Kobe Bryant’s widow asks court to publish names of deputies who took photos of fatal helicopter crash site

By Artemis Moshtaghian and Dakin Andone | CNN

Vanessa Bryant has asked a US court to publicly name four Los Angeles County sheriff’s deputies she claims took or shared pictures of the remains of her late husband, basketball legend Kobe Bryant, their daughter and seven others killed in the January 2020 helicopter crash.

The request comes as part of Bryant’s federal lawsuit against Los Angeles County and the sheriff’s department, which seeks damages, claiming negligence and invasion of privacy.

According to a proposed amended complaint filed in US District Court last week, Bryant’s lawyers included the names of the four LASD deputies among the defendants, along with the Los Angeles County Fire Department.

Lawyers for the defendants argue the names should be kept under seal and that revealing them would increase the likelihood the deputies in question would be targeted by hackers employed by tabloids looking to obtain and release any existing photos.

“The Sheriff’s Department wants to redact the names of the deputies that took and/or shared photos of my husband, daughter and other victims,” Bryant wrote in a statement posted on Instagram. “Anyone else facing allegations would be unprotected, named and released to the public. … These specific deputies need to be held accountable for their actions just like everyone else.”

The complaint, which redacted the deputies’ names, says one deputy used his personal cell phone to take between 25 and 100 photos of the crash scene, “many of which had no conceivable investigatory purpose and were focused directly on the victims’ remains.”

The photos spread throughout the sheriff’s department and were shared “in settings that had nothing to do with investigating the crash,” the complaint says. One deputy trainee showed pictures off at a bar, the complaint says, boasting he had worked on the crash site.

After learning they had taken and shared the photos, Los Angeles County Sheriff Alex Villanueva summoned the deputies and told them they would face no discipline if they deleted the pictures, the complaint claims. The deputies purportedly cooperated, it says.

An internal department investigation was later undertaken, after news reports about the photos. The complaint says the department has yet to provide public results of the investigation. Bryant, however, obtained the final report last month, the complaint says, adding the “report reveals that the Sheriff’s Department has failed to take basic steps to ensure all copies of the improper photos are tracked down and sequestered.”

The complaint also claims fire department personnel took and shared photos of the victims’ remains.

In a motion arguing to keep the deputies’ names private, attorneys for the defendants said they believe the photographs in question no longer exist. They said the defendants had asked Bryant to agree to an “independent forensic examination” to determine this, but said she has so far refused.

In response, Bryant’s attorneys said the defendants had not shown any precedent for an officer proceeding anonymously after they’ve been sued for a civil rights violation. They also said the fears of the deputies being hacked was “not a compelling reason” to seal their identities, and that if officials feared hackers could obtain the photos, the defendants should “act urgently to preserve and secure such photos.”

CNN has reached out to Los Angeles County and the sheriff’s department for comment.

Villanueva said last March that eight deputies were facing administrative action after accusations emerged that deputies shared pictures of the crash scene, saying he was “shocked” to learn about the incident and said he felt a “sense of betrayal.”

The accusations ultimately led to a new law in California making it illegal for first responders to share photos of a deceased person at a crime scene for any reason besides an official law enforcement purpose. A first responder found guilty of the misdemeanor crime may be fined up to $1,000 per violation. Gov. Gavin Newsom signed the bill into law last September.

The-CNN-Wire™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

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3 ‘transcendent’ figures in commercial real estate

Last Wednesday I agreed to an early meeting, in person, no less. On the drive back, I tuned into my favorite radio talk station, KABC 790. It was there I sadly learned of Rush Limbaugh’s passing.

I must admit, rarely did I listen. As a matter of fact, I can’t recall the last time. But, his brand saved AM radio and created a whole genre of content – conservative talk.

Many of the stalwarts in the industry today have Limbaugh to thank – including the two gents – Armstrong and Getty – to whom I was listening. Limbaugh transcended his craft. Meaning? Everyone knew him, even if you weren’t a fan. Michael Jordan, Arnold Palmer, Muhammad Ali, Vince Lombardi, Oprah Winfrey, Billy Graham and Stephen Spielberg all shared a similar impact on their professions.

Even if you never watched golf or consumed a lemonade iced-tea, you recognize Arnold Palmer. Transcendent figures do that – become household names.

