Category: Company and Industry News

In June, two members of the House Agriculture Committee, Representative Bob Gibbs (R-OH) and Representative David Rouzer (R-NC), and 17 other congressmen and congresswomen wrote a letter to House Ways and Means Committee Chairman Kevin Brady (R-TX) urging the committee to help preserve 1031 like-kind exchanges. The letter, attached below, called Section 1031 “integral to [its] operations and ongoing vitality.”

“The provision serves as an important tool for providing flexibility and increased economic efficiencies for the agricultural community. Section 1031 permits a taxpayer to exchange business-use or investment assets for other like-kind business-use or investment assets, without recognizing taxable gain on the sale of the old assets. These taxes, that would otherwise be due if the transaction was structured as a sale, are deferred. The repeal of this fundamental provision would have a monumental negative impact on the industry as a whole.”

In the photo above, Federation of Exchange Accommodators Government Affairs co-chair and Accruit CEO Brent Abrahm discusses the letter with Representative Brady at a legislative event with the Associated Equipment Distributors trade association. Read more about these recent efforts on behalf of Section 1031 in yesterday’s article on the Americans for Tax Reform website,

In June, two members of the House Agriculture Committee, Representative Bob Gibbs (R-OH) and Representative David Rouzer (R-NC), and 17 other congressmen and congresswomen wrote a letter to House Ways and Means Committee Chairman Kevin Brady (R-TX) urging the committee to help preserve 1031 like-kind exchanges. The letter, attached below, called Section 1031 “integral to [its] operations and ongoing vitality.”

“The provision serves as an important tool for providing flexibility and increased economic efficiencies for the agricultural community. Section 1031 permits a taxpayer to exchange business-use or investment assets for other like-kind business-use or investment assets, without recognizing taxable gain on the sale of the old assets. These taxes, that would otherwise be due if the transaction was structured as a sale, are deferred. The repeal of this fundamental provision would have a monumental negative impact on the industry as a whole.”

In the photo above, Federation of Exchange Accommodators Government Affairs co-chair and Accruit CEO Brent Abrahm discusses the letter with Representative Brady at a legislative event with the Associated Equipment Distributors trade association. Read more about these recent efforts on behalf of Section 1031 in yesterday’s article on the Americans for Tax Reform website,

Accruit, LLC, the nation’s leading provider of qualified intermediary and 1031 like-kind exchange program solutions, today announced a definitive agreement to acquire all of the assets of Bankers Escrow Corporation, one of the largest full service escrow companies in Colorado.  The parties anticipate a closing on June 30, 2016. Going forward, services will be provided under Accruit-owned Bankers Escrow, LLC.

Since 1991, Bankers Escrow Corporation has been an escrow agent for tax and insurance reserves, installment land contract and wrap-around mortgage servicing, lease to purchase arrangements, software code escrows, and document and cash holding escrows. Additional escrow services offered are construction draw escrows, business and assumption closing services, and private placements.   All the current escrow officers will be transferring to the newly-formed Bankers Escrow, LLC, where they will continue to provide all the current escrow services, ensuring consistency of service and processing. 
Like Accruit, Bankers Escrow Corporation provides qualified intermediary and exchange accommodation titleholder services for 1031 like-kind exchange clients, therefore the acquisition furthers Accruit’s presence in the 1031 real estate market.  “We’re delighted to expand Accruit’s offerings to include escrow services and to continue to grow the business that Mary Lou has built both in the escrow and real estate 1031 arenas.  Banker’s Escrow is a strong brand whose customer-oriented focus aligns well with Accruit’s own,” said Accruit CEO, Brent Abrahm.  
As of July 1, Bankers Escrow Corporation vice president, Mary Lou Schwab, will join Accruit in a consulting role, bringing 30 years of real estate tax accounting, tax deferred exchange, and escrow experience. Ms. Schwab is also a Certified Exchange Specialist® through the Federation of Exchange Accommodators, a licensed CPA, and an educator in real estate taxation and 1031 exchange continuing education classes for Colorado realtors.  Ms. Schwab stated, “With this acquisition, Bankers Escrow will continue to serve new and longstanding customers with integrity and professionalism. The additional technology and resources Accruit provides will propel Bankers Escrow to a new level of service and security.”

