The importance of the Section 871(d) and Section 882(d) election

Article Abstract:

Passive foreign investors in US real estate may be able to lower taxes on rental income by making IRC sections 871(d) and 882(d) tax elections. Although these foreign investors would typically be taxed at the flat rate applicable to such rental income, these tax elections permit investors to be taxed at regular rates and claim mortgage interest, depreciation, or expense deductions. In order to take advantage of the elections, the investors must designate all of the taxable income as effectively connected to US business activity.

Public Finance Activities, Tax Deductions & Exemptions, International aspects, Tax deductions, Tax elections, international

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The proposed section 467 regulations: long-awaited rules introduce complexity, uncertainty, and opportunities

Article Abstract:

Proposed regulations governing IRC Section 467 rental agreements are complex but will provide additional tax planning opportunities for some taxpayers. The regulations address areas such as fixed or contingent rents, deferred or prepaid rent, disqualified leasebacks, Section 467 loans and interest, recapture, and tax accounting. Tax accounting methods may have to be revised to accommodate the regulations, but the regulations themselves can provide tax planning advantages if thoroughly understood.

Lessors of Real Estate, Real Estate Operators and Lessors, Real Property Lessors, Methods, Interpretation and construction, Tax accounting, Tax planning, Leases, Landlords, Sale-leaseback transactions, Sale and leaseback

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Proposed at-risk regulations provide welcome clarity to qualified nonrecourse debt exception but some issues are left hanging

Article Abstract:

The IRS has issued proposed regulations clarifying the IRC section 465(c)(6) exception to the at-risk rules for qualified nonrecourse debts. The new rules are generally favorable to taxpayers and are particularly relevant for investors in real estate. Final regulations should clarify certain aspects and harmonize the operations of sections 465 and 752.

Financial instruments, Nonrecourse debt

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