Special Problems in Real Estate Taxation

Upon successful completion of this course, participants will be able to:

Chapter 1

• Determine what constitutes building an estate, preserving wealth, and distributing assets in the context of financial fundamentals and tax planning elements.
• Identify types of income, from a financial and tax perspective, to be budgeted into cash so that income-producing assets can be acquired and managed for an effective investment plan.
• Recognize the types of fringe benefits that employers can provide to employees tax-free.

Chapter 2

• Recognize the importance of the installment method, select requirements set forth in §453 to determine whether the installment method may be used, and specify terminology associated with the installment method.
• Determine the impact of §483 (imputed interest rules) and §§1271 through 1274 (original issue discount rules) on installment sales.
• Specify the rules associated with real property sales and casual sales of personal property, the provisions associated with the related party rules of §453, and the exceptions that override basic installment planning.
• Identify how the contingent payment sales have changed due to the Installment Sales Revision Act of 1980, specify other contingent payment rules, and determine circumstances when dispositions of installment obligations occur.

Chapter 3

• Identify mortgage financing specifying advantages and disadvantages and determine how to amortize mortgage costs.
• Determine interest using Deputy v. DuPont, 308 U.S. 488, and specify key aspects of personal interest, investment interest, prepaid interest, and points.
• Recognize interest-free or below-market interest rate loans and how they relate to lenders’ interest income and borrowers’ interest paid under §7872.
• Identify long-term financing techniques and characteristics of a shared appreciation mortgage and their impact on lenders and borrowers.
• Specify tests that determine what constitutes interest and their effect on the tax treatments of equity participation, and identify equity participation debt.

Chapter 4

• Identify the elements of the $500,000 home sale exclusion, how to apply it, and specify safe harbor regulations associated with §121.
• Determine the advantages of §1031 exchanges, their requirements, and the types of true exchanges including delayed exchanges.
• Recognize the regulations for related party exchanges and the disallowance of personal property exchanges.
• Identify the provisions of the regulations for delayed (deferred) exchanges, specify safe harbors that can be used without risk of actual or constructive receipt, and determine what partnership interests may be exchanged under §1031 and those that may not.

Chapter 5

• Identify condemnations and involuntary conversions under §1033 recognizing sales under threat of condemnation and their impact on the recognition of gain or loss.
• Specify variables of a condemnation award including their effect on income and determine a taxpayer’s net condemnation award.
• Identify severance damages and recognize the complexity of their treatment.
• Cite the §1033 gain postponement choices and specify the related party rule.

Chapter 6

• Identify the basic types of income and the “buckets” of income and loss under §469 that can control what a taxpayer can deduct against other income.
• Recognize the suspension of disallowed losses and how it relates to passive losses, and specify transfers deemed to be fully taxable dispositions.
• Identify taxpayers subject to §469 and whether clients fall into one of the categories of taxpayers who are subject to the passive loss rules.
• Specify the effects of the §469 limitations on credits and losses from passive activities and determine how to qualify for material participation.
• Identify an activity and its passive activity loss, determine the treatment of carryover suspended losses, and recognize the tax treatment property formerly used in a nonpassive Activity.
• Determine passive activity credits and recognize the benefits and uses of the passive activity audit guide.

Chapter 7

• Recognize the requirements of the Foreign Investment in Real Property Tax Act of 1980, and identify interests in foreign

Chapter 8

• Cite reasons for establishing a REIT that generates annual income that is tax-sheltered and recognize the development of the self-liquidating REIT.
• Identify how management operates a REIT and specify requirements with regard to organization, operation, assets, and income.