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Commissioner V. Tufts: a Sound Decision
Denver Law Review Volume 61 Issue 1 Article 8 February 2021 Commissioner v. Tufts: A Sound Decision Roger H. Randall Follow this and additional works at: https://digitalcommons.du.edu/dlr Recommended Citation Roger H. Randall, Commissioner v. Tufts: A Sound Decision, 61 Denv. L.J. 93 (1983). This Article is brought to you for free and open access by the Denver Law Review at Digital Commons @ DU. It has been accepted for inclusion in Denver Law Review by an authorized editor of Digital Commons @ DU. For more information, please contact [email protected],[email protected]. COMMISSIONER V TUFTS: A SOUND DECISION INTRODUCTION For federal income tax purposes, gross income includes the net gain or loss derived from dealings in property.' The amount of gain or loss is the difference between the taxpayer's adjusted basis2 in the property and the 3 amount realized upon disposition of the property. Consider a partner in an apartment development financed almost en- tirely with a nonrecourse mortgage loan. 4 The property is worth about $400,000 less than the unpaid debt at disposition. The Third Circuit, based on its decision in M llar v. Commi'ssioner,5 would find the amount realized to be the the full amount of the unpaid debt, assumed by the new owner. Treasury Regulation 1.1001-26 is similarly dispositive, if it is entitled to ef- fect. 7 Recently, however, in Commissioner v. Tufts, 8 the Fifth Circuit majority disagreed with the Third Circuit's decision in Mdlar and ignored the regula- tion. 9 The United States Supreme Court granted certiorari to resolve this 1. -
CMS Conventional Underwriting Guidelines – FNMA
CMS Conventional Guidelines—FNMA CMS Conventional Guidelines—FNMA Mortgage Lending Department Version 3.8 – 07/15/21 DOCUMENT OVERVIEW Purpose The following document describes the responsibilities and requirements of the Carrington Mortgage Services, LLC (CMS) Mortgage Lending Division Underwriter (Underwriter) when reviewing and underwriting mortgage loan applications. The purpose of credit and property underwriting is to ensure that each loan meets high quality standards that make the loans acceptable to CMS and Fannie Mae. Table of Eligibility ............................................................................................................. 24 Contents Purpose ....................................................................................................... 24 Loan Application ................................................................................................ 24 Requirements .............................................................................................. 24 Requirements for the Loan Application Package ........................................ 25 Document Images ....................................................................................... 25 Limited Denial of Participation (LDP)/General Services Administration (GSA) Lists .......................................................................................................................... 25 Requirements .............................................................................................. 25 Preliminary Review of Borrower’s -
Tax Issues for U.S. Real Estate Investors in Distressed Markets
Tax Issues for U.S. Real Estate Investors in Distressed Markets PETer J. ELIas The author discusses the significant, complex, and often very surprising or counterintuitive tax consequences associated with transactions taking place in distressed real estate and capital markets. “Adversity will not define us…But our response to it might.” – Mike Tomlin, Head Coach of the 2008 World Champion Pittsburgh Steelers nvestors in U.S. real estate markets are currently experiencing un- precedented adversity. The subprime mortgage debacle, the col- Ilapse, or near collapse, of many of the world’s most storied finan- cial institutions, the freezing of capital markets, massive governmental bailouts, and horrifying daily declines in public stock markets, and other events have been well publicized, but they do not even begin to describe Peter Elias is a partner with Foley & Lardner LLP in the San Diego office and a member of the firm’s Private Equity & Venture Capital and Tax & Individual Plan- ning Practices. He focuses his practice on the creation and implementation of tax-advantaged structures for a wide range of business and investment transac- tions. Mr. Elias also has significant experience in the representation of sponsors in connection with the formation, tax planning and structuring of investment funds, including real estate. He can be reached at [email protected]. 195 Published in the April 2009 issue of Pratt's Journal of Bankruptcy Law. Copyright ALEXeSOLUTIONS, INC. PRAtt’S JOURNAL OF BANKRUPTCY LAW the economic difficulties being faced by investors across the globe. Al- though there is some debate about whether or to what extent the eco- nomic recession may recede during 2009, many analysts and observers are bracing for more, not less, turbulence in the U.S. -
