SENATOR BAUCUS OPPOSES TAX ON CARRIED INTEREST

Transcription

1

2

3 his piece of legislation has several provisions beneficial to the commercial real estate industry, such as a 15 year leasehold improvement depreciation extension, as well as an extension to the current 50 percent bonus depreciation, allowing property owners to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance normally available. Moreover, the bill extends the current $1.80 per square foot energy tax credit for commercial property owners who achieve 50 percent energy savings through energy retrofits. The bill also provides an extension to Brownfields expensing provision, allowing real estate owners to recover environmental cleanup costs in the year they are incurred. While all of these elements of the bill LEGISLATIVE UPDATE SENATOR BAUCUS OPPOSES TAX ON CARRIED INTEREST ON DECEMBER 10, 2009, THE HOUSE PASSED A TAX EXTENDERS BILL (H.R.4123), WHICH INCLUDES EXTENSIONS ON A VARIETY OF TAX BREAKS SCHEDULED TO EXPIRE AT THE END OF By Gary Banner, CCIM, CRE Commerce CRG Cushman & Wakefield Alliance are beneficial to the commercial real estate industry, the House bill also included tax increases that could adversely affect many real estate partnerships in order to help pay for these and other extensions. Under the House bill, income generated from carried interest could be taxed at a rate of ordinary income (at 35 percent or more), as opposed to the current capital gains rate (15 percent). Most general partners with existing carried interests will be penalized under the passed legislation. Extensive rules for carried in real estate partnerships are provided so that some real estate general partners will continue to receive capital gains treatment, while many will face ordinary income treatment. CONT D ON PAGE 8 3

4 LEGAL BRIEFS COMMERCIAL LANDLORDS GET ANSWERS TO ABANDONED PROPERTY QUESTIONS or years now, questions have lingered about how exactly a commercial landlord should deal with abandoned personal property left by a tenant. Senate Bill 338 answers this question. On October 1, 2009 a landlord who leases or subleases any commercial premises was authorized to dispose of any abandoned personal property left on the commercial premises under certain circumstances. This is not entirely new as residential landlords are able to dispose of abandoned property employing standards set forth under Nevada Revised Statute ( NRS ) 118A.460. However, there has always been a question whether this statute applied to the commercial setting. Senate Bill 338 removes the guesswork and sets forth the process for disposing of abandoned personal property left on commercial premises. By Keith Williams, Esq. Marquis & Aurbach Senate Bill 338 added a new section to NRS Chapter 118 authorizing a commercial landlord to dispose of abandoned property. A commercial landlord may dispose of abandoned personal property in a lease or sublease situation where the lease or sublease situation has been terminated for any reason. The landlord must, however, take certain steps to notify any holder of a perfected lien or security interest that the property has been abandoned and notify, by certified mail, the tenant who left the property on the premises of the landlord s intention to dispose of the property. This notification must take place no less than 14 days prior to disposal by the landlord. If the landlord and any holder of a perfected lien or security interest have a written agreement concerning the removal and disposal of abandoned property, that agreement determines the rights and obligations of those parties with respect to the removal and disposal of abandoned property. A landlord is also authorized to charge and collect the reasonable and actual costs of inventory, moving and safe storage, if necessary, of the abandoned personal property before releasing the abandoned personal property to the tenant or his authorized representative. If the tenant disputes the costs claimed by the landlord, the dispute may be resolved using the procedure specified in NRS , as amended by section 3 of Senate Bill 338. In the event a landlord does not properly dispose of the abandoned property, landlords can incur both criminal and civil liability. Thus, compliance with SB 338 is critical. If a landlord believes property has been abandoned on the commercial premises the landlord needs to determine whether the tenant has subjected the property to a perfected lien or security interest and can do this by searching the records of the property for a financing statement. Additionally, the landlord needs to notify the former tenant and any person who has a perfected lien or CONT D ON PAGE 5 4

5 LEGAL BRIEFS CONTINUED FROM PAGE 4 security interest in the property of the landlord s intention to dispose of the property. Notice can and should be done via certified mail, return receipt requested. If a landlord complies with the provisions of NRS 118 they can dispose of the abandoned property without incurring criminal or civil liability. One way to dispose of the property is for a landlord to hire a company to auction off the property as it allows for the maximum recovery in value for the property and ensures that the sale of the property will take place in a commercially reasonable manner. If the sale of the goods yields funds above the reasonable and actual costs of inventory, moving and safe storage of the property the landlord must be careful with the additional funds. The landlord does not have an automatic right to retain the additional funds. To have a right to the additional funds the landlord needs to secure a judgment against the tenant. There are several ways the landlord can pursue a judgment depending on the specific circumstances. For example, the landlord can seek damages for the balance of the lease terms subject to the landlord s duty to mitigate damages. If the landlord is successful in securing a judgment against the former tenant the landlord can then try to secure the additional funds from the auction to satisfy the judgment. The landlord should not attempt collect on a prospective judgment by retaining funds above the reasonable and actual costs of inventory, moving and safe storage of the property. The landlord needs to secure a judgment against the tenant that entitles the landlord to the additional funds before the landlord retains any additional funds. Keith Williams, Esq. is an associate in Marquis & Aurbach s civil litigation group and concentrates his practice on construction, contract, and property disputes. 5