Accruit, LLC, the nation’s leading provider of qualified intermediary and 1031 like-kind exchange program solutions, today announced a definitive agreement to acquire all of the assets of Bankers Escrow Corporation, one of the largest full service escrow companies in Colorado.  The parties anticipate a closing on June 30, 2016. Going forward, services will be provided under Accruit-owned Bankers Escrow, LLC.

Since 1991, Bankers Escrow Corporation has been an escrow agent for tax and insurance reserves, installment land contract and wrap-around mortgage servicing, lease to purchase arrangements, software code escrows, and document and cash holding escrows. Additional escrow services offered are construction draw escrows, business and assumption closing services, and private placements.   All the current escrow officers will be transferring to the newly-formed Bankers Escrow, LLC, where they will continue to provide all the current escrow services, ensuring consistency of service and processing. 
Like Accruit, Bankers Escrow Corporation provides qualified intermediary and exchange accommodation titleholder services for 1031 like-kind exchange clients, therefore the acquisition furthers Accruit’s presence in the 1031 real estate market.  “We’re delighted to expand Accruit’s offerings to include escrow services and to continue to grow the business that Mary Lou has built both in the escrow and real estate 1031 arenas.  Banker’s Escrow is a strong brand whose customer-oriented focus aligns well with Accruit’s own,” said Accruit CEO, Brent Abrahm.  
As of July 1, Bankers Escrow Corporation vice president, Mary Lou Schwab, will join Accruit in a consulting role, bringing 30 years of real estate tax accounting, tax deferred exchange, and escrow experience. Ms. Schwab is also a Certified Exchange Specialist® through the Federation of Exchange Accommodators, a licensed CPA, and an educator in real estate taxation and 1031 exchange continuing education classes for Colorado realtors.  Ms. Schwab stated, “With this acquisition, Bankers Escrow will continue to serve new and longstanding customers with integrity and professionalism. The additional technology and resources Accruit provides will propel Bankers Escrow to a new level of service and security.”

Accruit, LLC, the nation’s leading provider of qualified intermediary and 1031 like-kind exchange program solutions, today announced a definitive agreement to acquire all of the assets of Bankers Escrow Corporation, one of the largest full service escrow companies in Colorado.  The parties anticipate a closing on June 30, 2016. Going forward, services will be provided under Accruit-owned Bankers Escrow, LLC.

Since 1991, Bankers Escrow Corporation has been an escrow agent for tax and insurance reserves, installment land contract and wrap-around mortgage servicing, lease to purchase arrangements, software code escrows, and document and cash holding escrows. Additional escrow services offered are construction draw escrows, business and assumption closing services, and private placements.   All the current escrow officers will be transferring to the newly-formed Bankers Escrow, LLC, where they will continue to provide all the current escrow services, ensuring consistency of service and processing. 
Like Accruit, Bankers Escrow Corporation provides qualified intermediary and exchange accommodation titleholder services for 1031 like-kind exchange clients, therefore the acquisition furthers Accruit’s presence in the 1031 real estate market.  “We’re delighted to expand Accruit’s offerings to include escrow services and to continue to grow the business that Mary Lou has built both in the escrow and real estate 1031 arenas.  Banker’s Escrow is a strong brand whose customer-oriented focus aligns well with Accruit’s own,” said Accruit CEO, Brent Abrahm.  
As of July 1, Bankers Escrow Corporation vice president, Mary Lou Schwab, will join Accruit in a consulting role, bringing 30 years of real estate tax accounting, tax deferred exchange, and escrow experience. Ms. Schwab is also a Certified Exchange Specialist® through the Federation of Exchange Accommodators, a licensed CPA, and an educator in real estate taxation and 1031 exchange continuing education classes for Colorado realtors.  Ms. Schwab stated, “With this acquisition, Bankers Escrow will continue to serve new and longstanding customers with integrity and professionalism. The additional technology and resources Accruit provides will propel Bankers Escrow to a new level of service and security.”

