Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
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.
Why LKE Was Originally Enacted
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?