Deducting 2018 Real Property Taxes Prepaid in 2017 Comes with Caveats
January 04, 2018 —
William Hussey – White and WilliamsMany clients and friends have inquired about accelerating the payment of their 2018 real property taxes as a result of the recent enactment of the federal Tax Cuts and Jobs Act. Pursuant to that Act, the deduction for state and local income, real property and other taxes will be capped at $10,000 in tax years 2018 through 2025. The Act, moreover, specifically disallows a deduction in 2017 for 2018 state and local income taxes that are prepaid before year-end.
The Act was not clear on whether a prepayment of 2018 real property taxes would be deductible in 2017. For certain taxpayers that are not subject to the alternative minimum tax, a prepayment of those 2018 real property taxes might be of current benefit to them.
Yesterday, the IRS issued an advisory to taxpayers outlining which real property tax prepayments will be deductible in 2017 and which are not. The text of that advisory, together with the illustrative examples, is set out below for your consideration.
IR-2017-210, DEC. 27, 2017
WASHINGTON - The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.
The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018. A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017. State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.
The following examples illustrate these points.
Example 1: Assume County A assesses property tax on July 1, 2017 for the period July 1, 2017 – June 30, 2018. On July 31, 2017, County A sends notices to residents notifying them of the assessment and billing the property tax in two installments with the first installment due Sept. 30, 2017 and the second installment due Jan. 31, 2018. Assuming taxpayer has paid the first installment in 2017, the taxpayer may choose to pay the second installment on Dec. 31, 2017, and may claim a deduction for this prepayment on the taxpayer’s 2017 return.
Example 2: County B also assesses and bills its residents for property taxes on July 1, 2017, for the period July 1, 2017 – June 30, 2018. County B intends to make the usual assessment in July 2018 for the period July 1, 2018 – June 30, 2019. However, because county residents wish to prepay their 2018-2019 property taxes in 2017, County B has revised its computer systems to accept prepayment of property taxes for the 2018-2019 property tax year. Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 tax year until July 1, 2018.
The IRS reminds taxpayers that a number of provisions remain available this week that could affect 2017 tax bills. Time remains to make charitable donations. See IR-17-191 for more information. The deadline to make contributions for individual retirement accounts - which can be used by some taxpayers on 2017 tax returns - is the April 2018 tax deadline.
IRS.gov has more information on these and other provisions to help taxpayers prepare for the upcoming filing season.
Read the court decisionRead the full story...Reprinted courtesy of
William Hussey, White and WilliamsMr. Hussey may be contacted at
husseyw@whiteandwilliams.com
Privileged Communications With a Testifying Client/Expert
June 10, 2019 —
Shannon M. Warren - The Subrogation StrategistIn
In re City of Dickinson, 568 S.W.3d 642 (Tex. 2019), the Supreme Court of Texas recently assessed whether a client’s emails with its counsel were subject to disclosure after the client was designated as a testifying expert witness. In re City of Dickinson involved a coverage dispute between a policyholder and its insurer. The policyholder moved for summary judgment on the issue of causation, essentially alleging that its insurer did not pay all damages caused by Hurricane Ike. In responding to the motion, the insurer relied upon an affidavit by one of its employees, a claims examiner, that included both factual testimony and expert witness testimony.
The policyholder subsequently filed a motion to compel, seeking the production of emails between the claims examiner and the insurer’s counsel that were generated while the affidavit was being drafted. The emails contained numerous revisions of the affidavit. The insurer objected, asserting that the emails were protected by the attorney-client privilege and were generated in the course of the rendition of legal services.
The trial court granted the motion to compel, ordering production. Ultimately, after a series of appeals, the Supreme Court had to decide whether the documents in dispute were subject to discovery. In resolving this issue, the court examined the rules pertaining to expert disclosures. As noted by the court, the rules authorize the production of all documents provided to a testifying expert witness. Thus, the court was faced with determining if its rules required the disclosure of documents that are also subject to the attorney-client privilege.
Read the court decisionRead the full story...Reprinted courtesy of
Shannon M. Warren, White and WilliamsMs. Warren may be contacted at
warrens@whiteandwilliams.com
A Court-Side Seat: A Poultry Defense, a Houston Highway and a CERCLA Consent Decree that Won’t Budge
March 22, 2021 —
Anthony B. Cavender - Gravel2GavelFebruary saw the usual array of significant environmental decisions and federal regulatory notices.
THE FEDERAL COURTS
U.S. Court of Appeals for the District of Columbia
Luminant Generation v. EPA
The court will be grappling with a difficult venue case governed by the Clean Air Act (42 USC Section 7607(b)). In 2013, the U.S. Court of Appeals for the Fifth Circuit decided the case of Luminant Generation v. EPA (714 F. 3d 841), in which the court upheld the affirmative defenses that were made part of the Texas State Implementation Plan (SIP) and which applied to certain unpermitted emissions from regulated sources during periods of startup, shutdown or malfunction. These defenses were challenged in the Fifth Circuit and were rejected. On the national stage, EPA has been involved in litigation over these affirmative defenses and recently excluded from a “SIP Call” the Texas program, which was carved out. This EPA decision is being challenged in the DC Circuit (see Case number 20-1115),with the State of Texas arguing as an intervenor that any issues involving Texas belong in the Fifth Circuit, and not in the DC Circuit because the Act allows regional issues to be decided in the regional federal courts.