In April, Senator Ron Wyden (D-OR) released a cost recovery reform and simplification discussion draft that would repeal our current depreciation method for assets used in business.  Currently, deprecation is calculated under MACRS (Modified Accelerated Cost Recovery System).  This proposal would repeal MACRS and replace the schedules with six individual pooling methods into which similar tax life assets are grouped together (pooled) and depreciated as a group of assets.  Accruit, along with several of our association partners, were given an overview of the plan and asked for feedback prior to the release.
At a high level, pooling doesn’t sound like a bad idea; there are six buckets and an inclusive structure for like-kind exchanges without the requirements that burden today’s taxpayer. But closer analysis of the draft bill yields some concerns. Tracking detailed information at an asset-level is standard operating procedure and not considered an extra burden by the majority of Accruit’s clients who made  investments years ago into systems that provide the asset-level tracking required in many types of businesses (leasing, for instance) and by most states.
The following, provided by PwC, presents a detailed overview of the discussion draft. I will keep you apprised of ongoing discussion with our 1031 Coalition partners, Senate Finance Committee members, and others as I coordinate further commenting on the draft proposal.
Senate Finance Committee examines business tax reform issues; Ranking Member Wyden releases draft cost recovery tax reform bill

In April, Senator Ron Wyden (D-OR) released a cost recovery reform and simplification discussion draft that would repeal our current depreciation method for assets used in business.  Currently, deprecation is calculated under MACRS (Modified Accelerated Cost Recovery System).  This proposal would repeal MACRS and replace the schedules with six individual pooling methods into which similar tax life assets are grouped together (pooled) and depreciated as a group of assets.  Accruit, along with several of our association partners, were given an overview of the plan and asked for feedback prior to the release.
At a high level, pooling doesn’t sound like a bad idea; there are six buckets and an inclusive structure for like-kind exchanges without the requirements that burden today’s taxpayer. But closer analysis of the draft bill yields some concerns. Tracking detailed information at an asset-level is standard operating procedure and not considered an extra burden by the majority of Accruit’s clients who made  investments years ago into systems that provide the asset-level tracking required in many types of businesses (leasing, for instance) and by most states.
The following, provided by PwC, presents a detailed overview of the discussion draft. I will keep you apprised of ongoing discussion with our 1031 Coalition partners, Senate Finance Committee members, and others as I coordinate further commenting on the draft proposal.
Senate Finance Committee examines business tax reform issues; Ranking Member Wyden releases draft cost recovery tax reform bill

In April, Senator Ron Wyden (D-OR) released a cost recovery reform and simplification discussion draft that would repeal our current depreciation method for assets used in business.  Currently, deprecation is calculated under MACRS (Modified Accelerated Cost Recovery System).  This proposal would repeal MACRS and replace the schedules with six individual pooling methods into which similar tax life assets are grouped together (pooled) and depreciated as a group of assets.  Accruit, along with several of our association partners, were given an overview of the plan and asked for feedback prior to the release.
At a high level, pooling doesn’t sound like a bad idea; there are six buckets and an inclusive structure for like-kind exchanges without the requirements that burden today’s taxpayer. But closer analysis of the draft bill yields some concerns. Tracking detailed information at an asset-level is standard operating procedure and not considered an extra burden by the majority of Accruit’s clients who made  investments years ago into systems that provide the asset-level tracking required in many types of businesses (leasing, for instance) and by most states.
The following, provided by PwC, presents a detailed overview of the discussion draft. I will keep you apprised of ongoing discussion with our 1031 Coalition partners, Senate Finance Committee members, and others as I coordinate further commenting on the draft proposal.
Senate Finance Committee examines business tax reform issues; Ranking Member Wyden releases draft cost recovery tax reform bill

