NAIOP Upstate New York opens year with a program on taxes

On January 28 NAIOP upstate New York chapter kicked off the new year with their first program titled," Obama and Taxes...What to expect in 2009." The seminar was presented by Jeff Corey who is a partner at the CPA firm The Bonadio Group. Corey reviewed the tax proposals affecting commercial real estate. He started by telling us just how much tax revenue was collected in 2008 and broke it down by the following individual groups: 1) Individual Income Tax: $1.236 trillion. 2) Corporate Income Tax: $380.925 billion. 3) Employment Taxes: $814.819 billion. 4) Gift Taxes: $1.97 billion. 5) Excise Taxes: $ 57.99 billion. 6) Estate Taxes: $26.717 billion. These taxes total $2.518 trillion of revenue that was brought into the government in 2008. Corey mentioned that in October of 2008 $700 billion went to the Wall St. bailout along with $300 billion in tax incentive riders coupled with the January 2009 Economic Recovery Plan of $825 billion with 2/3 going to new spending and 1/3 going to tax cuts. For business he mentioned they need to extend the bonus depreciation which would allow a 50% write-off at the start of an investment in a new property if purchased this year. This would have a stimulus effect on buying something now versus next year. Corey also said that the government should extend the $250,000 section 179 increase through 2009. He did however say that there is no language right now to change leasehold improvement depreciation (39 years to 15 years) and restaurant space, LHI and retail depreciation extended in 2008 to be extended in 2009. Net operating loss carrybacks should be extended from two years to five years  and there is an issue with pass-throughs and the ability to utilize losses at individual owner/investor levels. He talked about energy credits and an increase in funding for New Clean Energy Bonds and Qualified Energy Conservation Bonds that will be available for businesses this year. He also spoke about the $7,500 credit to first time home buyers and a repayment waiver if the home is bought between January 1 and July 1 of this year and not resold in less than 36 months. Looking ahead he told us that we should stay concerned with lease hold improvement write-offs, carried interest issues, Brownfield Remediation and Average Minimal Tax (AMT) issues. It is estimated that taxes this year should stay the same as last year but will probably go up in 2010 and 2011. The IRS will probably tighten the rule on 1031s , raise FICA maximum over $110,000/year and go after companies that lay off their employees and bring them back as independent contractors saving them payroll taxes. His presentation was excellent and gave everyone in attendance a very good idea of what lies ahead tax-wise this year. We would like to thank The Bonadio Group for sponsoring this event. Thomas Thaney is the 2009 president of NAIOP Upstate New York, Pittsford, N.Y.