Read the court decisionRead the full story...Reprinted courtesy of
Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Mental Health and Wellbeing in Construction: Impacts to Jobsite Safety
August 16, 2021 —
NAHB - NWFA and Hardwood Floors MagazineThis article originally appeared in the National Wood Flooring Association's Hardwood Floors Magazine.
In the construction industry, workplace safety efforts have often focused on eliminating the most-common causes of on-the-job accidents, such as falls, being struck by or caught in-between objects, electrocutions, or being exposed to hazardous chemicals and substances. For more than two decades, the National Association of Home Builders (NAHB) has been at the forefront of enhancing physical safety and health in residential construction. NAHB takes proactive steps to keep members and affiliated state and local associations informed and educated about safety and health issues and trends affecting the building industry, including developing safety and health resources to help builders and contractors operate safe jobsites and lower workers’ compensation costs.
However, we recently have learned that construction workers are particularly susceptible to mental health issues and suicide – which is a silent killer in construction, and we know that the home building industry is not immune to the issues in the construction industry at large. We also know that industry associations have a role to play in promoting the importance of worker health and well-being to their member organizations. Helping to create sustainable workplaces and healthy, thriving professionals strengthens the industry and deepens the volunteer leadership bench. In addition to the benefits to the association, workplace well-being is good for employee health and retention, may reduce the cost of insurance, sick time, and employee turnover, and increase productivity. This can be accomplished by addressing mental well-being as part of overall safety – both physical and psychological.
How big is this problem of mental health and suicides in construction? According to the Centers for Disease Prevention and Control (CDC), the construction industry has one of the highest rates of death by suicide compared to other industries. In 2017, the suicide rate for construction workers was 53.3 per 100,000 workers, which is nearly five times greater than the rate for all fatal work-related injuries in construction (9.5 per 100,000 workers) from the physical hazards companies focus on eliminating.
Read the court decisionRead the full story...Reprinted courtesy of
NAHB
From the Ground Up
March 06, 2022 —
Maggie Murphy - Construction ExecutiveAs a veteran of the U.S. Marine Corps, Mari Borrero knows a thing or two about stepping up to a challenge. She describes her time in the military as “one of those milestones that changes your life,” and credits the experience with turning her from a self-described “entitled teenager” into the woman she is today: fearless, bold and relentless in pursuit of her dreams.
A career in the construction industry was never on the table for Borrero, who, after being honorably discharged from the Marine Corps, worked as a hospice-care coordinator and then a teacher in support of her then-third-grade son. The common thread in all these occupations? A genuine desire to put the needs of others before her own. Today, Borrero says she can’t imagine doing anything other than what she now calls work—owning and operating a construction business, Auburn, Washington–based American Abatement & Demo.
Easing Transitions
Born in Bayamón, Puerto Rico, Borrero was five when her mother moved the family to Dallas to seek life-saving treatment at Children’s Medical Center Dallas for her brother, who had a rare kidney disease. A local church supported the family, providing housing, food and clothing until they were able to transition into their own space.
Reprinted courtesy of
Maggie Murphy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Read the court decisionRead the full story...Reprinted courtesy of
Locals Concerns over Taylor Swift’s Seawall Misdirected
January 13, 2014 —
CDJ STAFFHomeowners in Westerly, Rhode Island have been concerned about alterations made to a seawall below Taylor Swift’s seaside home in Rhode Island, particularly in that some large boulders have been moved to the shore. But officials with Rhode Island’s Coastal Resource Management Council have assured residents that the work is being done at their request, according to the Westerly Sun.
In addition to moving boulders, the project repairs an existing seawall which was damaged by Hurricane Sandy. The cost is estimated to be $2 million.
Read the court decisionRead the full story...Reprinted courtesy of
Shutdowns? What A Covid-19-Safe Construction Site Looks Like
April 20, 2020 —
ENR Editors - Engineering News-RecordThere’s no end to published opinions about construction project shutdowns where the widely different types of jobsites are reduced to a single Dickensian nightmare crying out to be closed during this COVID-19 pandemic.
ENR Editors
ENR may be contacted at ENR.com@bnpmedia.com
Read the full story... Read the court decisionRead the full story...Reprinted courtesy of
First Lumber, Now Drywall as Canada-U.S. Trade Tensions Escalate
November 30, 2016 —
Katia Dmitrieva – BloombergA new trade dispute has broken out between Canada and the U.S. that threatens to raise prices in Canada’s already overheated housing markets.
The Canada Border Services Agency imposed a provisional tariff as high as 277 percent on U.S. drywall imports in September after ruling that manufacturers were dumping the product, or selling it below the price in their home market, undercutting local suppliers.
The tariff has raised the price of drywall, or gypsum board as it’s also called, by as much as 30 percent and is causing “chaos” and delays as contractors scramble for alternative sources. Some builders say the tariff could add as much as C$13,000 ($9,671) to the cost of a new home, which would amount to a C$2.6 billion increase to the roughly 200,000 homes built in Canada each year.
Read the court decisionRead the full story...Reprinted courtesy of
Katie Dmitrieva, BloombergMs. Dmitrieva may be followed on Twitter @katiadmi
