With the 2017 Tax Cuts and Jobs Act (“Tax Reform”) fully enacted, taxpayers and practitioners are racing to find last-minute planning opportunities prior to the new year, and states are looking for ways to assist their residents prospectively. The most talked about planning opportunity, currently, is prepaying property taxes for 2018 to create a 2017 tax benefit around Section 11042(a)(6), which limits the state and local tax deduction to $10,000 beginning in 2018. However, imprecise wording contained within Section 11042(a)(6) could feasibly be interpreted to permit a deduction for state and local income taxes as well – depending on how you read the provision.
The California real estate transfer tax landscape experienced a seismic shift when the Supreme Court of California upheld the imposition of Los Angeles County’s Documentary Transfer Tax (“L.A. Transfer Tax”) on the transfer of a controlling interest in a partnership that indirectly owned Los Angeles real estate through an LLC. 926 North Ardmore Avenue, LLC v. County of Los Angeles, 219 Cal. Rptr. 3d 695 (Cal. June 29, 2017). Specifically, the Court held “that the tax may be imposed if the document reflects a sale: that is, an actual transfer of legal beneficial ownership made for consideration.”
The Texas Supreme Court recently granted a petition for review in ETC Marketing, Ltd v. Harris County Appraisal District, 467 S.W.3d 501 (Tex. App.—Houston [1st Dist.] 2015, pet. granted). The question before the high court in ETC Marketing, Ltd is whether an operator of an intrastate natural gas pipeline in Texas is required to pay ad valorem taxes on the value of 33 billion cubic feet of gas stored in a Harris County reservoir. The stakes are high as the 33 billion cubic feet of gas could give rise to a $162 million ad valorem tax bill.