You may be wondering, what does this have to do with commercial real estate? Only this: Our trade has similar figures who’ve broken the shackles of normal and transformed our industry. Allow me to introduce you to a few. Wait, you probably already know them.

Roger Staubach, founder of The Staubach Co., U.S. Naval Academy grad, Heisman Trophy winner, multiple Super Bowl titles with the Dallas Cowboys. Thanks for that, Roger! You made this young man – a lifelong Cowboy fan – very happy in the 1970s.

When Staubach retired from the NFL, his focus turned to commercial real estate. He moonlighted in brokerage during the off-season with the Henry S. Miller Co. While there, he observed a need. Corporate tenants were lacking representation.

During those days, owners of commercial real estate engaged brokers to market their assets and locate occupants to fill their spaces. But, who was the tenant’s advocate? Generally, it was a hybrid agent who did landlord and lessee work.

Staubach ’s company forged the tenant rep concept whereby his company’s only clients were the occupiers of office and industrial buildings. Contractors, space planners, architects, attorneys, project managers and moving companies were all components of Staubach’s offering. When you hired Staubach to secure a location, all of those service providers were part of the deal — at no cost. He revolutionized the way in which corporate occupants were represented. Staubach was sold to Jones Lang LaSalle in 2008 for $613 million. How’s that for timing?

Andrew C. Florance, founder, director, president and CEO of CoStar Group Inc. Through CoStar, Florance pioneered the concept of commercial real estate firms outsourcing research functions to a third-party information provider, combining the operational efficiencies of a computer-based information system with the more thorough, standardized and higher quality property information produced by the industry’s first independent research organization.”

From experience, CoStar is the best in its class, and we rely on its data daily. CoStar is the gold standard when it comes to tasks such as sourcing available inventory, researching ownership, and reviewing market trends.

Bill Lee, founder of Lee & Associates Commercial Real Estate Services. Lee was a top producer at Grubb & Ellis in the 1970s. His observation was that there was no intraoffice cooperation. An agent within the office had zero incentive to work with his fellow agent. Quite the contrary, in many cases the agent would “pocket” the information so that he could “double end” the deal with his own buyer. Lee wondered if there was a way to create intraoffice cooperation through a sharing of commissions and profit.

Lee and four of his Grubb & Ellis friends started Lee & Associates in 1979. The theory was simple but revolutionary: Create a system that would reward profitability and encourage cooperation. Each of the original “partners” was free to broker deals in any area, call on any client they chose (as long as another Lee agent didn’t have an existing relationship) and the agents were encouraged to share with each other.

Profit was divided at the end of the year and apportioned to each partner according to his contribution. The resulting “splits” exceeded anything in the industry then and now. Lee & Associates’ “principals” (as we are now called) enjoy the best splits in the industry. The firm is now the largest broker-owned company in the U.S. boasting over 60 offices globally.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

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Tiger Woods is transferred to a new LA hospital as fellow golfers express their hopes for full recovery

By Travis Caldwell | CNN

Following a car accident Tuesday morning in California that resulted in significant leg injuries and required an extraction from his vehicle by first responders, Tiger Woods now begins the arduous recovery process.

A new chapter began Thursday with his transfer to a second Los Angeles-area hospital for “continuing orthopedic care and recovery,” according to a statement.

Dr. Anish Mahajan, the chief medical officer and interim CEO at Harbor-UCLA Medical Center, confirmed that Woods was moved to Cedars-Sinai Medical Center, which is approximately 20 miles away.

“On behalf of our staff, it was an honor to provide orthopedic trauma care to one of our generation’s greatest athletes,” Mahajan said in the statement.

Woods’ injuries include “comminuted open fractures affecting both the upper and lower portions of the tibia and fibula bones,” Mahajan said Tuesday, meaning the bones broke into more than two pieces and pierced the skin. A rod was inserted into the tibia to stabilize the leg. Additional injuries to the bones of the foot and ankle were stabilized with a combination of screws and pins.

Woods told investigators at the hospital after the accident that “he had no recollection of the crash” that left him seriously injured, Los Angeles County Sheriff Alex Villanueva told CNN’s Erin Burnett on Wednesday.

Cedars-Sinai network is known for sports rehabilitations

The reasons for Woods’ transfer have not been released, yet facilities affiliated with Cedars-Sinai are known for their sports medicine and related surgeries. Should Woods and his family choose to continue care within its network, options are available in terms of recovery.

