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We use FFO as currently defined by NAREIT to be net income (loss), computed in accordance with GAAP excluding extraordinary items, as defined by GAAP, and gains (or losses) from sales of property (including deemed sales and settlements of pre-existing relationships), plus depreciation and amortization on real estate assets, impairment write-downs of depreciable real estate or of investments in unconsolidated real estate partnerships, joint ventures and subsidiaries that are driven by measurable decreases in the fair value of depreciable real estate assets, and after related adjustments for unconsolidated partnerships, joint ventures and subsidiaries and noncontrolling interests.
4 million related to gains on sales of depreciable real estate, or diluted EPS of $1.
The boxed example illustrates the outcomes of a sale of depreciable real estate under current law and two additional circumstances--the Bush proposal and under a higher ordinary income tax rate.
At issue is the Taxpayer Relief Act of 1997 (TRA 97) that lowered the general capital gains tax rate to 20 percent (from 28 percent) for individual taxpayers, but created a 25 percent rate for sales of depreciable real estate.
Assume Z contributes depreciable real estate to the XYZ partnership in exchange for a one-third interest in partnership capital, profits and losses.
Impairment writedowns of depreciable real estate - unconsolidated joint venture (a)
GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization.
On the merger date, CD's assets consisted of $600 cash and depreciable real estate with a $600 basis; the basis of the partners' capital accounts was $1,000 for C and $200 for D, with no partnership liabilities.
Nilbib would be well advised to try to let as much time pass as possible between any acquisition of depreciable real estate needed to meet the basis limitation and the date when the debt discharge occurs.
Impairment writedown of depreciable real estate - unconsolidated joint venture (a)
FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") and is used by the company as follows: net earnings (computed in accordance with GAAP) plus depreciation and amortization of assets unique to the real estate industry, excluding gains (or including losses), any applicable taxes and noncontrolling interests on the disposition of certain assets, the company's share of these items from the company's unconsolidated partnerships and any impairment charges on a depreciable real estate asset.
Complexities arise in administering these new provisions to depreciable real estate sold subject to an installment sale agreement.