Source: https://patents.google.com/patent/US20020013750A1/en
Timestamp: 2018-04-26 15:55:49
Document Index: 86282691

Matched Legal Cases: ['§1031', '§1031', '§1031', '§1031', '§1031', '§1031']

US20020013750A1 - Methods and investment instruments for performing tax-deferred real estate exchanges - Google Patents
US20020013750A1
US20020013750A1 US09956372 US95637201A US2002013750A1 US 20020013750 A1 US20020013750 A1 US 20020013750A1 US 09956372 US09956372 US 09956372 US 95637201 A US95637201 A US 95637201A US 2002013750 A1 US2002013750 A1 US 2002013750A1
US09956372
Mature investors also may have numerous concerns-related to inheritance. For example, most mature investors would like their investments to be divisible, so that they may be easily divided among heirs. Additionally, these investors may want their estates to be able to sell part of their investment holdings to pay estate taxes.
The above and other objects and advantages of the present invention will be apparent upon consideration of the following detailed description, taken in conjunction with the accompanying drawings, which:
[0030]FIG. 1 illustrates a prior art IRC §1031 exchange conducted through a qualified intermediary;
[0031]FIG. 2 shows the structure of the new real estate investment methods and investment instrument of the present invention;
[0032]FIG. 3 depicts an illustrative embodiment of an investment instrument of the present invention;
[0034]FIG. 5 shows an IRC §1031 exchange used for tax-deferred exchange of investment property for “deedshares” in accordance with the principles of the present invention;
[0035]FIG. 6 is a flowchart of an IRC §1031 exchange in which investment property is exchanged for deedshares;
[0036]FIG. 7 depicts an illustrative computer database structure for implementing the methods and investment instrument of the present invention; and
[0037]FIG. 8 shows an illustrative computer system and network for executing a database application implementing the methods and investment instrument of the present invention.
Master agreement 24 also may contain other provisions relating to the master tenant. For example, the put/call provisions preferably specify the master tenant as the entity to which deedshares 22 are sold at the end of the specified time. Additionally, it is possible to adjust the profit-made by the master tenant on this sale by adjusting the term of the master lease and the specified time during which deedshares 22 are held to maturity.
In step 31, the real estate portfolio is encumbered with a master agreement and master lease for a specified interval, e.g., 10 years. The master agreement includes a mechanism, discussed hereinabove, to reaggregate title from the holders of the deedshares to enable the real estate portfolio to be disposed of at the end of the term of the master agreement. In step 32, title to the real estate in the portfolio is divided into tenant-in-common deeds having a predetermined denomination, e.g., 1000 deeds each having a $100,000 value, creating “deedshares.”Finally, at step 33, the seller sells the deedshares to the public, either directly, or through qualified intermediaries via IRC §1031 exchanges.
[0063]FIG. 4B shows the steps taken by the master tenant, starting with entering into the master lease, at step 40. During the term of the master lease, several steps are taken. At step 41, the master tenant pays monthly rent on the lease to the deedshare holders (co-tenants). The master tenant then subleases the property (typically at a profit) to one or more subtenants at step 42. In steps 43 and 44, the master tenant maintains the property, and pays the taxes and insurance on the property. When the term of the deedshare has expired, at step 45, the master tenant exercises his call to purchase the deedshares from the individual deedshare holders at a calculable value, such as fair market value.
[0064]FIG. 4C shows the steps taken by a deedshare holder. At step 50, the deedshares are purchased from the seller, either directly, or through a qualified intermediary as part of an IRC §1031 exchange, as described in greater detail hereinbelow. During the term of the deedshares, the deedshare holder receives guaranteed monthly income from the rent paid by the master tenant (step 51). During the term of the deedshares, each deedshare holder is permitted to depreciate the deedshare holder's tax basis in any improvements on the property for tax-accounting purposes (step 52). At the end of the term, at step 53, the deedshare holder exercises his put to force the master tenant to purchase the deedshares at fair market value. Prior to the end of the term of the master lease, a deedshare owner may freely alienate title to the deedshare.
Mortgage tables 88 contain a list of the debt encumbering each investor's relinquished property and the debt associated with the deedshares held by each investor. This information may be used in conjunction with the information in property-tables 82 to help investors assure that they obtain a sufficient mortgage on deedshares to comply with IRC §1031, and to assure lenders of the appropriate loan-to-value ratio which warrants the mortgage needed by investors.
Referring to FIG. 8, an illustrative computer system and network for executing and accessing the database of FIG. 7 is shown. Computer system 90 is a database server that executes the database described hereinabove. Computer system 90 includes CPU 91, which executes instructions that implement a database server application, and mass storage 92, preferably a PAID array, on which the data that forms the database is stored. Computer system 90 also preferably includes network interface 93 so that the database may be accessed through other computers on a local area network.
creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds of at least one predetermined denomination, each of the plurality of deedshares subject to a provision for reaggregating the plurality of tenant-in-common deeds after a specified interval.
7. The method of claim 2, wherein encumbering the real property in the real estate portfolio with a master agreement further comprises including a tax provision in the master lease, requiring the master tenant to pay taxes on the real estate.
US09956372 1998-12-03 2001-09-17 Methods and investment instruments for performing tax-deferred real estate exchanges Abandoned US20020013750A1 (en)
US09205633 Continuation US6292788B1 (en) 1998-12-03 1998-12-03 Methods and investment instruments for performing tax-deferred real estate exchanges
US12539752 Continuation US7925572B2 (en) 1998-12-03 2009-08-12 Methods and investment instruments for performing tax-deferred real estate exchanges
US20020013750A1 true true US20020013750A1 (en) 2002-01-31
WO2007011956A2 (en) * 2005-07-19 2007-01-25 Rex & Co. Transfering financial interest
WO2007011956A3 (en) * 2005-07-19 2007-05-18 Rex & Co Transfering financial interest
US6292788B1 (en) 2001-09-18 grant
Free format text: ASSIGNMENT OF ASSIGNORS INTEREST;ASSIGNORS:ROBERTS, NEAL;FRANKLIN, MICHAEL;RUNNELS, CHARLES;AND OTHERS;REEL/FRAME:014581/0800