Broker-Dealers Offered Opportunity to Provide Comments to FINRA Rules for Capital Formation

The Financial Industry Regulatory Authority, known as FINRA, is undergoing a review of internal operations and programs as part of a review process dubbed FINRA 360. FINRA, as an independent self-regulatory organization with the overall goal of protecting investors and creating efficiency in the markets, governs many in the financial services industry in conjunction with the securities and exchange commission. FINRA has been issuing notices and seeking comments from those in the industry, as part of FINRA 360, with the goal of identifying opportunities to further the FINRA mission.

Recently, FINRA started the review process for rules that pertain to broker-dealers and their involvement with the capital formation process, and has issued corresponding notices. One of the recent notices from FINRA includes regulatory notice 17-14, seeking comments regarding broker-dealers when involved with unregistered securities and operating funding portals. The broad spectrum of rules that fall within the purview of notice 17-14 include funding portals, crowdfunding, capital acquisition brokers, unlisted real estate investment trusts, and other administrative and operational rules for raising capital.

For those wishing to submit comments on the rules, FINRA has set a deadline of May 30, 2017. For more information, FINRA notice 17-14 can be found at the following link: http://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-17-14.pdf

© 2017 Vandenack Weaver LLC
For more information, Contact Us

 

Advertisements

What Are Some Common Risks Involved in a Commercial Real Estate Transaction?

In a commercial real estate transaction there are risks associated with making sure the buyer can afford to pay you, that’s usually the first thing the seller wants to figure out. From a buyer’s standpoint, you want to look at what kind of due diligence do you need to do. Do you need to worry about zoning regulations? Are the environmental hazards that have been on this property? Did there used to be a gas station? What are the title issues? Are there any easements running through it? If you are redeveloping the property you may be putting a new building up. You need to make sure that you have the right to put it where you really want to on that piece of property.

Every transaction is different and every transaction has its hot points. Sellers want to make sure they are getting paid and they know when they are going to close and buyers want to make sure they are really going to be able to use the property the way they want to once they close.

© 2014 Parsonage Vandenack Williams LLC

For more information, Contact Us

What Should Be in a Commercial Real Estate Purchase Contract?

In a real estate purchase contract you definitely need to make sure you identify the property, identify the parties (who is the buyer and who is the seller), identify the purchase price and how it’s going to be paid and have the seller make some warranties to you about the condition of the property (how it is zoned, whether there are utilities and those types of things). You also need to deal with how the closing costs are going to be allocated, who is paying for the title insurance, who is recording the deed, is there financing involved and does the buyer need the ability to get out if the financing doesn’t come through. In a commercial real estate transaction there are a whole lot of issues that need to be addressed in the contract and it’s good to have good counsel helping you out in that process.

© 2014 Parsonage Vandenack Williams LLC

For more information, Contact Us

If I Want to Buy Property for Investment, Should I Purchase It With a Business Entity?

Business entities are very useful when you want to purchase real estate. If there is more than one person involved in making a purchase, I would tell you almost every single time the answer to that question is yes because it gives you more flexibility in structuring how the financial benefits of that property are going to be allocated to the owners, how further investment is going to work, and determining the maintenance of the property and those types of things. Also, a business entity can give you some distinct tax advantages, again usually if there is more than 1 person involved. Finally, a business entity can give you liability protection so that if something happens and you don’t have insurance for it, the most you could lose is just the value of that asset.

© 2014 Parsonage Vandenack Williams LLC

For more information, Contact Us

What Are the Tax Benefits of Investing in Real Estate?

There are a variety of tax benefits to investing in real estate. One of the significant tax benefits is that you will get capital gains treatment in a lot of cases for the sale of real estate. That is particularly true if it is investment real estate. For example, if you invest in a parcel of farmland and that land appreciates and you then sell it, you are going to get a tax rate that is lower than the ordinary tax rate.

© 2014 Parsonage Vandenack Williams LLC

For more information, Contact Us

A Group of Investors Are Buying Real Estate – What Should They Consider?

When a group of people want to come together and buy real estate, some of the first things they should consider are what are we going to purchase, why are we buying it, and how are we going to fund it. Who’s putting in the money? Is there going to be a loan involved? If a bank is going to loan you money, they are probably going to want personal guarantees. Is everybody coming together willing to give a personal guarantee? Is everyone’s tax situation the same? How should taxes flow from this property? What are you going to do with the property? Is one person going to run their business out of it, or are you all just buying it to rent it out to third parties? There are so many questions that group of investors needs to answer before they can decide the best way to purchase the property.

© 2014 Parsonage Vandenack Williams LLC

For more information, Contact Us

Tax Court Rules Trusts Can Be Real Estate Professionals

The United States Tax Court has recently released a decision in Frank Aragona Trust v. Commissioner that will affect tax planning for many trusts that own businesses or hold real estate. In that case, a trust operated rental real estate properties and developed other real estate properties. It incurred losses from these activities, which it deducted as non-passive losses.

Under prior law, rental real estate losses were automatically passive losses unless incurred by a “real estate professional.” The IRS’s position in Frank Aragona Trust was that a trust could never qualify as a real estate professional. However, the Tax Court found for the taxpayer. It stated that a trust could qualify as a real estate professional if the rental real estate activities of its trustees were regular, continuous, and substantial. It did not, however, address whether trusts could count the activities of employees who were not trustees. The decision will also have a significant impact on planning for the Net Investment Income Tax.

© 2014 Parsonage Vandenack Williams LLC

For more information, Contact Us