Accruit was pleased to contribute to the following letter submitted to the Senate Finance Committee yesterday on behalf of the 1031 Like-Kind Exchange Coalition. We are seeing great strides in our efforts with Congress as we continue to educate members on the benefits that 1031 like-kind exchanges bring to the economy.
May 10, 2016
The Honorable Orrin G. Hatch
Chairman
Senate Committee on Finance
219 Dirksen Senate Office Building
Washington, D.C. 20510
The Honorable Ronald L. Wyden
Ranking Member
Senate Committee on Finance
219 Dirksen Senate Office Building
Washington, D.C. 20510
Dear Chairman Hatch and Ranking Member Wyden:
As the Senate Finance Committee considers ways to create jobs, grow the economy, and raise wages, we strongly urge you to retain current law regarding like-kind exchanges under section 1031 of the Internal Revenue Code (“Code”). Like-kind exchanges are integral to the efficient operation and ongoing vitality of thousands of American businesses, which in turn strengthen the U.S. economy and create jobs. Like-kind exchanges allow taxpayers to exchange their property for more productive like-kind property, to diversify or consolidate holdings, and to transition to meet changing business needs. Specifically, section 1031 provides that firms and investors do not immediately recognize a gain or loss when they exchange assets for “like-kind” property that will be used in their trade or business. They do immediately recognize gain, however, to the extent that cash or other “boot” is received. Importantly, like-kind exchanges are similar to other non-recognition and tax deferral provisions in the Code because they result in no change to the economic position of the taxpayer.
Since 1921, like-kind exchanges have encouraged capital investment in the United States by allowing funds to be reinvested in the enterprise, which is the very reason section 1031 was enacted in the first place. These investments not only benefit the companies making the like-kind exchanges, but also suppliers, manufacturers, and others facilitating them. Like-kind exchanges ensure both the best use of real estate and a new and used personal property market that significantly benefits start-ups and small businesses. Eliminating them or restricting their use would have a contraction effect on our economy by increasing the cost of capital. In fact, a recent macroeconomic analysis by Ernst & Young found that limitations on like-kind exchanges could lead to a decline in U.S. GDP of up to $13.1 billion annually.1
Companies in a wide range of industries, business structures, and sizes rely on the like- kind exchange provision of the Code. These businesses—which include construction, industrial, and farm equipment; vehicle manufacturers and lessors; and real estate—provide essential products and services to U.S. consumers and are an integral part of our economy. A study by researchers at the University of Florida and Syracuse University supports that without like-kind exchanges, businesses and entrepreneurs would have less incentive and ability to make real estate and capital investments. The immediate recognition of a gain upon the disposition of property being replaced would impair cash flow and could make it uneconomical to replace that asset.2 As a result, requiring the recognition of gain on like-kind exchanges would hamper the ability of businesses to be competitive in our global marketplace. The reduced investment in real estate and capital would also have significant upstream and downstream impacts on economic reactivity and employment in industries as diverse as real estate, agriculture, construction, tourism, hospitality, trucking, and equipment supply.
In summary, there is strong economic rationale, supported by recent analytical research, for the like-kind exchange provision’s nearly 100-year existence in the Code. Limitation or repeal of section 1031 would deter and, in many cases, prohibit continued and new real estate and capital investment. These adverse effects on the U.S. economy would likely not be offset by lower tax rates. Finally, like-kind exchanges promote uniformly agreed upon tax reform goals such as economic growth, job creation and increased competitiveness.
Thank you for your consideration of this important matter.
Sincerely,
American Car Rental Association
American Farm Bureau Federation
American Truck Dealers
American Trucking Associations
Asian American Hotel Owners Association
Associated General Contractors of America
Avis Budget Group, Inc.
CCIM Institute
C.R. England, Inc.
Equipment Leasing and Finance Association
Federation of Exchange Accommodators
Hertz Global Holdings, Inc.
Idaho Dairymen’s Association
Institute of Real Estate Management
National Apartment Association
National Association of Real Estate Investment Trusts
National Association of Realtors ®
National Automobile Dealers Association
National Multifamily Housing Council
National Stone, Sand, and Gravel Association
National Utility Contractors Association
The Real Estate Roundtable
Realtors ® Land Institute
South East Dairy Farmers Association
Truck Renting and Leasing Association
Western United Dairymen
1 The Economic Impact of Repealing or Limiting Section 1031 Like-Kind Exchanges in Real Estate (March 215, revised June 2015)
 

