Real Estate Dealer Or Investor – Can’t Switch At Drop Of Hat
I’m just a lowly CPA, but I think a critical point was missed in the decision. The Court attributes everything that happened from 2002 on to Mr. Boree. If Glen Falls LLC was a partnership up till 2005, what happened before then was not relevant. Mr. Boree gets a fresh start in his purpose in holding the property at the deemed liquidation of the partnership. By conflating the two, the Tax Court appears to be contradicting its holding in the Phelan decision. Of course, it appears that Mr. Boree did not really take advantage of the fresh start. Nonetheless, I think that more careful planning and the introduction of one or more special-purpose entities might have enabled Mr. Boree to achieve capital gains treatment on a significant part of the transaction.
Phelan Decision Showed How To Get Capital Gains Treatment While Engaging In Development Acitvity
The Phelan brothers were involved in both real estate development and construction. Along with their partner, they formed a single purpose entity (Jackson Creek Land Corporation-JCLC) to own the particular tract of land in question (which they designated Jackson Creek). JCLC was considered a partnership for income tax purposes. The court found the formation and operation of this single purpose entity very significant. It also noted that the Phelan’s real estate business conducted through other entities concerned commercial real estate rather than residential real estate projects, such as Jackson Creek.
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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.