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The real estate investors’ guide to getting past Uncle Sam. How the industry has turned tax avoidance into a legal art form.

“Property owners who want to benefit from an asset’s increase in market value have two options: They can sell or they can refinance. If they sell (without doing a 1031 exchange), they pay capital gains tax on any profit. Refinancing, however, doesn’t typically count as a “realization event” in the eyes of the IRS, explained tax attorney David Spencer — meaning there is no profit to be taxed.”
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Tax Disclosure Boilerplate and the Confidentiality Conundrum

Tax practitioners have liberally applied tax sunshine language to a variety of contracts to avail their clients of the safe harbor provided by the registration, reporting, and list-keeping regulations. According to Spencer, tax sunshine language may pose significant dangers to the confidentiality of information, such as specific pricing information or the existence of negotiations between named parties, that clients intended to remain confidential. The regulations unfortunately do not endorse an explicit carveout of this type of information from tax sunshine language, although arguments may be made that such a carveout has no substantive effect on the existence of conditions of confidentiality. Spencer suggests that Treasury and the IRS could focus the regulations without reducing their effectiveness by allowing such a carveout and by making other modifications.
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Accounting for Tax Consequences

Businesses, both broadly and specifically, view taxes as one (albeit important) part of overall decision making. Financial accounting often is, for better or worse, the language of corporate decision making, and thus the manner in which tax consequences affect a profit & loss statement or balance sheet plays an important role in how tax decisions are ultimately made. The goal of this course will be to familiarize the student with the accounting rules applicable to tax events and consequences, and then illustrate the application of those rules through an in-depth analysis of several situations in which taxes and the accounting for taxes determines the actions taken by business enterprises. The course does not require a background in financial accounting (the first few courses consist of an overview introduction to GAAP).
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