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.
NAA/NMHC have urged such an approach to preserve "stepped up" basis, which is critical for heirs of depreciable real estate
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.
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.
With the increased focus on maximizing income tax step-up in basis planning, especially for depreciable real estate
, the benefit of retaining real estate in the estate and growing an insurance policy outside the estate in an irrevocable life insurance trust (HIT) enhanced by the Graegin arrangement is clear.
Treatment of impact fees and similar costs incurred during the development and construction of depreciable real estate
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
Thus, all amounts expended under section 190 on depreciable real estate
are afforded capital gains treatment under IRC section 1231 when the property is sold.
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.