6

7

8 LEGISLATI E UPDATE CONTINUED FROM PAGE 3 The loss of capital gains treatment for real estate investment partnerships would turn long-established taxation rules upside down. Real estate partnerships, from the smallest venture to the largest investment fund, have a carried interest component. Approximately $1 trillion of commercial and residential properties are held by partnerships. Changing the tax rates on carried interest from capital gains rates to ordinary income rates would be devastating to these businesses. Such a tax increase clearly discriminates against real estate compared to other assets and puts it at a greater competitive disadvantage for investment dollars. Additionally, it puts more pressure on a fragile commercial real estate industry already facing a rapid rise in delinquencies and foreclosures, as well as a growing challenge to access credit. Currently Senate Finance Chairman Max Baucus (D-MT) opposes an increase to the treatment of carried interest, making it unlikely that such a provision will be passed by the Senate. Nonetheless, a tax increase could be slipped into any one of the bills that are currently before the Senate. To prevent this from happening, CCIM Institute submitted a joint letter with IREM and NAR urging all 100 Senators to not change the current capital gains treatment of carried interests for real estate partnerships. Gary Banner, CCIM, CRE is Senior Director of Commerce CRG/Cushman & Wakefield Alliance, Las Vegas; and RCA-National Legislation / Regulation Committee Member. He can be reached at (702) or gbanner@commercecrg.com. 8

9 PRESIDENT S MESSAGE CONTINUED FROM PAGE 1 I believe that these leaders Get It. The need for continued diversification in our communities is evident and our Mayors are busy working towards just that. Who would have thought it possible for Las Vegas to be considering an Alligator Zoo? Then again, why not us and why not here. While it was quite evident that our Mayors are busy working towards a more sustainable economic environment, we must also be doing our part. We have a responsibility to stay knowledgeable about the legislative activities of our community. Gary Banner is our Legislative Chair and continues to work diligently to provide the facts and activities of our government that affect our children, our community, and our profession. Keep a close eye on his column in the Perspective as he continues to provide us updates. As we welcome Spring, I want to encourage you to focus on the successful tools and techniques that served you well in the past and explore what new professional developmental opportunities await that will absolutely revitalize your efforts and heighten your results. Considerations should include signing up for that CCIM class that either begins your path to a most amazing educational experience and prestigious Designation, or merely serves as a valuable refresher. Another suggestion go to the website and take advantage of the various webinars available via our National CCIM Institute, the Greater Las Vegas Board of Realtors or local Support Affiliates many at no cost. Some say What Got Us Here Won t Get Us There and we ve all heard that this is the New Normal. Perhaps. However, your successful business practices haven t evaporated and what got you here was a lot of hard work, perseverance, networking, community involvement and investing in your professional future. It s time to rejuvenate and embrace this new professional environment. As your Board, we stand ready to assist however possible and will continue to bring you the best speakers and educational programs available. In conclusion, I want to leave you with this: We are made to persist. That's how we find out who we are. - Tobias Wolff Now get out there and make it an UNBELIEVABLE Day! Susan Borst, CCIM of Commerce Real Estate Solutions, represented the tenant in a lease of an 11,149 square foot industrial property located at 5225 South Valley View Boulevard, Suites 3-6, Las Vegas, NV with a value of $219, Susan Borst, CCIM of Commerce Real Estate Solutions, represented the tenant in a lease of a 4,000 square foot industrial property located at West Desert Inn Road, Building 1, Suites 3210, Las Vegas, NV with a value of $121, Susan Borst, CCIM of Commerce Real Estate Solutions, represented the tenant in a lease of an 8,706 square foot industrial property located at 4816 North Pecos Road, Building B, Suite 109, North Las Vegas, NV with a value of $111, Susan Borst, CCIM of Commerce Real Estate Solutions, represented the landlord in a lease of a 6,234 square foot industrial property located at 4350 South Arville Street, LEASES: Building 1, Suites 3 & 4, Las Vegas, NV with a value of $106, Liz Clare, CCIM of Commerce Real Estate Solutions, represented the landlord in a lease of a 1,200 square foot retail property located at West Sahara Avenue, Suite 3N, Las Vegas, NV with a value of $129, Carolyn Curtis, CCIM of Commerce Real Estate Solutions, represented the landlord in a lease of a 4,808 square foot office property located at 1785 East Sahara Avenue, Suite 440, Las Vegas, NV with a value of $115, Michael Dunn, CCIM, SIOR of Commerce Real Estate Solutions, represented the landlord in a sublease of a 7,536 square foot office property located at 6795 Edmond Street, Building 2, Suite 220 Las Vegas, NV with a value of $455, Monty Montierth, CCIM of Commerce Real Estate Solutions, represented the tenant in a lease of an 8,516 square foot industrial property located at 950 Pilot Road, Suite D, Las Vegas, NV with a value of $342, Kara M. Walker, CCIM of Grubb & Ellis Las Vegas, represented the tenant, Ameritile, Inc., in a 36 month lease of an 8,591 square foot industrial property located at the Santoli Commerce Center, 5585 South Valley View Boulevard, Suite 2, Las Vegas, NV with a value of $210, Kara M. Walker, CCIM of Grubb & Ellis Las Vegas, represented the tenant, Arizona Precision Sheet Metal, Inc., in a 39 month lease of a 5,200 square foot industrial property located at the Blue Diamond Business Center, 4280 West Windmill Lane, Suite 101, Las Vegas, NV with a value of $97, Soozi Jones Walker, CCIM, SIOR and Bobbi Miracle, CCIM of Commercial Executives, represented the T&J Fallon Family Trust in a lease of a 3,389 square foot office property located at 5575 South Durango Drive, Suite 110, Las Vegas, NV with a value of $153, TO MAKE A DEALMAKERS SUBMISSION: *Publications are limited to designees who are Chapter and Institute members in good standing. Announcements are for publication in The Perspective, but submissions may also appear on the website. All parties are aware that space is limited and are accepted and published by largest dollar volume within each submission session. Please contact Gary Banner, CCIM, CRE for the submission form at gbanner@comre.com or

10 CCIM EDUCATION 10

11 PLATINUM SPONSOR 11

12