Linking Land Use and Transportation

Approaches to linking land use and transportation encompass a holistic view of development. From a transportation perspective, "Smart Growth" includes planning that better coordinates land use and transportation; accommodates pedestrian and bike safety and mobility; provides and enhances public transportation service; improves the connectivity of road networks; and takes a multi-modal approach to transportation with supportive land use development patterns to create a variety of transportation options.

The Federal-aid transportation planning program supports efforts to coordinate land use and transportation decision-making and to foster "smart growth".

Statewide and Metropolitan Planning Factors:

* Support the economic vitality of the United States, the States, and metropolitan areas, especially by enabling global competitiveness, productivity, and efficiency;
* Increase the safety of the transportation system for motorized and nonmotorized users;
* Increase the security of the transportation system for motorized and nonmotorized users;
* Increase the accessibility and mobility options available to people and for freight;
* Protect and enhance the environment, promote energy conservation, and improve quality of life, and promote consistency between transportation improvements and State and local planned growth and economic development patterns;
* Enhance the integration and connectivity of the transportation system, across and between modes throughout the State, for people and freight;
* Promote efficient system management and operation; and
* Emphasize the preservation of the existing transportation system.

Passive Activity Losses - Real Estate Tax Tips

Generally, a passive activity is any rental activity OR any business in which the taxpayer does not materially participate. Nonpassive activities are businesses in which the taxpayer works on a regular, continuous, and substantial basis. In addition, passive income does not include salaries, portfolio, or investment income.

As a general rule, the passive activity loss rules are applied at the individual level. Although Internal Revenue Code Section 469 was enacted to discourage abusive tax shelters, its impact extends far beyond shelters to virtually every business or rental activity whether reported on Schedules C, F, or E, as well as to flow through income and losses from partnerships, S- Corporations, and trusts. Generally, the law does not apply to regular C-Corporations although it does have limited application to closely held corporations.

There Are Two Kinds of Passive Activities:
* Rentals, including both equipment and rental real estate, regardless of the level of participation
* Businesses in which the taxpayer does not materially participate on a regular, continuous, and substantial basis

Types of Income and Losses

Income and losses on a tax return are divided into two categories:

* Passive: Rentals and businesses without material participation. A limited partner is generally passive due to more restrictive tests for material participation. As a result, limited partners will generally have passive income or losses from the partnership
* Nonpassive: Businesses in which the taxpayer materially participates. Also, salaries, guaranteed payments, 1099 commission income and portfolio or investment income are deemed to be nonpassive. Portfolio income includes interest income, dividends, royalties, gains and losses on stocks, pensions, lottery winnings, and any other property held for investment.

Passive Activities

Income and losses from the following activities would generally be passive:

* Equipment leasing
* Rental real estate (with some exceptions)
* Sole proprietorship or farm in which the taxpayer does not materially participate
* Limited partnerships with some exceptions
* Partnerships, S-Corporations, and limited liability companies in which the taxpayer does not materially participate

Nonpassive Activities

Income and losses from the following activities would generally be nonpassive:

* Salaries, wages, and 1099 commission income
* Guaranteed payments
* Interest and dividends
* Stocks and bonds
* Sale of undeveloped land or other investment property
* Royalties derived in the ordinary course of business
* Sole proprietorship or farm in which the taxpayer materially participates
* Partnerships, S-Corporations, and limited liability companies in which the taxpayer materially participates
* Trusts in which the fiduciary materially participates.

Involuntary Conversions

An involuntary conversion occurs when your property is damaged, stolen, condemned, or disposed of under the threat of condemnation and you obtain other property or money in payment, such as insurance or a conviction award. Involuntary conversions are also known as involuntary exchanges.

Reporting Gain or Loss

Gain or loss from an involuntary conversion of your property is generally recognized for tax purposes unless the property is your main home. You report the gain or take away the loss on your tax return for the year you realize it. (You cannot deduct a loss from an involuntary adaptation of property you held for personal use unless the loss resulted from a casualty or theft.)

However, depending on the type of property you receive, you may not have to statement a gain on an involuntary conversion. You do not report the gain if you obtain property that is similar or related in service or use to the converted property. Your basis for the new property is the same as your basis for the changed property. The gain on the involuntary conversion is deferred until a taxable sale or replace occurs.

Like-Kind Exchanges - Real Estate Tax Tips

Generally, if you exchange business or investment property solely for business or investment property of a like-kind, no gain or loss is documented under Internal Revenue Code Section 1031. If, as part of the exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other assets and money received, but a loss is not recognized.

