Commercial Investment Real Estate March/April 2018 | Page 23

Expensing Allowances Under an additional rule under IRC Section 168, qualified taxpayers can write off 100 percent of capital expenditures for qualified new and used property for the taxpayer’s business use. Exchanges IRC Section 1031 has existed since the 1920s. Fortunately, members of the U.S. Congress con- cluded, under the 2017 tax act, that Section 1031 would not be repealed for real estate. However, the 2017 tax act did repeal the Section 1031 rule for exchanging personal property. Carried Interest Under an additional rule under IRC Section 168, qualified taxpayers can write off 100 percent of capital expenditures for qualified new and used property for the taxpayer’s business use. In some instances, taxpayers have received carried interest in each project that they directed. In such cases, the taxpayers often claimed that any gain from the disposition of the interest was subject to tax at the long-term capital gain rate. The 2017 tax act addressed this issue by holding that if the interest might otherwise be qualified for long-term capital gain, such interest would not be taxed as long-term capital gain unless the carried interest was held for a minimum of three years. Alternative Minimum Tax Ever since the passage of the Alternative Mini- mum Tax, many experts have asked why the AMT should exist. While the individual AMT was not repealed, Congress did repeal AMT for corporations, which is effective in 2018. Similar to the 21 percent corporate tax rate, this change will make U.S. corporations more competitive globally, and more likely to want to undertake more business within the U.S. Of course, there are many other changes under the 2017 tax act; commercial real estate profes- sionals overall have plenty to celebrate. The new act will spawn new legislative proposals and refinements. Stay tuned. Mark Lee Levine, CCIM, JD, LLM (tax), is a professor and chair holder at the Burns School of Real Estate and Construction Management, Daniels College of Business at the University of Denver. Contact him at [email protected]. Libbi Levine Segev, JD, MS-RECEM, LLM (tax) is a teaching assistant professor at the Daniels College of Business at the University of Denver. Contact her at [email protected]. CCIM Institute’s 2018 Capitol Hill Visit This Spring, CCIM Institute is leading a delegation to Washington to meet with U.S. Senators and Representatives. For a chance to have your voice heard at the highest levels of government, join us on this historic trip. May 15-17, 2018 during the REALTORS® Legislative Meetings & Trade Expo in Washington, D.C. CCIM.COM Visit www.nar.realtor/midyear to register or contact [email protected] for more information. March | April 2018 21