The “LBJ University of Dirty Politics”
My friend Tom Cahill has given me permission to republish his letters home from his voluntary exile in France. This is the fifth in the series. It will be daily until...
Can Walgreen Stance On Property Tax Hurt Income Tax Position Of 1031 Investors?
Why does this scare me? Well, if I was what I refer to as the agent from hell and I was auditing somebody who had exchanged into the $4,325,000 Oshkosh Walgreen, I would be inclined to say. “You know. It looks to me like your exchange facilitator only put about $1.7 million or so into real estate as it is defined under state law in Wisconsin. The balance went into a contractual right, which is property not of like kind, making it taxable boot.” Yuck.
If my fear is justified, things would not be good for the sub sub industry that has relied on the pools of 1031 money. At least one prominent expert, Charles Egerton who is a past chair of the ABA’s Section of Taxation, thinks that my fears may be groundless. I do have to say though that it troubles me that people are saying that a property is worth one thing when they go to the capital markets and determine whether something qualifies for income tax deferral and something less, a lot less, when it comes to how much they have to chip in for the cops and the fire fighters and the school kiddies, but that’s just me, who might have been the agent from hell, if he hadn’t had the good luck to be hired by Herb Cohan.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.