2020 National Income Tax Workbook
2020 NATIONAL INCOME TAX WORKBOOK Chapter 1: Financial Distress CHAPTER ISSUES Foreclosures Cancellation- and Abandonments of-Debt Income Repossessions Debt-Related Bad-Debt 2020 Relief Information Deduction Loans & Grants Returns I.R.C § 108 – Recognition of Debt OR Excluded from Income Treated as sale Recognizes Gain or Loss Recourse Loan – Personally liable Amount Realized is the SMALLER OF: the outstanding debt immediately before the transfer reduced by any amount taxpayer is personally liable for immediately after the transfer OR the FMV of the transferred property FORECLOSURES & REPOSSESSIONS PG. 2 COMMUNITY BANK V. COMMISSIONER, 79 T.C. 789,792 (1982), AFFD. 819 F. 2D940 (9 TH CIR. 1987) Sale Price of property at foreclosure = FMV EXAMPLE 1.1 GAIN ON FORECLOSURE PG 2 2015 Lorna bought land $ 100,000 Purpose – build primary residence $ 20,000 down and financed $ 80,000 Personally liable and land secured loan 2020 loan balance $ 65,000 & FMV of land $ 110,000 2020 Foreclosure – bank sold land for $ 110,000 and applied to balance owed Lorna received $ 45,000 (excess from sale) What’s Lorna’s GAIN & Realized amount? $ 10,000 (FMV $ 110,000 – basis $ 100,000) $ 110,000 ($ 65,000 loan balance + $ 45,000 proceeds) EXAMPLE 1.2 LOSS ON FORECLOSURE PG 2 Same facts as 1.1 EXCEPT FMV declined to $ 60,000 2020 Foreclosure – bank sold land for $ 60,000 and applied to balance owed Lorna OWES remaining $ 5,000 Bank forgave the $ 5,000 Lorna has cancellation-of-debt income What’s Lorna’s LOSS? $ 40,000 Is Lorna’s LOSS deductible? -
Breaching the Mortgage Contract: the Behavioral Economics of Strategic Default Tess Wilkinson-Ryan
Vanderbilt Law Review Volume 64 | Issue 5 Article 4 10-2011 Breaching the Mortgage Contract: The Behavioral Economics of Strategic Default Tess Wilkinson-Ryan Follow this and additional works at: https://scholarship.law.vanderbilt.edu/vlr Part of the Contracts Commons Recommended Citation Tess Wilkinson-Ryan, Breaching the Mortgage Contract: The Behavioral Economics of Strategic Default, 64 Vanderbilt Law Review 1545 (2019) Available at: https://scholarship.law.vanderbilt.edu/vlr/vol64/iss5/4 This Article is brought to you for free and open access by Scholarship@Vanderbilt Law. It has been accepted for inclusion in Vanderbilt Law Review by an authorized editor of Scholarship@Vanderbilt Law. For more information, please contact [email protected]. Breaching the Mortgage Contract: The Behavioral Economics of Strategic Default Tess Wilkinson-Ryan 64 Vand. L. Rev. 1547 (2011) Underwater homeowners face a quandary: Should they make their monthly payments as promised or walk away and save money? Traditional economic analysis predicts that homeowners will strategically default (voluntarily enter foreclosure) when it is cheaper to do so than to keep paying down the mortgage debt. But this prediction ignores the moral calculus of default, which is arguably much less straightforward. On the one hand, most people have moral qualms about breaching their contracts, even when the financial incentives are clear. On the other hand, the nature of the lender-borrower relationship is changing and mortgage lenders are increasingly perceived as remote, profit-obsessed entities undeserving of moral concern. In the studies reported here, I tease out three distinct psychological effects of this perception, including the erosion of reciprocity norms, an increase in social distance, and the destigmatization of foreclosure. -
Debt Exchanges©
DEBT EXCHANGES© Linda Z. Swartz Cadwalader LLP © Copyright 2014 by LexisNexis Matthew Bender, reprinted with permission from Collier on Bankruptcy Taxation and Volume 15 of Collier on Bankruptcy, 15th Ed. Revised by M. Sheinfeld, F. Witt, and M. Hyman; Alan N. Resnick and Henry J. Sommer, Editors-in- Chief. All rights reserved. TABLE OF CONTENTS Page I. INTRODUCTION ..................................................................1 II. DEEMED EXCHANGES OF DEBT .....................................1 A. Regulations .......................................................................1 1. Modifications ..............................................................2 2. Significant Modifications ...........................................7 a. Changes in Yield ...................................................8 b. Changes in Timing and Amount of Payments ...............................................................9 c. Changes in Obligor or Security ..........................12 d. Changes in the Nature of a Debt Instrument.......15 B. Comparison of Regulations and Case Law/Rulings .......17 1. Increased Principal Amount......................................17 2. Change from Annual Pay to Monthly Pay ................18 3. Forbearance of Remedies..........................................18 4. Extension of Maturity Date.......................................19 5. Changes in Obligor or Collateral ..............................20 C. Potential for Equity Recharacterization ..........................21 1. Basis for Recharacterization .....................................21 -
