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All proceeds will be utilized by the Center for Wealth & Legacy Studies to continue working with our San Diego community’s businesses by instilling hope and providing a specific roadmap for their continued success throughout the generations.

The Center for Wealth & Legacy Studies Journal (Blog)

Welcome to The Wealth & Legacy JournalTM (Blog) being contributed to by our advisory group, Wealth & Legacy Seminar Series speakers, and our sponsors.  We will add thoughts to help inform, educate, and enlighten the family business community and all wealthy taxpayers and their advisors so they can make better decisions about their wealth, life and legacy. 

You are more than welcome to post a comment on any of the articles or ask follow-up questions, but please no solicitations or SPAM posts.

Friday
05Mar2010

IRS Provides Guidance Re: Failed 1031 Exchanges Caused By Qualified Intermediary Failure 

There have been a number of failed 1031 Exchange Qualified Intermediaries over the last couple of years.  The majority of these were precipitated by the sever market conditions that we are experiencing, although some have been from misappropriation of clients' 1031 Exchange funds.

There are significant tax reporting challenges involved when an investor sells relinquished property and structures a 1031 Exchange in order to defer his or her taxes by acquiring a like-kind replacement property and then having the Qualified Intermediary fail. 

Revenue Procedure 2010-14 was issued today by the Internal Revenue Service to help investors that were affected by 1031 Exchange Qualified Intermediaries that failed to complete the investor's Like Kind Exchange by acquiring and transferring replacement property to the investor.

The Rev. Proc. 2010-14 provides a safe harbor method of treating and reporting capital gain or loss for certain taxpayers who initiate tax deferred exchanges under Section 1031 of the Internal Revenue Code but fail (default) to complete their 1031 Exchange because their Qualified Intermediary has failed to acquire and transfer like kind replacement property to the investor.

The Internal Revenue Service will not treat investors that meet the requirements of Rev. Proc. 2010-14 as being in actual or constructive receipt of their 1031 Exchange funds when the investor did not complete his or her 1031 Exchange because of their Qualified Intermediary (QI) defaults and becomes subject to a bankruptcy or receivership proceeding.

DateFriday, March 5, 2010 at 11:35AM
AuthorWealth Legacy Series | CommentPost a Comment
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Saturday
30Jan2010

Revisiting Depreciation Recapture Issues at Tax Time. 

It is that time of year again when The Center for Wealth & Legacy Studies' Advisory Team fields many questions regarding the reporting and tax treatment of 1031 Exchanges, or in many cases the lack of a 1031 Exchange, on the taxpayers' income tax returns.

There are more questions this year because many taxpayers sold real estate and cashed out rather than deferring their taxes via a 1031 Exchanging again.  They now have significant income tax liabilities to worry about.

Depreciation Recapture Issue

The one tax planning issue in terms of rental or investment property that is most often misunderstood by taxpayers is that of depreciation recapture.  Depreciation, or writing off the cost of a building, is mandatory if a taxpayer buys and holds rental or investment property. 

The depreciation is indefinitely deferred into the future upon sale of the investment property as long as the taxpayer structures a 1031 Exchange transaction.  However, the depreciation will be recaptured and taxed upon the sale if the taxpayer does not 1031 Exchange into replacement property.

This is the reason that we have noticed an increase in depreciation recapture questions.  So, I thought that I would link to a discussion board post on depreciation recapture that will help explain the issue in greater detail. 

DateSaturday, January 30, 2010 at 02:51PM
AuthorWealth Legacy Series | Comment1 Comment
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Friday
22Jan2010

Comments on Housing Market From UBS's David Goldberg

Housing (real property) in the United States will begin to gradually recover (read "crawl" out of the hole) in the second half of 2010 according to David Goldberg, home-building analyst for UBS, a global financial services firm.  We thought that we would whare their 10 predictions for housing in the United States for 2010:

  1. "Fundamentals will remain 'choppy' in the first half of the year, with conflicting data points making it difficult to ascertain whether we’ve actually reached the trough in housing."
  2. "Headline risk, primarily driven by the government's efforts to extract itself from the mortgage market, will drive the homebuilding stocks down 15% or more from current levels…With the longer term path for fundamentals offering limited clarity, we expect the homebuilding stocks to remain quite volatile and extremely sensitive to news flow."
  3. "The previous prediction notwithstanding, the government is going to do everything in its power to protect home prices...In the end; we believe that concerns about higher rates and declining mortgage market liquidity won't amount to much. In our opinion, the government continually made it clear that it is working to limit further home price declines given the serious ramifications these declines would have for both consumers and lenders."
  4. "Although we forecast that as many as 7 million foreclosures are likely to occur over the next several years, we believe the pace at which these homes will come to the market will be consistent with current levels. As such, the concerns around the negative impacts of rising inventory levels are overdone."
  5. "An improvement in unemployment is the single most important predictor for the longer term health of the housing market - only by focusing on this variable can we truly understand the timing for a recovery."
  6. "An improving jobs picture will d4rive greater price stability and better demand. That said, given the level of excess inventory, the pace of price appreciation will be below trend for some time."
  7. "The builders will see sequential improvements in their quarterly results."
  8. "Given the limited amount of high quality, finished lots coming to market, we expect the builders to increasingly consider purchasing undeveloped parcels, which represent a greater value. This trend will be magnified if conditions start to accelerate more meaningfully in the near term as builders look to rebuild their operations over time."
  9. "Although residential construction lending standards might loosen in 2010, liquidity will be insufficient to drive starts toward current consensus estimates."
  10. "The longer term outlook for housing will increasingly dominate investors focus toward the end of 2010."

 

DateFriday, January 22, 2010 at 04:00PM
AuthorWealth Legacy Series | CommentPost a Comment
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Tuesday
19Jan2010

Just Show Me The Money!

Do you own your own closely held business?  Are you having trouble obtaining financing (debt) or raising capital to expand your closely held business?  This is a common problem in today's new world where the debt and capital markets are still problematic. There are ways to raise money.  There are solutions.  But, you must be creative and think outside of the box.  You are invited to a seminar entitled "Just Show Me The Money." 

DateTuesday, January 19, 2010 at 10:59PM
AuthorWealth Legacy Series | CommentPost a Comment
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Thursday
14Jan2010

Revisiting The Cause For The Center For Wealth & Legacy Studies

The Center for Wealth & Legacy Studies™ is committed to helping successful business owners and families ‘pass forward’ their financial success along with their core values and virtues that created their wealth. The Center brings together a diversity of experience and professional backgrounds to identify and address the financial and legacy issues facing every business and family today. Our goals are to instill hope and provide a specific roadmap for continued success throughout the generations.

The Center is a non-profit founded by a group of like-minded professionals. We recognize that business families fill a vital role in building and funding the broader community, and our communities depend upon their energy and contribution. Today’s business families are faced with unprecedented challenges. A recent study by nationally recognized family wealth consultants Roy Williams and Vic Preisser indicates that 70% of financially successful families fail to pass their business and wealth even one generation. Much of this failure comes from a breakdown of trust and communication within the family or a failure to adequately prepare their heirs.

Our commitment via The Center for Wealth & Legacy Studies is not to just report on the issues, but to provide practical guidance on all matters of wealth and legacy. Through a variety of media and forums, The Center for Wealth & Legacy Studies™ provides objective clarity, expertise and perspective to local, national and international audiences.

DateThursday, January 14, 2010 at 09:26AM
AuthorWealth Legacy Series | CommentPost a Comment
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