Section 1031 does not apply to exchanges of catalog, stocks, bonds, notes, other securities or evidence of indebtedness, or certain other assets.

Like-Kind Property

Properties are of like-kind, if they are of the same nature or character, even if they vary in grade or quality. Personal properties of a similar to class are like-kind properties. However, livestock of different sexes are not like-kind properties. Also, personal property used principally in the United States and personal property used predominantly outside the United States is not like-kind properties.

Real properties usually are of like-kind, regardless of whether the properties are improved or unimproved. However, real assets in the United States and real property outside the United States are not like-kind properties.

Installment Sales - Real Estate Tax Tips

An installment sale is a sale of property where you get at least one payment after the tax year of the sale. If you dispose of property in an installment sale, your description part of your gain when you receive each installment payment. You cannot use the installment method to statement a loss.

General Rules

If a sale qualifies as an installment sale, the gains have to be reported under the installment method unless:

* You elect out of by means of the installment method
* You are not a qualified accrual method taxpayer

Real estate tips

A lot of people use various trends when looking at the real estate market. Ones main tool is to first realize the real estate market. The real estate is a large market and now is at your advantage. Start in the area that you live in keeping track of neighboring real estate and any homes you may buy. It is easier to keep track of leaseholder or buyers when you live in same the geographical area.

When it comes to your local real estate market there are a few things to focus on.

1. Growth in jobs are good since where there is strong growth, there are new workers and they need a place to live.

2. Many of these people will be moving in from a new area.

3. If job growth is well-built, your real estate business should have a nice profit. A lot of new construction in an area may hurt your real estate business when assess your local market. The more homes available to purchasers the harder it will be for sellers to sell their properties. A group of communities have new construction, but you are fine if it is not outpacing the demand.

Licensed Real Estate Agents - Tax Tips

Most real estate professionals function their business as a sole proprietorship. This means that you are not someone's employee, you haven't formed a partnership with anyone, and you have not included your business.

Statutory Non employees

Licensed real estate agents are statutory non employees and are pleasured as self-employed for all Federal tax purposes, including income and employment taxes, if:

* Substantially all payments for their services as real estate agents are openly related to sales or other output, rather than to the number of hours worked

* Their services are executed under a written contract providing that they will not be treated as employees for Federal tax purposes

This category contains individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output.

Evaluating Price Pull Backs When Buying

If you are in position to buy a home these days, you have a great chance to make a killing. It is no top secret the real estate market has pulled back in a big way. We are quickly approaching the bottom of that market, which means you can reap huge equity growth in the next few years if you buy now. One of the issues you face now, however, is figuring out if a house is losing value due to the overall pull back or because of a little permanent. There is no clear way to create this determination. One approach taken by many is to view the nature of the neighborhood. Is the neighborhood falling on hard times? Are jobs leaving town? Is there something major that has happened? If not, you are probably looking at a home that is suffering a provisional pull back and will rebound for big equity gains as the market does the same.

Rural

Rural Land is land that is used wholly and exclusively for carrying on a substantial business of primary production. A 'substantial primary production business' has a commercial purpose or character and is not merely carried on as a hobby or for recreation purposes and is involved in activities related to the cultivation of land; animal husbandry/farming; horticulture; fishing; forestry; viticulture or dairy farming. Primary production for the purpose of the rural land definition does not include vacant land (even if zoned 'rural'), hobby farms, land used for stock agistment or mining.

The definition of primary production is taken from the Income Tax Assessment Act 1936 which states "primary production means production resulting directly from:

* the cultivation of land;

* the maintenance of animals or poultry for the purpose of selling them or their bodily produce, including natural increase;

* fishing operations;

* forest operations; or

* horticulture;

and includes the manufacture of dairy produce by the person who produced the raw material used in that manufacture."

If land cannot be considered rural land then it is defined as urban land. Therefore, acquisitions by foreign interests of 'hobby farms', 'rural residential' blocks, land used for stock agistment and vacant land with rural zoning are included within the urban land category. Most acquisitions of rural and urban land by foreign interests require foreign investment approval.

Generally, where a foreign interest proposes to acquire a business of primary production valued at less than $100 million, the transaction is exempt from requiring foreign investment approval.
Acquisitions of such businesses valued at $100 million or more (or the relevant threshold for US investors or offshore takeovers) require prior approval and are normally approved unless considered contrary to the national interest.

Where the investment is by a foreign government or one of its agencies, foreign investment approval is required irrespective of the size of the investment.

