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Taxation of proceeds of contract to not complain........

Technical topics regarding tax preparation.
#51
Nilodop  
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We're pretty much in agreement w/o actually saying so. It's, like, tantamount to our being in agreement. I'll make a few comments, definitely NOT in order of importance.

The first is more of a question than a comment. Is there a substantive difference between "bare naked title alone" and "bare legal title"?

The next is this. In #48 you say It seems that the Rule here is this: If we have a permanent easement and retain the property, we can maybe recognize gain, but never loss.. And you say In that case, we simply offset proceeds against basis and do not recognize loss.. And a large part of the reasoning for that is stated thrice in #48. since we still retain the property and we retain the property and and retain the property. Thrice, mind you, although I may have shown them in a different order than you used them.

Now that phrase is subject to some misinterpretation. Is the property the entire property pre-easement, or just the property made subject to the easement? That question becomes important as a way to distinguish my example in #49 as well as your Rev Rul 72-255 (in #50) from facts like in Inaja Land and my Rev Rul 68-291 (in #47).

But I do see redemptive clarification later when you build on this: Some key words here, including within the Pub reference above, are “beneficial interest” and whether or not we retain that. . It still might help to specify whether the impossibility of allocating basis to the easement land is present in the facts, as opposed to the clear ease of such allocation in my example in #49. That also should have been clarified in Rev Rul 72-255, and it's not too late for that.

Another thought I had is whether it matters to our conclusion whether the age of the earth is like 4 billion years old, you know or is it only in the low to mid thousands of years. The ever fun science/religion thingy. I conclude it does not matter.
 

#52
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The first is more of a question than a comment. Is there a substantive difference between "bare naked title alone" and "bare legal title"?


Yes. The former could refer to illegal title as well as legal title.

Now that phrase is subject to some misinterpretation. Is the property the entire property pre-easement, or just the property made subject to the easement?


I think it’s the portion of the property subject to the easement. I don’t put a whole lot of stock into the idea that we can’t figure out basis for a portion of a property (i.e. that it would be impossible or impractical). The fact is, if we were to subdivide the easement portion off of the whole, and then sell the easement portion instead of putting an easement on it, we’d need to know the basis. I do suppose, though, that if we have numerous adjoinging parcels, bought at different times for different prices, and then we run an easement through the whole of them, maybe it’s impractical to figure out basis for the easement portion.

In any case, if you read the Scales case, the guy owned like 6,000 acres. The easement only covered 324.4 acres. The court said:

In view of these authorities and the facts that the petitioner has surrendered perpetual and complete control of the 324.4 acres involved herein to the Levee Improvement District, and that it is useless for purposes of cultivation or grazing because almost always overflowed by water, we must hold, for the purposes of this proceeding and for taxation, that the conveyance to the Levee Improvement District was tantamount to a sale and that petitioner has no beneficial interest therein.

Key word “beneficial interest: and “therein.” All in all, I think the Rules I put forth cover every situation.

I conclude it does not matter.


Very well then.
 

#53
Nilodop  
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All in all, I think the Rules I put forth cover every situation..

As Billy Shakespeare said,
“He was a man, take him for all in all,
I shall not look upon his like again.”


I am loath to end this discussion, but I fear it is the right thing to do, if only for hoping not to beat a dead horse.
 

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