In these economic hard times, it is perhaps more likely that rescission—to legally undo—will be considered regarding the purchase, the sale, the deal, the option exercise. The IRS defines rescission as the “abrogation, canceling, or voiding of a contract that has the effect of releasing the contracting parties from further obligations to each other and restoring the parties to the relative position that they would have occupied had no contract been made.” In an article in The M & A Tax Report, David E. Libman covers the conditions necessary for the rescission to be recognized for tax law purposes.

Due to the punitive tax imposed on a REIT that engages in a prohibited transaction, the safe harbor for avoiding prohibited transaction status is critical to REITs when entering into proposed transactions. Because the determination of whether a taxpayer is acting as a dealer is often murky at best, most REITs rely strictly on the safe harbor rather than wade into the murky waters of “dealer property” determinations. Daniel F. Cullen, in his column in the Journal of Passthrough Entities, explains alternative tests enacted under the Housing and Economic Recovery Act of 2008, which grant more flexibility in disposing of assets during these troubled times.

Charles Goulding, Jacob Goldman, and Taylor Goulding, in an article in Corporate Business Taxation Monthly, discuss the growing introduction of light emitting diode lighting for building interiors. While the new technology has a high initial cost of purchase, it is cheaper in the long run, especially when one considers the tax advantages available under the Economic Stabilization Act of 2008, which extended the Code Sec. 179(d) 60-cent-per-square-foot commercial building EPAct energy efficient lighting tax deduction through Dec. 31, 2013.

Stevie D. Conlon, in an article in the Journal of Taxation of Financial Products, examines a provision in the Emergency Economic Stabilization Act of 2008 that requires brokers to expand information reporting to the IRS in connection with securities sales to include the adjusted cost basis of securities sold and whether the related gain or loss is long term or short term.