Remember adjusting an oddly shaped TV antenna to improve reception on channels higher than 13? If you do, the memory is likely distant.
Congress noticed a few years ago and mandated that the Federal Communications Commission (the “FCC”) repurpose Ultra High Frequency (a.k.a. “UHF”) broadcast spectrum that carried some of those channels, to create more room for mobile broadband. The FCC gave licensees holding rights to the repurposed spectrum the option of selling their existing licenses or accepting inferior rights.
One licensee wanted to sell and reinvest in other rights of their choosing without paying capital gains tax on the sale. The licensee asked the Internal Revenue Service to rule that Internal Revenue Code Section 1033, the same provision that allows tax-free reinvestment when the government takes real estate by condemnation, applies to allow tax-free reinvestment of the UHF license rights. The IRS agreed, even though the taxpayer technically was not forced to sell. The IRS ruled that the option to accept other rights did not prevent Section 1033 tax deferral because the inferiority of the substitute rights the FCC offered justified ignoring that alternative. The IRS found the transaction amounted to a forced sale and therefore qualified for tax deferral.
If the government gives you a “false” choice between selling your property or accepting an inferior alternative, this ruling explains how to defer tax on the sale if you reinvest the proceeds. But we do not recommend trying this strategy with your old UHF TV antenna. You probably won’t recognize gain to defer anyway.
The Internal Revenue Code prescribes minimum imputed interest rates and time-value-of-money factors applicable to certain loan transactions and estate planning techniques. These rates are tied formulaically to market interest rates. The Internal Revenue Service updates these rates monthly.
These are commonly applicable rates in effect for February 2017:
Short Term AFR (Loans with Terms <= 3 Years) 1.04%
Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years) 2.10%
Long Term AFR (Loans with Terms >9 Years) 2.81%
7520 Rate (Used in many estate planning vehicles) 2.6%
Williams Parker is pleased to serve as the Annual Sponsor of the Association for Corporate Growth’s Sarasota programming. On February 2, ACG is hosting “Succession Planning II – How Did Your Plan Really Work?” at the Sarasota Yacht Club.
The panel, moderated by Williams Parker attorney Robert W. Benjamin, features Taylor T. Collins and James B. Tollerton of PBI, as well as founder and CEO of Miles Partnership, Roger Miles.
In October, ACG presented a panel on how and when to successfully exit your business. At the upcoming seminar, the panel of business owners who have successfully implemented a succession plan will discuss the following:
What went right?
Were there any unexpected events or consequences and how did you deal with them?
What advice would you give a business owner planning for ownership succession?
What were the challenges of the transition from the perspective of the successor to the business?
Thursday, February 2, 2017
5:30 to 8:00 p.m. (Cocktails/appetizers 5:30 – 6:30; Panel to begin at 6:30)
Sarasota Yacht Club
1100 John Ringling Blvd. Sarasota, FL 34236
Please contact us if you are interested in attending.