presumably in the case of depreciable real estate
, an increase in income tax basis--on death, absent further planning.
FFO is defined in the White Paper as net income (loss) (computed in accordance with generally accepting accounting principles), excluding gains (or losses) from sales of property, plus depreciation and amortization, plus impairment write-downs of depreciable real estate
and after adjustments for unconsolidated partnerships and joint ventures.
We determine FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), as net income attributable to common stockholders (computed in accordance with GAAP), excluding real estate-related depreciation and amortization, impairment losses on depreciable real estate
, gains or losses on the sales of depreciable real estate
, and after adjustments for unconsolidated ventures.
NAA/NMHC have urged such an approach to preserve "stepped up" basis, which is critical for heirs of depreciable real estate
In it's third quarter report, Reckson reported net income of $9.3 million, or diluted earnings per share (EPS) of $0.11 for the third quarter of 2006 including $2.1 million charge for the aforementioned compensation plan, as compared to $113.6 million, including $96.4 million related to gains on sales of depreciable real estate
, or diluted EPS of $1.37 for the third quarter of 2005.
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.
No election is needed to avoid two computations for MACRS 27.5-year real property (residential rental property) or MACKS 39-year real property (i.e., most other 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.
The news system assigns depreciable lives of 3 years for most vehicles, 5 years for most equipment, 10 years for certain public utility property, and 15 years for most depreciable real estate
and some long-lived public utility property.
This is essentially depreciation recapture realized on the sale of depreciable real estate
; however, an individual with an ordinary income tax rate below this special rate would only pay the ordinary rate.
Reckson reported net income allocable to common shareholders of $113.6 million, including $96.4 million related to gains on sales of depreciable real estate
, or diluted earnings per share (EPS) of $1.37 for the third quarter of 2005, as compared to $8.8 million, including $2.2 million related to gains on sales of depreciable real estate
and the aforementioned $6.7 million accounting charge, or diluted EPS of $0.13 for the third quarter of 2004.
* Treatment of impact fees and similar costs incurred during the development and construction of depreciable real estate