Partner Loans to Fund Capital Call Shortfalls: Loan to Non-Contributing Partner Vs. Loan to Partnership
PARTNER LOANS TO FUND CAPITAL CALL SHORTFALLS IN REAL ESTATE PARTNERSHIPS: LOAN TO NON-CONTRIBUTING PARTNER VS. LOAN TO PARTNERSHIP By Stevens A. Carey * This Article examines two common loan remedies in a two-partner real estate partnership that may be available to a contributing partner when the otherpartner fails to contribute its share of a capital call: apartner loan to the non-contributing partner and a partner loan to the partnership. With an emphasis on the economics, the author discusses advantages and disadvantages of each approach as well as solutions to some of the perceived disadvantages. When there is a capital call in a two-partner real estate partnership,' one of the partners may be unwilling or unable to fund its share. In that event, many partnership agreements provide that the other partner may advance the entire amount of the capital call. Such provisions might apply when the capital contributions are required or when they are discretionary (i.e., whether or not the failure to contribute constitutes a default). In either case, the advance by the contributing partner of the non-contributing partner's share might be treated in one of the following ways (among others) 2 : (1) as a loan to the other (non-contributing) partner, in which event the loan is used by the other partner to contribute its share of the capital call so that the partners' respective shares of contributions may stay in sync (i.e., in the sharing ratio contemplated for capital calls) 3; or (2) as a loan to the partnership, in which event the entire amount advanced by the contributing partner (i.e., both partners' shares) is treated as a loan to the partnership so that the partners' respective shares of contributions may stay in sync." These two loan alternatives, which are the focus of this Article, are illustrated by the following example: Example 1. -
Section 3.2 — Loans
LOANS Section 3.2 INTRODUCTION.............................................................. 3 Credit Card-related Merchant Activities ...................... 33 LOAN ADMINISTRATION ............................................. 3 OTHER CREDIT ISSUES .............................................. 34 Lending Policies ............................................................. 3 Appraisals .................................................................... 34 Loan Review Systems .................................................... 4 Valuation of Troubled Income-Producing Properties Credit Risk Rating or Grading Systems ..................... 4 ................................................................................. 35 Loan Review System Elements .................................. 5 Appraisal Regulation ............................................... 35 Current Expected Credit Losses (CECL) ....................... 6 Interagency Appraisal and Evaluation Guidelines ... 37 Allowance for Loan and Lease Losses (ALLL) ............. 6 Examination Treatment ........................................... 41 Responsibility of the Board and Management ........... 7 Loan Participations ...................................................... 41 Factors to Consider in Estimating Credit Losses........ 7 Accounting .............................................................. 41 Examiner Responsibilities .......................................... 8 Right to Repurchase ................................................. 42 Regulatory Reporting of the -
Textron Financial Corporation (Exact Name of Registrant As Speciñed in Its Charter) Delaware 05-6008768 (State Or Other Jurisdiction of (I.R.S
BOWNE OF BOSTON 02/24/2003 21:18 NO MARKS NEXT PCN: 002.00.00.00 -- Page is valid, no graphics B45698 001.00.00.00 6 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ≤ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Ñscal year ended December 28, 2002 OR n TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission Ñle number 0-27559 Textron Financial Corporation (Exact Name of Registrant as SpeciÑed in Its Charter) Delaware 05-6008768 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) IdentiÑcation No.) 40 Westminster Street, P.O. Box 6687, Providence, R.I. 02940-6687 (401) 621-4200 (Address of Principal Executive OÇces) Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Title of Class Which Registered 1 $600,000,000 7 /8% Notes New York Stock Exchange due December 9, 2004 Securities registered pursuant to Section 12(g) of the Act: Name of Each Exchange on Title of Class Which Registered 10% Series A Trust Preferred Securities of NASDAQ Subsidiary Trust (and subsidiary guarantee with respect thereto) Common Stock, $100.00 par value Indicate by check mark whether the registrant (1) has Ñled all reports required to be Ñled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to Ñle such reports) and (2) has been subject to such Ñling requirements for the past 90 days. -
Investing in Real Estate Using Self Directed Retirement Accounts
