S Y L L A B U S REAL ESTATE TAXATION SUMMER, 2013 TODD A. ERNSBERGER. 1. Internal Revenue Code of 1986 and accompanying Treasury Regulations.

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1 I. SCOPE AND PURPOSE. S Y L L A B U S REAL ESTATE TAXATION SUMMER, 2013 TODD A. ERNSBERGER This course will focus primarily on the substantive tax law as it affects the major areas of real estate activity, namely, acquisitions and dispositions of real estate, limitations on deductions, and entity selection. A prerequisite to becoming an effective tax planner is mastering the rules which may potentially effect a transaction. In other words, how can you play the game if you do not know the rules? Accordingly, this course will emphasize reading, analyzing and interpreting the Internal Revenue Code and Treasury Regulations and applying them to both common and complex real estate transactions. II. COURSE MATERIALS. Required Materials Available in Law School Book Store 1. Internal Revenue Code of 1986 and accompanying Treasury Regulations. Supplemental Materials Closed Reserve in Library 1. Taxation of Real Estate Transactions, Sanford M. Guerin (2005, CCH Incorporated) 2. Federal Income Taxation of Real Estate, Gerald J. Robinson, Sixth Edition (2006, Thomson RIA) III. OUTLINE OF COURSE. The Code/Regulation assignments below as well as the reading assignment chapters may be supplemented and/or amended as the course progresses. Although specific Treasury Regulation assignments are sometimes set forth below, the Treasury Regulations for a particular assigned Code Section should always be reviewed. Handouts and problems will be distributed during class. Code and Regulation Assignments are attached: CORRESPONDING DATE GUERIN REFERENCE TOPIC 1. 5/23 * Introduction to course and Internal Revenue Code * Overview of Internal Revenue Code * Review IRC Table of Contents * Character of Gain Chapters 1, 2, 3 * Dispositions of Real Property * What Constitutes Sale/Exchange Disposition 1

2 * Determination Amount Realized, Gain Realized, Gain Recognized * Acquisition of Real Property (Basis) a. What constitutes a sale, disposition under 1001? b. By Purchase c. Gift 2. 5/30 Chapters 1, 2, 3 * Basis (Continued) a. Acquired from a Decedent b. Uniform Basis/Multiple Interests c. Entity Basis considerations d. Adjustments to Basis * Non-recognition Transactions 3. 6/6 * State Law Real Property Taxation (Guest Speaker) * Board of Revision Appeals Chapter 7 * Accounting Methods * Installment Sales 4. 6/13 Chapters 7, 9 * Installment Sales (Continued) a. Contingent Installment Sales b. Disposition of Installment Sale Notes c. Jumbo ISO s/pledging ISO s * Wrap Around Mortgages 5. 6/20 Chapters 8, 11, 12 * Non-recognition Provisions * Like Kind Exchanges 6. 6/27 Chapters 8, 11, 12 * Like Kind Exchanges (Continued) a. Reverse Exchanges b. Build to Suit 7. 7/11 * Involuntary Conversions 8. 7/18 * Involuntary Conversions (Continued) Chapter 13 * Residences 9. 7/25 Chapter 13 * Residences (Continued Chapters 14, 15 * Special Rules a. Part Gift/Sale, b. Sale of Term Interest c. Bargain Sale to Charity d. Related Parties 2

3 e. Workouts 10. 8/1 Chapter 4 * Limitation on Deductions * Passive Activity * General Limitations on Loss: Home Loss Rules Final IV. TBA GRADING. Your grade will be based in large part upon the final examination. Grade reductions or enhancements associated with class attendance and preparation are within the instructor s sole discretion. You will be permitted to use your copy of the Internal Revenue Code and Treasury Regulations during the final exam. It is expected that you will annotate your copy of the Internal Revenue Code and Treasury Regulations during the course of the semester. While such annotations are permissible for exam purposes, no additional pages or other materials may be added to those texts for exam purposes. V. MISCELLANEOUS INFORMATION. Homework problems and/or handouts will be assigned periodically throughout the semester. You are expected to have completed the problems for classroom discussion. Periodically, you may be requested to turn such assignments in for review. The review is intended to provide a barometer of how you are progressing through the course. Although collaboration among classmates is permitted for the classroom assignments, no collaboration will be permitted during the final exam. Todd Ernsberger can be reached Monday through Friday, at or at tae@olrblaw.com. 3

4 INTERNAL REVENUE CODE/TREASURY REGULATIONS Class 1, 2 Capital Gain and Loss: 1221, 1223, 1211, 1231, 1202(h), 1237, 1245, 1250 (1) Begin 61(a)(3); ; 1001: : 1274 What is Amount Realized from sale/disposition of Property? Determination of Gain Realized 1001 Method of Accounting 441, 446, 451, 453: (c)(1)(ii) (a) Commissioner v. Tufts 461 U.S. 300 (1983) (2) Why is Basis Important How does it come into play? (a) Determining Gross Income: See Subchapter B 61(a)(3); Reg ; Subchapter O 1001 (b) Determining Amount/Limitations on Deductions: 167(c); 1.167(a)-1; 168(a); (a); See 704(d); 1366(d) (3) Determination of Basis (Subchapter O, Part II) (a) (b) Adjusted Basis of Property is Basis ( 1012 et al) adjusted as provided in Cost (Acquisition by Purchase); 1014 Acquisition from decedent: 1015 gifts, transfers in trust; See 1017; 1019, 1031(d), 1033(b), 1038, 1041 (c) Subchapter C - 301(d), 307, 334, 358, 362 Subchapter K - 722, 723 Subchapter P (4) Cost * Amount paid (Cash/Property) for Property 1012; (a) Key: Define property/properties being acquired See (b); 483, 1274, 1274A * Apportionment of Basis (a); 1.167(a)-5, 280B * Compensation 61(a); 83 * Imputed Interest Rule 1274, 1274A, 483 * Converted Property 1.167(g)-1 (5) Acquired by Gift ( 1015) * ; -2; -4; -5 * Part Gift/Sale (a) (6) Acquired from Decedent ( 1014) ( ) 4

5 (a) What does acquired from decedent mean? 1014(b), (b) (c) Uniform Basis/Multiple Interests ; -6; 2520 (7) Review non-recognition provisions effecting basis; 1031, 1033, 1038(c), 1041; Subchapter C, K - What is general theory/theme re: basis/non-recognition transactions? (8) Adjustments to Basis ; ; -3; -7; -10; See 108, 263, 263A; 190, 266, 280(B), 167, 168, 179. Rev. Rul CB 35 Class 3, 4 Determination of Gain Recognized (c); (d) * Effect if any on Accounting Method (Subchapter E) See: 446; 451; 453; l 453 Treas. Regs.; 453A; 453B * Installment Sales Class 5, & Regs. (Like Kind Exchanges) Class 7, & Regs. (Involuntary Conversion) Class 8, (Committee Reports) (Principal Residence) Class 9, 10 Special Rules re: Computation of Gain Realized * Gifts 1015(a) * Part Sale/Gift ( ); (e) * Bargain sale to Charity 1011(b); (b); 2512; 170; (c) * Sale of Term/Remainer Interest 1001(e); ; * Related Parties 267; 318, 1239 * 178, 109, 1019, (b), 280A * 162, 163, 164, 212, 262, 195, 280A, 183, 465, 469 * 267, 318, 1239, 108, 1017, 165, 166, 1038 (Treas. Regs.): , -6(b)(1)(workouts) 5