partnership as an aggregate of its partners in a situation involving conversion of partnership interests into stock for purposes of section 1032.

Partnerships, Laws, regulations and rules, Accounting and auditing, Partnership, Debt

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Debt reductions in connection with the disposition of property

Article Abstract:

The Tax Court decided in Briarpark Ltd. v. Commissioner that discharge of a nonrecourse debt attached to real property results in recognized gain includable in the total realized amount on the property's disposition. The court held that cancellation of indebtedness income did not result from such a discharge. Some factual partnership situations differing from Briarpark may make beneficial tax use of IRS regulation 1.1274-5(b)(1).

Extinguishment of debts, Debt cancellation, Cases, Nonrecourse debt

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