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Joseph Lipari

It is common for business entities (corporations, limited liability companies, or otherwise) to be organized solely for the purpose of owning a single piece of real property. Unsurprisingly, it is also common for such entities to cease active operations after the sale of such property. What may not occur to many taxpayers is that the cessation of business operations may result in an unforeseen acceleration of taxes. In 1018 Morris Park Avenue Realty, TAT(E)14-4(GC) (N.Y.C. Tax App. Trib., Aug. 7, 2017), the New York City Tax Appeals Tribunal ruled that a corporation must recognize all gain derived from an installment sale in the year in which the corporation ceased doing business in the City. Although this result may be harsh since the corporation may not have the resources necessary to pay the accelerated tax liability, the problem likely results from overly aggressive tax planning.

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