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Full-Text Articles in Law

A Win-Win Proposal For Analyzing Profits-Only Partnership Interests, Brad Borden Oct 2008

A Win-Win Proposal For Analyzing Profits-Only Partnership Interests, Brad Borden

Bradley T. Borden

The proper tax treatment of profits-only partnership interests is an unsolved aspect of tax law. The problem has manifested itself recently in the debate over the proper tax treatment of carried interests, a subset of profits-only partnership interests. Current law taxes holders of profits-only partnership interests based upon the character of income determined at the partnership level. Therefore, a partner who contributes only services to a partnership may be taxed at favorable long-term capital gains rates. One group of commentators recognizes such treatment as inequitable and recommends that at least a portion of partnership income allocated to holders of profits-only …


Financing Reverse Exchanges And Safeguarding Exchange Proceeds, Brad Borden Sep 2008

Financing Reverse Exchanges And Safeguarding Exchange Proceeds, Brad Borden

Bradley T. Borden

Over the last several years, reverse exchanges have become a fixture of section 1031. A fluid economy and a strained financial industry send a reminder that safe guarding exchange proceeds in reverse exchanges is paramount. This Article reviews reverse exchange structures, both safe harbor and non-safe harbor, and describes how such transactions must be financed to satisfy tax law requirements and safe guard exchange proceeds. The Article is adapted, with permission, from Chapter 5 of Tax-Free Like-Kind Exchanges.


The Like-Kind Exchange Equity Conundrum, Brad Borden Jul 2008

The Like-Kind Exchange Equity Conundrum, Brad Borden

Bradley T. Borden

The tax-free treatment of like-kind exchanges presents one of tax law’s most compelling equity conundrums. Tax law generally does not tax property holders on the appreciation in the property’s value, but it does tax gain or loss recognized by property sellers and exchangers of non-like-kind property. In its basic Aristotelian form, equity requires that likes be treated alike, but it does not provide criteria for determining what is alike. Depending upon the criteria selected, exchangers of like-kind property can be similar to holders, or similar to sellers and exchangers of non-like-kind property. The equity conundrum is whether tax law should …


Like-Kind Exchanges Of Personal-Use Residences, Brad Borden, Alex Hamrick Jun 2008

Like-Kind Exchanges Of Personal-Use Residences, Brad Borden, Alex Hamrick

Bradley T. Borden

The law governing section 1031 exchanges of personal-use residences ranges from very explicit, in the case of principal residences, to very vague, in the case of mixed-use second homes. The law excludes from section 1031 nonrecognition exchanges of property used solely for personal use. The IRS has provided guidance regarding exchanges of mixed-use principal residences and has provided an all-or-nothing safe harbor with limited applicability for exchanges of mixed-use second homes. To complete the body of law governing exchanges of personal-use residences, this article suggests that the IRS should provide broader guidance for exchanges of mixed-use second homes.


Policy And Theoretical Dimensions Of Qualified Tax Partnerships, Brad Borden Feb 2008

Policy And Theoretical Dimensions Of Qualified Tax Partnerships, Brad Borden

Bradley T. Borden

Qualified tax partnerships are arrangements that come within the definition of tax partnership but elect out of the subchapter K partnership tax rules. Tax entity classification discussions often overlook qualified tax partnerships. This Article identifies them as a definite part of the tax entity classification spectrum (along with disregarded arrangements, tax partnerships, S corporations, and C corporations). The Article presents a theoretical model that describes the relationship qualified tax partnerships have with other tax arrangements. By illustrating that relationship, the Article dismisses misconceptions about qualified tax partnerships. The Article also demonstrates that tax policy does not support the current definitional …


Partnership Tax Allocations And The Internalization Of Tax-Item Transactions, Brad Borden Jan 2008

Partnership Tax Allocations And The Internalization Of Tax-Item Transactions, Brad Borden

Bradley T. Borden

Studies in the theory of the firm help explain partnership attributes and the relationships partners have with each other, which in turn inform the analysis of partnership tax allocation rules. Those studies suggest that partners apportion partnership economic items (such as income and loss) to each other to reduce partner shirking, opportunistic behavior, and agency costs. But partnerships are complex communities of interest, so partners are often unable to determine the specific source of partnership economic items (i.e., they cannot trace partnership output directly from partner input). Therefore, apportioned amounts of partnership items may contain several different and inseparable economic …


Safe Harbors And Careful Planning Make Deferred Exchanges A Valuable Tool, Brad Borden Jan 2008

Safe Harbors And Careful Planning Make Deferred Exchanges A Valuable Tool, Brad Borden

Bradley T. Borden

This Article describes the section 1031 deferred exchange safe harbors. It describes how property owners can structure deferred and multiple-party exchanges to avoid actual and constructive receipt of boot to obtain nonrecognition on the exchange of properties. It demonstrates how property owners can use multiple safe harbors (such as a qualified intermediary and qualified trust) to protect exchange proceeds during the exchange interstice. It also considers the intricacies of the identification rules and the identification and exchange periods. The Article is adapted from Chapter 4 of the forthcoming treatise, Bradley T. Borden, Tax-Free Like-Kind Exchanges (Civic Research Institute 2008).


Tax-Free Like-Kind Exchanges, Brad Borden Jan 2008

Tax-Free Like-Kind Exchanges, Brad Borden

Bradley T. Borden

This is a comprehensive treatise on section 1031 like-kind exchanges.