The Cedars-Sinai Kerlan-Jobe Institute provides orthopedic surgeries, and practitioners at their clinics work with Los Angeles-area sports teams. Other professional athletes from around the country have had procedures performed at their centers.

The California Rehabilitation Institute, a partnership between Cedars-Sinai, UCLA Health and Select Medical, provides programs as well for those on the mend.

The institute is “the largest inpatient facility of its kind on the West Coast,” according to its website, and “is designed to help each patient recover the strength, skills and independence they need to return home and resume their lives.”

Golf pros continue to show support

Webb Simpson, who is tied atop the Thursday leaderboard at the PGA WGC-Workday Championship in Florida, shared his thoughts on Woods, saying his focus was on the golfer’s well-being.

“Of course you think about the golf career, you think about what he’s done for the game, but the thing I kept thinking about was his kids and how thankful I am that he made it out of that,” Simpson said.

He added, “The biggest thing I was concerned with, following the news and texting buddies, trying to figure out what was going on was, ‘Is he OK? Is he going to make it?’”

Phil Mickelson expressed similar sentiments Thursday after his round at a PGA Tour Champions event in Arizona.

“All the guys here understand and appreciate what he has meant to the game of golf, and for us and the PGA Tour. We are all very appreciative and supportive of what he has done for us. But right now, that is so far from our minds,” Mickelson said.

“I thought Rory McIlroy really said it well when he said that we’re just lucky and appreciative that his kids didn’t lose their father. We all are hoping and praying for a full and speedy recovery. We are all so thankful because that looked awful. We are thankful that he is still with us,” Mickelson said.

McIlroy said on Wednesday when asked about a potential career comeback for Woods, “He’s not Superman… He’s a human being at the end of the day. And he’s already been through so much. At this stage I think everyone should just be grateful that he’s here, that he’s alive, that his kids haven’t lost their dad.

“That’s the most important thing. Golf is so far from the equation right now, it’s not even on the map at this point,” McElroy said.

The-CNN-Wire™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

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Taco Bell announces a crispy chicken sandwich that is also a taco

There’s a new, unexpected player in the hot chicken sandwich war: Taco Bell.

The Irvine-based fast food giant will soon be testing an item called the Crispy Chicken Sandwich Taco, which a news release calls both a sandwich and a taco.

The sandwiches will go on sale for $2.49 each in Nashville, Tenn., and Charlotte, N.C., on March 11. Southern Californians will have to wait for a while. Taco Bell plans a nationwide debut later this year.

The sandwiches feature chicken meat marinated in jalapeño buttermilk, seasoned, and battered with a tortilla chip coating.

The chicken is folded into a piece of bread that resembles a pita and is spread with creamy chipotle sauce.

A spicy version of the sandwich includes a a slice of jalapeño that resembles pickle slices in Nashville chicken sandwiches.

 

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Gov. Newsom recall proponents gather more than a million signatures

By Maeve Reston | CNN

Leaders of the campaign to recall California Gov. Gavin Newsom have now gathered more than a million signatures, according to a new report from the California secretary of state’s office that suggests the effort is still on track as they inch toward a March deadline to qualify for the ballot.

Capitalizing on the frustration and anger among California Republicans and small business owners about Newsom’s restrictive stay-at-home orders last year, which were intended to try to stop the spread of the coronavirus, as well as the high case numbers that the state experienced over the holiday months, recall proponents say they have actually gathered 1.7 million signatures so far and are continuing to turn those in to the county registrars around the state for verification.

The most recent report from the secretary of state is a lagging indicator of the progress toward ballot qualification, because it only tallies signatures that California counties had received as of February 5. And of those nearly 1.1 million signatures, the counties have only verified a portion so far.

The report shows that of the 798,310 signatures verified, nearly 84% were valid. Longtime recall observers in California say that high percentage is a strong indicator that the recall will ultimately qualify for the ballot if recall proponents stay on track with that validation percentage as they turn in additional signatures. Under the California Constitution, the leaders of the recall must turn in 1,495,709 valid signatures by March 17, which is equivalent to 12% of the votes cast in the last gubernatorial election.

If the recall effort qualifies, it is unclear what month it would land on California’s ballot, because there are a series of bureaucratic steps that must take place at various levels of state government before the state’s lieutenant governor could formally call the recall election.

CNN has reached out to Newsom’s office for comment.

