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ABO goes to Washington.

ABO goes to Washington

A delegation representing a cross section of New York City's real estate industry met on Capitol Hill with national elected officials and their Congressional staff to encourage passage of tax policy revisions and banking reforms that are considered vital to the city's economy.

The day-long program, sponsored by Associated Builders and Owners of Greater New York, Inc., included an in-depth, "state of the industry" briefing by the National Association of Home Builders at the organization's headquarters. The national credit crunch and the elimination of deleterious provisions of the 1986 Tax Reform Act were foremost on the briefing agenda.

Jerome Belson, ABO president, said, "Our nation's economy is tied directly to real estate development. If constraints on lending are not lifted, there will be no real estate loans and our economy will not revive."

The 1986 Tax Reform Act contains a provision known as the passive loss limitation which limits the deductions from passive activities to the income from such activities. As it relates to real estate, a passive activity is defined as any activity in which a taxpayer does not materially participate, and any rental activity.

Accordingly, even if the taxpayer's principal business consists of real estate-related activities, including the management, development, construction, sales and ownership of real estate, the statute nevertheless mandates that a taxpayer's rental properties will be deemed inherently passive. Thus, any income or loss from the ownership of rental properties can only be offset against income or loss from other passive activities, principally rental real estate.

The non-real estate entrepreneur, on the other hand, can offset income and loss against other income or loss unrelated to the business, including salaries, dividends and interest.

At the briefing, Lyn Walker, tax counsel to recently deceased Sen. John Heinz, told the delegation: "In drafting the Tax Reform Act, real estate was singled out to bear a massive burden. Senators Daniel P. Moynihan, Bill Bradley and Bob Packwood, the principal authors of the Act, show little signs of softening.

"This year, 1991, will be hard to predict," she said. Nonetheless, a bill before the House of Representatives (H.R. 1414) that would amend the Tax Reform Act and improve passive loss limitations for real estate entrepreneurs, now has 287 co-sponsors, including 20 New York co-sponsors.

Following the briefing session, the ABO delegation met with many of the New York Congressional co-sponsors at a Capitol Hill reception hosted by NAHB.

The ABO group was comprised of Mr. Belson, ABO president; Philip Rudd, ABO chairman; Perry Balagur, Graubard Mollen Dannett & Horowitz; Bob Borg; Charles DiMaggio; Anthony Gliedman, CEO, Amrep Corp.; Michael Kerr, ABO director; Elliot Lesser, Edward Issacs & Company; Dan Margulies, Community Housing Improvement Program; Michael Merlo, CrossLand Savings FSB; Harvey Schultz, Oceanview Associates; and Arnold Sollar, ABO vice president.
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Title Annotation:Associated Builders and Owners of Greater New York, Inc.
Publication:Real Estate Weekly
Date:Jun 12, 1991
Previous Article:City trying to downsize, says Dep. Mayor Steisel.
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