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Like Kind Exchange for Equipment Lessors
Under the general rules of Like Kind Exchange (“LKE”), no taxable gain (or loss) is recognized, and no tax is due, where property held for use in a trade or business (including tax leased property) is exchanged solely for like-kind property that is also to be held for trade or business purposes. Assuming all requirements of LKE are met, if you dispose of an business asset and subsequently reinvest your sales proceeds to acquire a “like-kind” replacement asset of equal or greater value, then the recognition of taxable gain (along with the lessor's obligation to pay tax on that gain) is deferred until the replacement asset is sold or, in the case of subsequent follow on exchanges, until the replacement's replacement asset is sold in a taxable disposition.
The benefits of LKE for equipment lessors are clear. LKE programs (which seek to institutionalize LKE as a normal part of a lessor's lease origination and remarketing processes) allow lessors to defer federal and state taxation of gains when lessors systematically dispose of their off-lease equipment and subsequently replace that equipment with new leases of like kind equipment. The LKE deferral rules enable lessors to reinvest 100% of their proceeds back into their business instead of using a significant portion of those proceeds to pay federal and state income tax on gains. If a lessor's applicable federal and state tax rate is 40%, this gain deferral provision means that for every $1 million in taxable gain, lessors will have additional cash of $400,000 to reinvest in their leasing business. For the typical lessor, this additional cash can generate increased ROI for their lease portfolio of 75 to 150 basis points. As a result, LKEs provide significant economic advantages and facilitate businesses ongoing or increasing investments in their businesses.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.