Author Archives: E. John Wagner, II

Applicable Federal Rates for July 2017

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 July 2017:

Short Term AFR (Loans with Terms <= 3 Years)                                          1.22%

Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years)                    1.89%

Long Term AFR (Loans with Terms >9 Years)                                              2.60%

7520 Rate (Used in many estate planning vehicles)                                     2.2%

Here is a link to the complete list of rates: https://www.irs.gov/pub/irs-drop/rr-17-14.pdf

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

Applicable Federal Rates for June 2017

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 June 2017:

Short Term AFR (Loans with Terms <= 3 Years)                                          1.18%

Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years)                    1.96%

Long Term AFR (Loans with Terms >9 Years)                                              2.68%

7520 Rate (Used in many estate planning vehicles)                                     2.4%

Here is a link to the complete list of rates: https://www.irs.gov/pub/irs-drop/rr-17-12.pdf

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

Why You Probably Can Ignore President Trump’s Tax Proposal for Now

On Wednesday, President Trump released his tax proposal.

Take a look. It won’t take long. That’s it. One page of bullet points.

For comparison, now look at this discussion of then-candidate Trump’s tax proposals during the presidential election campaign last fall.

Anything new? Not really.

While restating campaign promises may initiate the legislative discussion, doing so tells us little about what might actually appear in legislation hammered out by competing factions in Congress.

So whether you are excited or disappointed about lower corporate tax rates or estate tax repeal, we suggest re-averting your attention to other matters for the time being.

To that end, this missive also ends without further elaboration.

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

Applicable Federal Rates for May 2017

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 May 2017:

Short Term AFR (Loans with Terms <= 3 Years)                                          1.15%

Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years)                    2.04%

Long Term AFR (Loans with Terms >9 Years)                                              2.75%

7520 Rate (Used in many estate planning vehicles)                                     2.4%

Here is a link to the complete list of rates: https://www.irs.gov/pub/irs-drop/rr-17-11.pdf

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

Applicable Federal Rates for April 2017

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 April 2017:

Short Term AFR (Loans with Terms <= 3 Years)                                          1.11%

Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years)                    2.12%

Long Term AFR (Loans with Terms >9 Years)                                              2.82%

7520 Rate (Used in many estate planning vehicles)                                     2.6%

Here is a link to the complete list of rates: https://www.irs.gov/pub/irs-drop/rr-17-08.pdf

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

How to Sell Raw Land or Air Rights to a Real Estate Developer and Receive Back Finished Condominiums Tax-Free

When a land owner sells to a condominium developer, both the land owner and the developer have motivations favoring the developer “paying“ the land owner with finished condominium units instead of cash. Such a transaction reduces the developer’s up-front cash investment while sometimes enabling the developer to use all the land as collateral for senior financing. While more risky than a cash sale, the seller may receive condominium units more valuable than the cash price the seller could realize.

What gets in the way of these transactions?  Often, the seller balks because the seller lacks the cash to pay capital gains tax on the value of the condominium units received back. To alleviate that problem, transactions are sometimes structured as partnership “mixing bowl” co-investments and redemptions, or as combination ground lease-Internal Revenue Code Section 1031 exchange transactions. These structures may defer capital gains tax; however, they also are subject to restrictions and frequently sufficiently convoluted so as to interfere with the developer’s business structure or senior financing.

In some circumstances an alternative sale structure offers a better solution. Under the alternative, the seller takes the positon that the receipt of finished condominiums is exempt from capital gains tax under Internal Revenue Code Section 1038. These same rules exempt a seller from tax when the seller forecloses on a delinquent purchaser on traditional seller financing (in tax parlance, an installment note). Unlike the mixing bowl or combination ground lease-Internal Revenue Code Section 1031 exchange structures, the Section 1038 structure more closely resembles traditional seller financing, making it potentially more palatable to senior development lenders and more simple for all the parties to understand and implement.

To learn more—including understanding scenarios involving air rights rather than raw land—follow this link to materials summarizing all these potential structures originally presented in an American Bar Association Section of Taxation webinar.

Please note that we post these materials with permission from and subject to the copyright of a co-presenting firm, Meltzer, Lippe, Goldstein & Breitstone, LLP.

 

Applicable Federal Rates for March 2017

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 March 2017:

Short Term AFR (Loans with Terms <= 3 Years)                                          1.01%

Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years)                    2.05%

Long Term AFR (Loans with Terms >9 Years)                                              2.78%

7520 Rate (Used in many estate planning vehicles)                                     2.4%

Here is a link to the complete list of rates: https://www.irs.gov/pub/irs-drop/rr-17-07.pdf

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

UHF Antennas Become Even More Obsolete, But Broadcasters Get a Tax Break

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.

Here is a link to the IRS ruling: https://www.irs.gov/pub/irs-wd/201702034.pdf

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

Applicable Federal Rates for February 2017

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%

Here is a link to the complete list of rates: https://www.irs.gov/pub/irs-drop/rr-17-04.pdf

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037

SEMINAR: Succession Planning II – “How Did Your Plan Really Work?”

ACG logo

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.