Over the last few decades, there have been more than a few proposals seeking to limit or remove the protections Proposition 13 affords to some types of real estate. In their recent client alert, colleagues Craig A. Becker and Breann E. Robowski examine Initiative 17-0055, which would make two significant changes to California’s property tax system, including the elimination of Prop 13 protection for commercial and industrial real estate.
When it comes to real estate, every large U.S. city is in some ways its own unique ecosystem. Still, a local measure can set a standard that other municipalities take note of and potentially emulate. In their recent client alert on dueling proposals for commercial rent tax measures, colleagues Richard E. Nielsen, Craig A. Becker and Robert C. Herr examine just such a local ballot measure, as the San Francisco electorate will decide between a 1.7% or 3.5% tax on commercial rentals in June.
In general, the Tax Cuts and Jobs Act bill allows pass-through owners making less than $157,500 ($315,000 for married couples) to take a flat 20 percent deduction on certain business income, before computing the ordinary income tax they would owe on the remainder. Under complex rules, the deduction phases out when taxpayers make over that amount but under $207,500 ($415,000 for married couples). Continue reading
On July 11, the Texas Court of Appeals, Third District, at Austin, TX, decided the case of Freestone Power Generation, LLC, v. Texas Commission on Environmental Quality, et al., reversing the trial court’s ruling that eight Texas power companies were not entitled to certain property tax exemptions administered by the Texas Commission on Environmental Quality (TCEQ). Continue reading
The California Supreme Court’s recent Ardmore decision expanding the applicability of California’s Documentary Transfer Tax Act will no doubt be the source of future litigation. In their recent client alert, colleagues Craig A. Becker, Richard E. Nielsen, Breann E. Robowski and Dianne L. Sweeney examine the issue.
In California Supreme Court Decision Changes the Transfer Tax World, Pillsbury attorneys Craig Becker, Richard Nielsen, Breann Robowski and Dianne Sweeney discuss the California Supreme Court’s decision in 926 North Armore Avenue, LLC v. County of Los Angeles:
- Court concludes counties and cities are permitted to impose a documentary transfer tax on entity transfers that result in a Proposition 13 “change in ownership” under California Revenue & Taxation Code § 64(c) or 64(d).
First is the ability to finance improvements with debt, which offers depreciation deductions. Second is the ability to make leveraged distributions through refinancing without paying immediate tax on the proceeds. The tax basis of assets steps up to fair market value at the time of the holder’s death, eliminating the deferred gain, so the income tax deferral upon a refinancing is even more attractive for heirs.
Will the U.S. Constitution’s Commerce Clause always insulate interstate commerce from the imposition of state and local taxes? Not always, as the Texas Supreme Court recently confirmed, when it agreed with the Court of Appeals for the First District of Texas, that Texas counties are permitted to levy property taxes on natural gas held in storage in Texas while awaiting future resale and shipment to out-of-state consumers. The case is ETC Marketing, Ltd. v. Harris County Appraisal District. Affirming the Court of Appeals, the Court rejected the argument that taxing the temporary storage of natural gas conflicts with the Commerce Clause in the U.S. Constitution. Continue reading