Address: 14034 S. 145 E. STE 100 Draper, Utah 84020 N A R E A (801) 931-5571 [email protected] INVESTING IN REAL ESTATE USING SELF-DIRECTED RETIREMENT ACCOUNTS By Ken Holman The most recognized types of retirement accounts are the 401(k) plan for private employers, the 403(b) plan for non-profit employers, the 457(b) plan for government employers and the SEP IRA (Simplified Employee Pension Individual Retirement Account (SEP) for employers and Individual Retirement Account (IRA) for individuals which the Internal Revenue Service calls Individual Retirement Arrangements. In 1974, Congress passed the Employee Retirement Income Security Act (ERISA) that, among other provisions, provided for Individual Retirement Arrangements, which permitted individuals making below a certain income to make annual tax-exempt contributions to their retirement account. In 1997, Senator William Roth of Delaware spearheaded the Taxpayer Relief Act of 1997, which did not permit a tax deduction for annual contributions but enables the earnings on such plans to grow tax- free. Modern pension plans, called defined benefit plans, began around 1920 but by the 1970’s it became apparent they we no longer sustainable for most companies. In 1978, Congress passed Section 401(k) of the Internal Revenue Code permitting high-earning individuals to invest in the stock market using income that was exempt from taxes. By 1980, Ted Benna, a benefits consultant and attorney, used the law to create a simple, tax-advantaged way to save for retirement, called defined contribution plans, which shifted the burden of saving for retirement from the corporation to the individual. -
Publication 525 Cat
Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 8 Draft Ok to Print AH XSL/XML Fileid: … tions/P525/2020/A/XML/Cycle08/source (Init. & Date) _______ Page 1 of 42 13:42 - 6-Apr-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Publication 525 Cat. No. 15047D Contents Future Developments ............ 1 Department of the Taxable and What's New .................. 1 Treasury Internal Reminders ................... 2 Revenue Nontaxable Service Introduction .................. 2 Income Employee Compensation .......... 3 Special Rules for Certain Employees ............... 15 For use in preparing Business and Investment Income .... 17 2020 Returns Sickness and Injury Benefits ....... 18 Miscellaneous Income ........... 20 Repayments ................. 36 How To Get Tax Help ........... 37 Index ..................... 39 Future Developments For the latest information about developments related to Pub. 525, such as legislation enacted after it was published, go to IRS.gov/Pub525. What's New Exclusion from income tax on a portion of unemployment compensation for 2020. For individuals with adjusted gross income of less than $150,000, up to $10,200 of unemployment compensation is excluded from gross income. In the case of a joint return, up to $10,200 re- ceived by each spouse is excluded. (See P.L. 117-2 and section 85(c).) Paycheck Protection Program loan forgive- ness. Gross income doesn’t include any amount arising from the forgiveness of a Pay- check Protection Program (PPP) loan, effective for taxable years ending after 3/27/2020. (See P.L. 116–136.) Likewise, gross income does not include any amount arising from the forgive- ness of Second Draw PPP loans, effective 12/27/2020. -
ALERT News Concerning Recent Tax Issues AUGUST 6, 2009
TAX ALERT News Concerning Recent Tax Issues AUGUST 6, 2009 BORROWERS AND LENDERS COMING TO GRIPS WITH THE PITFALLS AND OPPORTUNITIES WHEN MODIFYING THE TERMS OF DISTRESSED DEBT Thomas J. Gallagher • 215.665.4656 • [email protected] ccording to First American CoreLogic, almost $165 exchanged for a newly issued debt instrument in a taxable billion of commercial real estate loans will mature in transaction. Where loans traded at or near par, the adverse A2009. Trepp LLC, a commercial bond and real estate consequences of the deemed exchange largely fell on the loan statistician based in New York City and London, reported borrower. Where the borrower is a passthrough entity, the that another $3.8 billion of commercial mortgage loans were prevalence of state income tax withholding now places the transferred to special servicers in June, increasing the total balance borrower’s managers at risk personally if the exchange results in debt cancellation income. Moreover, where the holders of securitized commercial mortgages under the control of special have acquired the indebtedness at a substantial discount, servicers by 10%, to almost $40 billion. As the per square foot office significant adverse tax consequences from the deemed rents in places like New York City plummets and US commercial exchange can fall on the holders as well. This is particularly real estate prices decline nationally, pressure will rise and the true in cases where distressed debt was purchased with a ability of owners to refinance or extend maturing real estate view to executing a favorable debt restructuring transaction. commercial mortgage debt will be impacted severely.