The Loan Committee™

The Internal Revenue Service today issued guidance clarifying the impact a 2014 individual retirement arrangement (IRA) rollover has on the one-per-year limit imposed by the Internal Revenue Code on tax-free rollovers between IRAs. The change in the application of the one-per-year limit reflects an interpretation by the U.S. Tax Court in a January 2014 decision applying the limit to preclude an individual from making more than one tax-free rollover in any one-year period, even if the rollovers involve different IRAs. Before 2015, the one-per-year limit applies only on an IRA-by-IRA basis (that is, only to rollovers involving the same IRAs). Beginning in 2015, the limit will apply by aggregating all of an individual’s IRAs, effectively treating them as if they were one IRA for purposes of applying the limit.  read entire article…  Source:  IRS

Led by its Corporate Sponsor, Gary Appel, the Historic Rehabilitation Tax Credit program creates an incentive for the owners of historic properties to invest in restoring and reusing these buildings. The program allows a property owner to claim a federal income tax credit equal to 20% of the expenses incurred in rehabilitating an historic building. In short: a) the building must be eligible for listing on the National Register of Historic Places (50 years old is a guide, not a requirement); b) the rehabilitation hard and soft costs must be greater than the owner’s tax basis in the building; and c) the work must not damage the historic integrity of the building. If these requirements are satisfactorily met, the property owner who, for example, spends $10 million renovating a historic hotel, can claim a $2 million credit on their federal income taxes. Alternatively, there is a process whereby the owner can monetize the value of the credit based on its present value with a 3rd party investor. read entire article… Author:  Patrick Connors, Regional Marketing Development Manager at Paradigm Tax Group.

The biggest red flag at a shopping center would be the presence or former presence of a dry cleaning operation. Many releases that occur as a result of a dry cleaning business were not necessarily the result of negligence and could even have resulted through an inadvertent discharge of small quantities of dry cleaning solvents through piping. Soil and groundwater cleanup target levels (CTLs) for dry cleaning compounds in the State of Florida are very low, i.e., you don’t need very much to cause a problem. In addition, these compounds are heavier than water and tend to “sink” in the aquifer, making a release more costly to assess and many times more costly to remediate.

A state funded program was in place to address releases from dry cleaning facilities. The State of Florida Dry Cleaning Solvent Cleanup Program (DCSCUP) provides State funded assessment and remediation of soil and/or groundwater that has been contaminated as a result of dry cleaning solvents from dry cleaning facilities. An eligibility requirement of the program did require that dry cleaning solvent compounds be detected in the soil and/or groundwater; however, it was not required that the detected concentrations meet or exceed regulatory limits in order to make an application to the program. Site remediation under the program did not include third party liability. Applications to the program were not accepted after December 31, 1998.

According to a representative of the Florida Department of Environmental Protection (FDEP), 1,563 dry cleaning facilities (current and former) that were contaminated as a result of a release of dry cleaning solvents, made an application to the DCSCUP. A total of 1,400 sites were deemed eligible for the program. FDEP however, believes that at least 2,800 facilities could have applied, indicating that only about one-half of these types of sites would have been eligible for the program.

It is also interesting to note that facilities deemed ineligible for the DCSCUP cannot be compelled to assess and remediate their sites if knowledge of the release was the result of having made an application to the program. Therefore, do not assume that a dry cleaning facility has not impacted the subsurface if they were deemed program ineligible.  Contact MADELINE FELL at mfell@sgfenvironmental.com for additional information regarding environmental concerns associated with dry cleaner facilities or questions regarding phase I environmental site assessments.

SBA lenders must be aware of the need to order environmental studies on properties that serve as collateral on a SBA loan.  An Environmental Investigation must be conducted before taking any Loan Action that could result in a loss, or increase the risk of loss, due to the actual or alleged presence of Contamination. For example, an Environmental Investigation must be conducted before:

• Accepting Property as substitute collateral;
• Releasing a lien on collateral for substantially less than its estimated Recoverable Value based on unsubstantiated allegations of Contamination;
• Abandoning collateral, which would otherwise have Recoverable Value, based on unsubstantiated allegations of Contamination;
• Acquiring title to Property held as collateral, e.g., by purchasing it at a foreclosure sale or accepting a deed-in-lieu of foreclosure;
• Taking over the operation of a business that uses Hazardous Substances or is located on Contaminated Property regardless of whether the Borrower owns the Property;
• Selling REO or acquired personal property collateral for substantially less than its appraised value based on unsubstantiated allegations of Contamination; and
• Abandoning REO or acquired personal.

Read entire article… Source: Prudent Lenders, LLC. Author: Lance Sexton