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"The Real Deal" featured Haub Law Professor Bridget Crawford in "Tamir Sapir failed to report $194M from partial sale of 11 Madison: IRS"

09/13/2018

"The Real Deal" featured Haub Law Professor Bridget Crawford in "Tamir Sapir failed to report $194M from partial sale of 11 Madison: IRS"

If you could make $194 million disappear from your taxes, that’d be pretty cool right?

That’s what the Internal Revenue Service alleges now deceased Trump Soho co-developer Tamir Sapir (or his accountant) thought he could do, tax appeal proceedings filed in United States Tax Court in Washington, D.C. shows.

In 2017, the IRS fined Sapir’s estate, now controlled by his son Alex, more than $600,000 for filing a false return for tax year 2010 and ordered Sapir to pay his fair share—which apparently only amounts to an alternative minimum tax of $1.4 million, a flat rate the IRS imposes on tax filers that report a loss.

Alex Sapir appealed the decision, but it was denied late last month. He did not respond to a request for comment and his tax attorneys at Nixon Peabody declined to comment. Tamir Sapir died in 2014 after a lengthy illness.

The tax dispute regards capital gains from the Sapir Organization’s 2010 sale of a 49 percent stake in 11 Madison to CIM Group. On his initial return, Tamir Sapir deducted a claimed $450 million in personal liability for a loan on the property, which combined with the rest of his tax return, left him a reported total loss for that year of more than $253 million. The IRS, however, ruled that Tamir Sapir improperly claimed liability for a non-recourse real estate mortgage, a type of loan in which the bank — not the borrower — assumes the economic risk. As such, the IRS decided Sapir failed to report $194.2 million in income from the $469 million sale to CIM.

“Did Mr. Sapir’s accountants or attorneys not remember their basic tax course?” asked Bridget Crawford, a tax law professor at Pace University, who reviewed the documents at the request of The Real Deal. “The IRS took them to school when it included on Form 886-A, the Explanation of Adjustment, that neither certain contractual provisions nor the business partnership agreement itself ‘can convert a debt what is ultimately nonrecourse debt into a recourse debt.’”

Read the full article.