Tax Reform Implementation Highlights Partnership Ambiguities, Expert Says

Kate Courtis, senior vice president, taxation at GGP Inc. (NYSE: GGP), participated in a video interview at Nareit’s REITwise: 2018 Law, Accounting & Finance Conference in Hollywood, Florida.

Courtis said that implementing the changes brought about by the recent tax reform has highlighted the many ambiguities and unanswered questions related to partnership issues, such as the qualified business deduction and the new three-year carried interest provision.

“I always feel like a sponge just trying to get as much information as I can from a lot of the service providers who obviously spend a lot of their time thinking about it,” Courtis said.

About the impact of the new partnership audit regulations, Courtis advises any REITs with joint ventures to consider their agreements and think about what would happen if they were audited. There are different ways of treating various transactions, and it is relevant whether a REIT is a managing partner or just an investor in the transaction.

Touching on how to formulate strategies for avoiding disguised sales, Courtis said it is important to know the lifecycle of an asset, considering that it is getting more difficult to get around the rules.

“It is important to understand if you could put a property into a partnership earlier to start running a clock, maybe think about some vertical slice guarantees or a loan-out transaction,” Courtis noted.