Treasury identified eight tax regulations to be reviewed as part of the Trump Administration’s effort to reduce burdensome regulations passed by the previous Administration. Treasury will submit a final report to the President with recommendations for removal or substantial revisions by September 18, 2017.
The regulations include several that impact commercial real estate, specifically:
- Proposed regulations under Section 103 defining a political subdivision of a State that is eligible to issue tax-exempt bonds (REG-129067-15; 81 F.R. 8870)
- Proposed Regulations under Section 2704 (REG-16311302; 81 F.R. 51413) restricting the use of valuation discounts on family-owned businesses for estate tax purposes
- Temporary regulations under Section 752 dealing with allocation of liabilities for disguised sale purposes and treatment of bottom-dollar guarantees (T.D. 9788; 81 F.R. 69282)
- Temporary Regulations under Section 337(d) regarding transfers of property by C corps to RICs and REITs (T.D. 9770; 81 F.R. 36793)
ICSC’s position is that the proposed Section 103 regulations on political subdivisions impose overly broad restrictions that will cause severe and unintended barriers to governmental efforts to develop infrastructure and other improvements. ICSC’s comment letter can be found here.
ICSC joined other national real estate groups in asking Treasury to withdraw the proposed section 2704 valuation discount regulations. The regulations go beyond potential tax abuses and capture ordinary situations that arise in family-owned real estate businesses, which often impose restrictions on liquidation to preserve the business. Those comments can be found here.