Newsom, a Democrat, has largely brushed off the threat of a recall as he has traveled around the state in recent days visiting vaccination sites and trying to speed up the efficiency of the state’s vaccination program after it initially got off to a shaky start. Two community vaccination sites were opened in partnership with the Biden administration and the Federal Emergency Management Agency in Oakland and Los Angeles last week, creating greater access to shots in some of the state’s most vulnerable communities — a partnership Newsom hailed as a critical expansion of California’s vaccine supply.

During a visit to a mobile vaccination site in Inglewood Sunday, Newsom highlighted the fact that Covid-19 hospitalizations are down by 41% in California in the past two weeks and said the state is building out a system that could allow them to administer 4 million vaccinations a week.

“Our only constraint now in terms of more vaccines into the community — meeting people where they are, where we are here in Inglewood and elsewhere — is supply limitations,” Newsom said, noting that some 702,000 doses were affected by the extreme weather last week.

Responding to the frustration about the inability to reopen many schools in California — a central theme of the recall — Newsom recently announced that 10% of the first-dose vaccine shipments allocated to California will be made available to teachers — setting a goal of providing more than 300,000 doses to educators over the next month.

But Newsom is also still taking heat from some teachers’ groups for stating during an interview with the Association of California School Administrators last month that “if we wait for the perfect, we might as well just pack it up and just be honest with folks — that we’re not going to open for in-person instruction this school year.”

“There’s an old thing my mom taught me that says, ‘You find whatever you look for,’” Newsom said during the January meeting. “So if we want to find reasons not to open, we’ll find plenty of reasons. If we want to start building on ways to strategize to find ways of getting to where we all want to go, we’ll figure that out as well.”

He added that he has witnessed first-hand how Zoom classes are not working well for younger students, including his 4-year-old son, as well as for children who are homeless, in foster care, English learners or those struggling with disabilities.

President of the American Federation of Teachers Randi Weingarten responded to Newsom’s comments about finding “reasons not to open” Sunday morning during an interview with NBC’s Chuck Todd on “Meet the Press” by suggesting that Newsom was not doing enough to prioritize teachers in the areas where viral transmission is the highest in California, referencing the state’s color-coded system.

“When I hear politicians — when I hear Governor Newsom saying we are always going to find a way out, well, why is he not actually prioritizing the teachers in LA,” she said, noting they were in “purple zones,” or the areas of highest viral transmission.

“If the NFL could figure out how to do this in terms of testing and protocols, if the schools are that important, let’s do it, and my members want it,” she said.

The-CNN-Wire™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

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How to reconcile those pesky operating expenses

Today, we venture into the weeds to discuss an event that occurs this time of year.

Nope. Not Chinese New Year – which is cool, by the way.

Instead, we’ll discuss reconciling operating expenses including common area maintenance charges. Fun stuff – huh?

Generally, reconciling expenses proceeds with commercial tenants who do not own their building. Leases, rental agreements or contracts typically outline things such as base rent, commencement, expiration, rental increases and responsibility for mowing the grass and fixing a leaky roof. It’s very important you – or someone within your group – to understand how each of these cost categories is handled.

Typically, leases call for the tenant to pay for expenses related to the operation. If a company occupies a suite of offices, most likely the tenant executed a “full service gross” lease. Similar to other gross leases, an FSG lease lays out a rate inclusive of rent, property taxes, insurance for the premises and general exterior maintenance. What is unique to this arrangement is a charge for utilities and janitorial services which are baked into the monthly check you write.

If you consider a high-rise building with many enterprises, there is often a “pro-rata” sharing agreement for electricity, water, trash and the crew that vacuums the conference room after hours. It would be impractical to contract separately for these services, so most owners don’t. Most will include an “expense stop.” Simply, any of the above is billed to the tenant.

Industrial landlords take a slightly different approach to re-capture costs.

As an occupant of a manufacturing, warehouse, or service building – the tenant’s lease is likely a triple net or an industrial gross lease. The main difference here? Rent with a NNN lease excludes operating expenses from the monthly payment whereas an industrial gross lease lumps them together.

Am I saying no expenses are passed along in a NNN arrangement? Quite the contrary. They are invoiced as they occur or annualized and collected monthly.

So, how does this all play out for tenants?

Each year between October and December, commercial real estate owners budget for the next year. They take into account line items such as rent, property taxes, insurance, and yes, common area expenses like parking lot sweeping, trash collection, landscape maintenance and system repairs.

