Tax

When a tax-exempt property's use by a lessee involves an element of private profit. Is the tax-exempt status lost?

A tax nightmare could face big law firms and other multistate service providers if the U.S. Supreme Court this term requires retailers to collect sales taxes in states where the business has no physical presence.

Section 181 of the IRC has provided benefits to both producers of movies and television programs and — under pass-through legal structures such as limited liability companies — to their investors. Now, with the enactment of the sweeping new federal tax law, §181 has been given new life, with a couple of additional benefits and a couple of additional twists.

There are several clauses that rarely find their way into a landlord's initial draft of the lease that may be beneficial to a tenant. In addition, certain real estate tax provisions that are typically included in a landlord's standard lease form need to be carefully reviewed to make sure they are fair to both the landlord and the tenant.

The new law offers two obvious potential benefits: a 20% deduction for pass-through entities such as partnerships, and a 21% tax on corporations.

This article describes the provisions of the Act most likely to impact law firms.

Under the Tax Cut and Jobs Act, should certain employees of a tax-exempt organization receive compensation greater than $1,000,000 during the tax year from any combination of a tax-exempt organization and/or its related organizations, the organizations would be subject to an excise tax on that employee's compensation in proportion to their payments to the employee.

This article is intended to help practitioners by warning of mistakes the author has seen matrimonial attorneys make in applying federal tax law.