Accruit was pleased to contribute to the following letter submitted to the Senate Finance Committee yesterday on behalf of the 1031 Like-Kind Exchange Coalition. We are seeing great strides in our efforts with Congress as we continue to educate members on the benefits that 1031 like-kind exchanges bring to the economy.
May 10, 2016
The Honorable Orrin G. Hatch
Chairman
Senate Committee on Finance
219 Dirksen Senate Office Building
Washington, D.C. 20510
The Honorable Ronald L. Wyden
Ranking Member
Senate Committee on Finance
219 Dirksen Senate Office Building
Washington, D.C. 20510
Dear Chairman Hatch and Ranking Member Wyden:
As the Senate Finance Committee considers ways to create jobs, grow the economy, and raise wages, we strongly urge you to retain current law regarding like-kind exchanges under section 1031 of the Internal Revenue Code (“Code”). Like-kind exchanges are integral to the efficient operation and ongoing vitality of thousands of American businesses, which in turn strengthen the U.S. economy and create jobs. Like-kind exchanges allow taxpayers to exchange their property for more productive like-kind property, to diversify or consolidate holdings, and to transition to meet changing business needs. Specifically, section 1031 provides that firms and investors do not immediately recognize a gain or loss when they exchange assets for “like-kind” property that will be used in their trade or business. They do immediately recognize gain, however, to the extent that cash or other “boot” is received. Importantly, like-kind exchanges are similar to other non-recognition and tax deferral provisions in the Code because they result in no change to the economic position of the taxpayer.
Since 1921, like-kind exchanges have encouraged capital investment in the United States by allowing funds to be reinvested in the enterprise, which is the very reason section 1031 was enacted in the first place. These investments not only benefit the companies making the like-kind exchanges, but also suppliers, manufacturers, and others facilitating them. Like-kind exchanges ensure both the best use of real estate and a new and used personal property market that significantly benefits start-ups and small businesses. Eliminating them or restricting their use would have a contraction effect on our economy by increasing the cost of capital. In fact, a recent macroeconomic analysis by Ernst & Young found that limitations on like-kind exchanges could lead to a decline in U.S. GDP of up to $13.1 billion annually.1
Companies in a wide range of industries, business structures, and sizes rely on the like- kind exchange provision of the Code. These businesses—which include construction, industrial, and farm equipment; vehicle manufacturers and lessors; and real estate—provide essential products and services to U.S. consumers and are an integral part of our economy. A study by researchers at the University of Florida and Syracuse University supports that without like-kind exchanges, businesses and entrepreneurs would have less incentive and ability to make real estate and capital investments. The immediate recognition of a gain upon the disposition of property being replaced would impair cash flow and could make it uneconomical to replace that asset.2 As a result, requiring the recognition of gain on like-kind exchanges would hamper the ability of businesses to be competitive in our global marketplace. The reduced investment in real estate and capital would also have significant upstream and downstream impacts on economic reactivity and employment in industries as diverse as real estate, agriculture, construction, tourism, hospitality, trucking, and equipment supply.
In summary, there is strong economic rationale, supported by recent analytical research, for the like-kind exchange provision’s nearly 100-year existence in the Code. Limitation or repeal of section 1031 would deter and, in many cases, prohibit continued and new real estate and capital investment. These adverse effects on the U.S. economy would likely not be offset by lower tax rates. Finally, like-kind exchanges promote uniformly agreed upon tax reform goals such as economic growth, job creation and increased competitiveness.
Thank you for your consideration of this important matter.
Sincerely,
American Car Rental Association
American Farm Bureau Federation
American Truck Dealers
American Trucking Associations
Asian American Hotel Owners Association
Associated General Contractors of America
Avis Budget Group, Inc.
CCIM Institute
C.R. England, Inc.
Equipment Leasing and Finance Association
Federation of Exchange Accommodators
Hertz Global Holdings, Inc.
Idaho Dairymen’s Association
Institute of Real Estate Management
National Apartment Association
National Association of Real Estate Investment Trusts
National Association of Realtors ®
National Automobile Dealers Association
National Multifamily Housing Council
National Stone, Sand, and Gravel Association
National Utility Contractors Association
The Real Estate Roundtable
Realtors ® Land Institute
South East Dairy Farmers Association
Truck Renting and Leasing Association
Western United Dairymen
1 The Economic Impact of Repealing or Limiting Section 1031 Like-Kind Exchanges in Real Estate (March 215, revised June 2015)