What might also be considered? Is a vacancy anticipated? Are lease term extensions expected? They’ll also review the current year. Were expenses properly predicted or dramatically overstated? Next, will the gardener charge us more next year? Have insurance coverages been impacted by a hurricane in South Texas?

We know property taxes will increase by 2% unless a change of ownership occurred. Once calculated, a projection of next year, along with those budgeted expenses, is forwarded to the tenant.

You may be wondering, what happens if the owner collected too much money? This is where the February reconciliation begins.

Akin to sending Uncle Sam too many tax dollars, if you paid too much, expect a bonus from the landlord. Conversely, an underpayment will foster a note that you owe more. Please understand, a tenant has full rights to request backup information on items for which the owner seeks payment. A typical scenario would be a request for documentation outlining why wind in Texas would affect a California insurance premium. Or why did tree trimming cost so much?

Finally, the “more on this in a moment” promise. Delve into the terms: base year and expense stops highlighted in full service gross and industrial gross leases. Simply, these clauses limit the amount of common area expenses the owner can recover.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

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Family money: Trusts, taxes and how to plan lifetime gifts

Warren Buffett said that the perfect inheritance is enough money so that children feel they can do anything, but not so much that they could do nothing. This is pithy advice.

How much inheritance that amounts to, when to give it, and how, is the real crux of the matter for most families.

New laws motivate gifting.

Intergenerational transfers of wealth are nothing new. Passage of California’s new Proposition 19 caused significant upticks in the lifetime gifting of real property. And now, President Joe Biden’s tax proposal seeks to lower the estate tax exemption to $3.5 million per person, lower the gift tax exemption to $1 million, eliminate the step-up in income tax basis at death, and raise the capital gains tax rate.

As a result of all these changes, we are likely to see another tsunami of intergenerational gifting to take advantage of the current, more favorable tax laws.

Current law allows for lifetime gifts or gifts at death up to $11.7 million per person. With the expected decrease in the estate and gift tax exemptions, it’s likely many parents will consider gifting assets to children before any new tax law tax effect.

If a parent gifts $5 million in assets currently, the gift would be covered by the current exemption. If the estate tax exemption is later lowered to $3.5 million, the parent will have no further estate tax exemption remaining, but will not be subject to gift or estate tax on the “excess” $1.5 million they were able to gift before the law changed. In addition, the appreciation of the $5 million in assets between the time of the gift and the death of the parent will occur in the child’s hands, and thus outside the estate of the parent, saving even more in estate taxes.

The tax tail wagging the dog

While there can be significant benefits to gifting property to your children, or even grandchildren, sooner rather than later, how that is done should be considered carefully. Whether your estate is likely to be taxable or not, taxes are not and should not be the only concern.

Also, consider your family goals, the legacy you mean to leave, and whether or when your child or grandchildren might be able to handle the responsibility of such a gift. Also consider the vehicle for the gift, whether that should be a gift outright, in trust, in family partnership interests, or another business entity.

Gifts in trust

Large gifts to children and grandchildren should almost always be made using trusts. A gift during a lifetime or at death can be made through an irrevocable trust for the benefit of your children, and even your grandchildren.

An irrevocable gifting trust allows you to do tax planning while also providing your heirs with other benefits. It is not “controlling from the grave” so much as it is giving your heirs a leg up.

A trust can serve as a vehicle to train your heirs in the management of assets by providing for a third party to serve as trustee, allowing your heir to become a co-trustee at a certain age, and a sole trustee at a later age.

If your heir is in a high-risk job where lawsuits are a concern, a trust can provide them with protection from creditors. If you’re worried your child’s spouse would burn through your child’s inheritance, a trust can be structured to prevent that.

Think of the grandchildren

Grandparents can also provide for their grandchildren in a trust.

A trust can provide for the benefit of a child during the child’s lifetime and then for the grandchildren under similar terms. If the child has no choice and the grandchildren are the mandatory successor beneficiaries, the assets of the trust will not be included in the child’s estate, which could save significant estate taxes.

However, such a trust, known as a “generation skipping” trust (the tax skips a generation, not the trust’s benefits) would mean there is no step-up in income tax basis in the assets. If instead, the child was not likely to have a taxable estate even with the trust assets counted in their own estate and the income tax step-up in basis would be more valuable, the trust could simply give the child the option to exercise a power of appointment to say where the assets go at the child’s death.

