Abstract

http://ssrn.com/abstract=2439888
 


 



A Case for Simpler Gain Bifurcation for Real Estate Developers


Bradley T. Borden


Brooklyn Law School

Nathan Brown


Proskauer Rose LLP

John Wagner II


Williams Parker Harrison Dietz & Getzen

May 21, 2014

16 Florida Tax Review 279 (2014)
Brooklyn Law School, Legal Studies Paper No. 379

Abstract:     
This Article examines the judicially sanctioned bifurcation of real estate developers’ gain. The Article recognizes that even though some commentators oppose granting favorable tax treatment to capital gains, the law most likely will not change. With that in mind, the Article examines the all-or-nothing approach of characterizing gain from the sale of real estate as either capital gain or ordinary income. The Article rejects the all-or-nothing approach of characterizing income under the current statutory system. Instead, it embraces gain bifurcation in the second-best setting that taxes capital gains and ordinary income differently. Illustrating the policy justification for gain bifurcation and judicially sanctioned bifurcation structures, the Article recommends that lawmakers should more fully embrace gain bifurcation for real estate developers by creating a simple statutory election for bifurcating gain that would enhance equity, accuracy, and transparency of gain bifurcation. Although the Article limits its analysis to real estate developers, the idea of gain bifurcation, once improved in this area, could be a catalyst for exploring bifurcation in other areas.

Number of Pages in PDF File: 46

Keywords: Capital gain, gain bifurcation, real estate development, Bramblett structure, ordinary income

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Date posted: May 24, 2014 ; Last revised: October 9, 2014

Suggested Citation

Borden, Bradley T. and Brown, Nathan and Wagner, John, A Case for Simpler Gain Bifurcation for Real Estate Developers (May 21, 2014). 16 Florida Tax Review 279 (2014); Brooklyn Law School, Legal Studies Paper No. 379. Available at SSRN: http://ssrn.com/abstract=2439888

Contact Information

Bradley T. Borden (Contact Author)
Brooklyn Law School ( email )
250 Joralemon Street
Brooklyn, NY 11201
United States

Nathan Brown
Proskauer Rose LLP ( email )
One Boca Place
2255 Glades Road
Boca Raton, FL 33431
United States
John Wagner II
Williams Parker Harrison Dietz & Getzen ( email )
200 South Orange Avenue
Sarasota, FL 34236
United States
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