This month, the Tax Court revived a method to defeat conservation deductions with its October 10 opinion published as Palmolive Building Investors LLC et al. v. Commissioner, No. 23444-14; 149 T.C. No. 18 (Oct. 10, 2017), holding that if a taxpayer donates a conservation easement, the Treasury Regulations’ requirement that any mortgage must be subordinated to the conservation easement includes subordination of the mortgagee’s rights to insurance and condemnation proceeds.
On September 27, 2017, California Governor Jerry Brown signed an extension of the Urban Agricultural Incentive Zones Act. Rather than sunsetting on January 1, 2019, the Act now extends until January 1, 2029.
The Act, originally authored by Assemblymember Phil Ting and enrolled in 2013 as Government Code Section 51042, permits certain local governments to voluntarily enter into contracts with property owners who commit to using their property for agricultural use in exchange for property tax breaks.
Due to increased valuation of public and private equities, coupled with the upcoming end of the sunset provision that allows hedge fund managers to defer taxation on fees earned offshore, there is an increased interest among hedge fund and private equity managers to donate a portion of their fund interests to charity. The goal is to allow a manager to avoid ordinary income or capital gains tax and/or to obtain a tax deduction while accomplishing his or her philanthropic goals. In order to make the most of any such charitable giving plan, managers need to appreciate that the amount of any charitable deduction will vary depending on the character of the donated property and the type of organization that receives the gift.
The February 15, 2017 deadline for nonprofit organizations in California seeking to initially obtain or renew exemption from property taxes is quickly approaching, and there are changes to the reporting requirements if your organization allows third parties to use your property.
An increased concern amongst many tax-exempt organizations is how to report use of their property by private persons or non-exempt organizations.