If the power is not exercised, the trust terms providing for the grandchildren will prevail. In a sense, this is advance estate planning for the children by providing a default plan.

Trusts, whether for children or future generations, can provide very specific terms for when income or principal can be distributed to the beneficiaries to assure that your family goals and values are maintained.

The family business

A family-owned business often presents the biggest dilemma for parents, especially if one or more of the children (or perhaps the spouse of a child) is involved in the business, but the others are not.

Generally, a family business should be held in an entity (corporation, limited liability company or partnership) for centralized government, protection from creditors and ease of transferring between generations.

With an entity, parents can assure that control is in the hands of the active participants in the business by creating voting and non-voting ownership interests, adopting a business succession plan for leadership, and/or giving the majority interest to the child involved in the business.

If the parents also own the real estate on which the family business operates, consider gifting the real estate to the children not involved in the operating business, and the business itself to the active child.

Gifts of business interests in trust should also be considered since the trustee can then be carefully selected to manage the interest on behalf of all beneficiaries.

A legacy

Carefully considering when and how your children and grandchildren receive an inheritance is an opportunity for leaving not just property, but a legacy. A well-drafted and often reviewed trust is a vehicle that allows for that legacy to be maintained for generations to come.

Teresa J. Rhyne is an attorney practicing in estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I)” and “Poppy in The Wild.”  Reach her via email at Teresa@trlawgroup.net

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Commercial vacancy is nil, so what’s an antsy occupant to do?

A couple of weeks ago, I wrote about a system for analyzing an investment property, commercial lease, or potential building purchase.

I used the acronym FOCUS, and I deferred our conversation on the S, the solution step as it was column worthy all by itself. As you may recall, FOCUS stands for Facts, Opportunity, Consequence, Understanding and Solutions.

Solutions may splinter into several directions. However, they generally fall into one of three categories: do nothing, do something or defer a decision. Simply, if you’ve sold an income property, have used the FOCUS approach to determine your next move, and are to the solution step, you may choose to pay the gains (do nothing), purchase another asset (do something), or wait (defer).

As you approach an expiring lease, the process could suggest you renew the lease (do nothing), relocate to a new address (do something), or allow the contract to expire and hope your owner doesn’t force you to vacate. By the way, with today’s obscenely low vacancies, I’d not suggest doing this.

A lessee considering a purchase could opt to renew the leased premises (do nothing), pull the trigger on the buy (do something), or wait until the nutty prices level (defer).

Unfortunately, solutions are rarely as straight forward as outlined above.

Using our income property sale situation, we first spend hours of analysis before finding a solution. Doing nothing and paying the taxes owed appears simple. But, when you consider Uncle Sam and cousin Gavin will clip an enormous chunk of your profit, this may pale in comparison to another route.

Doing something – by affecting a tax-deferred purchase and buying another parcel comes with myriad complexities. First, you must decide to do this before your sale closes. Next, there are finite time frames guiding your acquisition. And don’t forget, uou MUST find something!

Sellers are bullish. The pool of suitable offerings is limited. As Tom Petty crooned – “the waiting is the hardest part.” Deferring a decision – if you sell an income property – forces you into the “do nothing” mode. If you close without designating your desire to exchange, you lose the option. A fat tax bill awaits.

Now, let’s take the example of an expiring lease. Sure, you could elect to find a new spot. In effect “do something.” But the thinking behind the decision warrants some dissection.

Frequently we meet with a tenant and hear, “once our lease expires, we will DEFINITELY RELOCATE!” But, these days the majority of occupants don’t. After careful consideration, most realize renewing an existing lease has many benefits – an expensive move is avoided, disruption is nullified and downtime is erased.

The industrial real estate market suffers from an acute lack of available spaces. In some size ranges, our vacancy is zero! Your intention to upgrade into a newer facility might be met with very limited choices and costly ones at that. Finally, some just cannot pivot into a new address. Generally, we see such motivators as custom improvements, special permitting or an irreplaceable area.

A direction to purchase your business’ home and pay rent to yourself is a sound plan — sometimes. Doing nothing means you’ll stay, continue to rent and run your business with little change. Hopping into a purchase – doing something – would require you to survey the market, get yourself approved for financing or tap your piggy bank and execute a transaction.