Statement of Commissioner Douglas H. Shulman

I want to extend my thanks to the members of the Senate and the Senate Finance Committee, especially Chairman Baucus and Senator Grassley. I also want to thank President Bush for nominating me and Treasury Secretary Paulson for his support.

The Internal Revenue Service touches virtually every adult, every business and every non-profit organization in America. It is an honor to assume the leadership of this critical agency. I recognize the great responsibility I have been given and will work to ensure that the IRS is fair, impartial and respects the rights of all taxpayers.

As Commissioner, I will concentrate on both enforcement and service. For the majority of Americans who pay their taxes willingly and on time, there must be clear guidance, accessible education and outstanding service. Our aim should be to make it as easy as possible for citizens to pay the correct amount of taxes in the most efficient and least burdensome manner possible.
For taxpayers who intentionally evade paying taxes, there must be rigorous enforcement programs.

I am looking forward to working with the dedicated and talented IRS workforce, along with the broader tax community and important stakeholders to continue to build an efficient, effective and respected IRS.

Open Thread

As we watch the Fed and Paulson desperately try to either nationalize Bear Stearns or get it merged, I am led to wonder why it is that main stream media articles keep avoiding a basic, fundamental truth about the housing bubble – they keep trying to insist that bubblicious housing prices are somehow justified, that sellers are somehow entitled to peak bubble prices and are justified in their expectation of receiving such prices, and that the only reason why housing prices are currently being threatened is because of a lack of credit. Ha! What about that 800 lb elephant sitting in the middle of the editor's office; what about income? What about the fact that the only way people could "afford" bubble pricing was with NINJA loans and the like? Why isn't income-based affordability ever given any serious consideration?

Besides, credit really isn't all that threatened especially now that the GSE conforming loan limits have been raised to absurd levels (at least here in California). Sure you can get credit; it's available to anyone who can make a hefty down payment, can prove their income, and who doesn't spend more than about a third of their gross income on the mortgage (or no more than about 40% or so on all debt combined). What's the problem? Seems perfectly reasonable to me. The "problem", of course, is that since bubble-inflated prices are based on the exact opposite of these more traditional lending criteria, bubblicious prices cannot be supported unless one of two things occurs: 1) prices come way down or 2) everyone gets a 100%+ raise. Personally, I would prefer the latter but I am not counting on it.

Home Buying Guide

Buying a home can be one of the largest financial investments you'll make in your lifetime. If you're a home buyer, particularly a first-time buyer, you'll find our home buying guide helpful. By educating yourself on the home buying process and seeking out the sound advice of a REALTOR®, you'll save time, energy, and money.

REALTORS® are licensed real estate professionals who are also members of a local real estate board. A REALTOR® acts as an agent for the buyer or the seller - or, in less frequent situations, for both. But no matter whom they represent, REALTORS® are legally obligated to protect and promote the interests of their clients. All REALTORS® must adhere to a strict Code of Ethics and a high standard of business practices.

To Short Sell or Not to Short Sell Your Home

In the current times the real estate market is seeing a drastic rise in the number of short sale listings. What is a short sell you ask? A short sale is when market conditions are so that the value of your home is worth less than what you currently owe on your mortgage and you decide to sell anyway. That's when you know you're in a short sell situation. How and why would someone sell their home if they will end up minus cash?

The why is easy to explain. The majority of reasons center around a home owner not being able to afford their monthly mortgage payment. Due to whatever circumstances such as job loss, divorce, or an unforeseen financial emergency more and more homeowners are considering short selling their home. Another factor that has plays a major role is homeowners with adjustable rate mortgages (ARMs) not being able to afford their monthly payment when it adjusts to a higher interest rate. It makes matters much worse when the current market conditions are bad and home prices are falling. Most homeowners facing these situations could have opted to refinance or borrow money against their home based upon their home value rising. A short sale is also a better alternative to foreclosure in which your home is taken back by the bank or lender, you get left with nothing to show for it, and your credit score is left virtually trashed.

Real Estate Licensed Agent -Tax Tips

Most real estate professionals operate their business as a sole proprietorship. This means that you are not someone's employee, you haven't formed a partnership with anyone, and you have not incorporated your business.

Statutory Nonemployees

Licensed real estate agents are statutory nonemployees and are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:

• Substantially all payments for their services as real estate agents are directly related to sales or other output, rather than to the number of hours worked.
  
• Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes.

This category includes individuals engaged in appraisal activities for real estate sales if they earn income based on sales or other output.