Don’t forget to look into the “true cost of ownership” by adding up mortgage payments, property taxes, insurance and some little things like maintenance. It’s generally much cheaper to lease. Oh yeah, don’t forget: the down payment isn’t free – even if it’s in a liquid account.

You could choose to hire, invest in machinery or open a new market with the cash. In some cases, these alternate investments yield bigger returns than buying a building. Deferring until our pricing settles could make sense.

My opinion is we’re long overdue for a correction. But, so far, even a pandemic hasn’t stalled the upward march.

Sometimes FOCUSing on the solution is tough!

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

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Why so many off-market real estate deals?

Thank you dear readers for monitoring my missives for the past six years as with this week’s column we celebrate an anniversary! Yep. The first column authored by yours truly was Super Bowl Sunday of 2015. My, how the years have flown. Thank you! Here’s to another six. Whattaya say?

Recently, I observed a phenomenon of market activity rarely seen in my years in the commercial real estate business – that of “what’s beneath the waves.” Many deals these days, akin to a Zoom participant smartly clad from the waist-up but wearing pajama bottoms, are happening out of sight. Referred to as “off-market,” these secret agreements are dominating!

So you may be wondering why. I certainly am. Allow me to proffer some opinions.

First, a bit of background. Historically, the motivation of accepting an unsolicited offer was attached to one of the following: Selling pressure such as a pending loan maturity or a foreclosure. Desire to avoid disruption of a business – after all, publicly marketed offerings come with tours – people walking through. Sale of the operation. Many times the buyer of the company will pay the most for the real estate housing the enterprise. Despite these triggers, proceeds to the seller are generally maximized by casting a wide net.

Selling off-market also comes with a down-side angle. You may leave money on the table, you have no advocate to guide you through market conditions and no vetting has occurred. There could be an unresolved title matter, a leaky roof, or an obstinate tenant who must be relocated. Don’t forget the tax impact of selling. Sure, you’ll face this either way, but when that offer arrives, do you understand the after-tax net proceeds?

But, these days, we’re seeing sales occur despite all of the obstacles listed above. The appetite for industrial buildings for buyers to occupy, developers to scrape and build new, or investors to satisfy tax-deferred exchanges is voracious!

If you’re a seller – or considering selling – your options are to list or not. Hmm, sounds like an HGTV show idea. If you list, your broker will run a process – plant a sign in front, create some marketing collateral, notify the local agents, publish in the multiples, and alert the neighbors. Sprinkle in a drone fly, Matterport tour, some digital pushes and voila! Let the games begin.

But with the obscene lack of inventory, many practitioners are phoning sellers with another approach. Just accept our proposal, short-circuit the marketing time, avoid the disruption, and oh, by the way, the buyer we have will pay us, give you top dollar, and close without a financing contingency. Bam! Sellers are responding favorably.

But, also in play is what I call “mini-marketing”. Here’s how it works. An owner gives an indication he’ll transact. Brokerage help in engaged. A brief fact sheet is prepared outlining the offering – all with the concurrence of the seller. The best half dozen buyers are solicited. Typically, four will have a strong interest. Boom.

Finally, a stakeholder may have zero interest in selling. He may only want to lease the building and hold it long-term. But, in the process of finding a tenant, the buyer activity floods his inbox. At the prices folks are paying, he can’t refuse. Plus, he can sell high and redeploy into a tax friendlier state such as Texas or Nevada and bolster his return.

So in order to know what’s really occurring – take a look under the surface. You might just find that whale of a buyer you seek.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

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No. 1 tax tip for 2020 returns: File early

With each new year comes a predictable series of traditions – the Oscars, Girl Scout cookies, NBA playoffs and the April 15 tax deadline.

As with everything else in our new normal, this year’s events will be managed a little differently. The Academy Awards ceremony has been postponed to the end of April, and films will be streamed online instead of screened in theaters.

We do not expect the Girl Scouts to visit our office with their addictive little Thin Mints. They will practice their sales techniques on the Digital Cookie platform.

The NBA lengthened the season while reducing the number of total games, Kobe will be with us in spirit, and many arenas will still not have fans in the stands.

So how will the filing of our 2020 taxes change? This year the IRS delayed the start of tax season, which is the first day they will start to process returns, to Feb. 12 and has promised to speed refunds during the pandemic.

If one of your New Year’s resolutions was to not procrastinate until the last minute to file your return (or extension), this might be the perfect year to file early, or at least to file on time.

File early

Your tax return might be simpler than in years past, so it might be easier than you think to file taxes now and mark this task off the to-do list.

Because of the Tax Cuts and Jobs Act in 2017, more than 90% of taxpayers no longer need to itemize their deductions. If in the past, you dutifully filled out the organizer from your tax firm and gathered and added up receipts to itemize your deductions, you might not need to do it this year. (Your accountant might not have had the heart to tell you that you did not need to do it last year, either.)

Easier than before

The standard deduction for 2020 is $12,400 if you are single, and $24,800 if you are married and filing jointly. The standard deduction is larger if you are over 65 or are blind. You can choose the standard deduction amount instead of adding up your medical, mortgage, DMV fees, property taxes, and charitable deductions.

Congress also eliminated employee and investment expenses with the tax law change.

If you look through the tax return you filed last year and do not find a Schedule A, you did not itemize and probably will not itemize this year.

Getting the refund

If you were disappointed not to receive a refund over the past couple of years, it might be due to a change in the withholding on your paycheck. The law change in 2017 reduced how much tax was withheld from workers’ paychecks, and this caused a reduction in the amount of refunds taxpayers, overall, received when they filed their returns. However, if your income was less in 2020, you could be due a refund that you could collect now rather than later.

Carryback losses

If deductions for last year were more than income, you may have a net operating loss (NOL). There is a tax savings opportunity in the CARES Act that may allow you to obtain an additional refund that was not available previously.

The act permits NOLs from 2018, 2019, and 2020 tax years to be carried back to the previous five tax years. Losses in 2018 or 2019 that you could not previously carryback can now be carried back to 2013 and forward. This could result in a refund. If you had a loss in 2020, you could also carry that loss back to 2015 and forward to obtain a refund now.

New stimulus funds

New stimulus packages will utilize information from your 2020 bookkeeping, payroll, and income tax returns to compute the benefits you are entitled to receive. Therefore, it is in your best interest to compile this information now.

The new 2021 Paycheck Protection Plan calculated benefit is based on either 2020 or 2019 payroll amounts. Businesses that show a 25% or more reduction in any quarter comparison from 2019 to 2020 may qualify for a first or second “round” PPP.

Other state and county business grant programs are also based on comparisons of 2019 and 2020 revenue and net income amounts supported by tax returns or bookkeeping. As a bonus, remember that the PPP loan forgiveness income is tax-free. and you can deduct the expenses that were paid to meet the requirements for your PPP loan forgiveness.

If income was reduced in 2020, you might qualify for subsidized health insurance premiums under the Affordable Care Act or California Care. Use your tax return info for 2020 to compute your benefits. Additional individual stimulus checks and other governmental benefits to stimulate the economy might be available this year and will probably be based on 2020 tax filings.

Can’t find something?

Do not let a missing 1099 or W-2 derail you from filing on time this year. Almost all of your tax information to prepare your returns is available online from your employers, brokers, bankers, and online at IRS.gov.

Even if you owe

If you collected unemployment benefits in 2020 and did not withhold tax, you may want to figure those taxes now and file (and pay) later.

Knowing how much you owe so you can plan is better than being surprised with a tax bill later. If you utilize the services of a tax professional, do not wait to make an appointment because you think you might owe. It is better to book with them now before they are busy.

They can calculate your taxes and hold the returns to file later if you owe income taxes. They can also help you set up a payment plan if you cannot afford to pay the tax.

If you’re past due

If your New Year’s resolution to file on time includes past due returns, note that a first priority should be to file the older returns. You can always make payment arrangements with the IRS to stretch out what you owe, with a low-interest installment agreement, over five years. You will not set up an agreement to pay until all of your past due returns are processed, which could take time.

You can easily set up a payment arrangement yourself if the balance you owe is under $25,000 and you have a stable source of income to pay the balance. Not being able to pay your taxes should never be a reason not to file your taxes.

Hopefully, within the next six months, most of us will have been fully vaccinated, and we will all be excited to get back to spending time with our family and friends, traveling, and enjoying ourselves. (Think roaring 20s after the 1918 flu epidemic.) Perhaps the best reason not to wait and to file now is that it will be one less chore to do later when you should be having fun.

Michelle C. Herting, specializes in estate, trust and gift taxes, and business valuations. She also is president of the Charitable Gift Planners of Inland Southern California.

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