Title: Reagan v. Commissioner of Revenue
Citation: N/A
Docket Number: SJC-13287
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: March 10, 2023

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SJC-13287 
 
JAMES J. REAGAN, JR., & another1  vs.  COMMISSIONER OF REVENUE. 
 
 
 
Suffolk.     December 5, 2022. - March 10, 2023. 
 
Present:  Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, 
& Georges, JJ. 
 
 
Urban Redevelopment Corporation.  Taxation, Urban redevelopment 
corporation, Capital gain, Exemption, Appellate Tax Board:  
findings.  Statute, Construction.  Administrative Law, 
Agency's interpretation of statute. 
 
 
 
 
Appeal from a decision of the Appellate Tax Board. 
 
 
The Supreme Judicial Court on its own initiative 
transferred the case from the Appeals Court. 
 
 
Richard L. Jones (Caroline A. Kupiec also present) for the 
taxpayers. 
Celine E. de la Foscade-Condon for Commissioner of Revenue. 
Karen A. Pickett & Daniel B. Winslow, for New England Legal 
Foundation, amicus curiae, submitted a brief. 
Frank J. Bailey, John C. La Liberte, & Selena Fitanides, 
for PioneerLegal, LLC, amicus curiae, submitted a brief. 
 
 
 
 
1 Irene M. Reagan. 
2 
 
 
WENDLANDT, J.  "There are three things that matter in 
property:  location, location, location."2  Starting in the 
1940s, however, as the Legislature sought to remedy the public 
exigency of blighted, decadent, and substandard areas in the 
Commonwealth's cities and towns, location was not enough; the 
Legislature concluded that it needed to provide an incentive for 
private investment in urban redevelopment projects to transform 
the landscape of the Commonwealth and to supply urgently needed 
low income housing.  Thus, the Legislature enacted and amended 
G. L. c. 121A. 
 
Pertinent to the present appeal, the statute provides a tax 
exemption as an incentive for private entities to invest in 
constructing, operating, and maintaining urban redevelopment 
projects in areas that have become deteriorated, unsightly, and 
often dangerous.  The tax concession, which can be extended for 
up to forty years, see note 5, infra, provides that these 
private entities are exempt "from taxation of real and personal 
property and from betterments and special assessments and from 
the payment of any tax, excise or assessment to or for the 
 
 
2 This expression has been attributed, perhaps apocryphally, 
to Lord Harold Samuel, a real estate tycoon in Great Britain.  
Safire, Location, Location, Location, N.Y. Times Magazine (June 
26, 2009) (noting 1926 real estate classified advertisement in 
Chicago Tribune stating, "Attention salesmen, sales managers:  
location, location, location, close to Rogers Park," was 
published at time when young Lord Samuel was only fourteen years 
old). 
3 
 
[C]ommonwealth or any of its political subdivisions on account 
of a project" (emphasis added).  G. L. c. 121A, § 18C (f).  In 
consideration of this tax concession, the tax-exempt entity is 
required, inter alia, to pay a specifically defined excise 
annually, to agree to certain restrictions set forth by local 
housing authorities, to limit its cumulative annual return on 
investment, and to make additional payments to local 
authorities.  G. L. c. 121A, § 18C. 
 
This case presents the question whether, when an otherwise 
qualifying entity sells an urban redevelopment project during 
the forty-year tax-exempt window, the tax concession extends to 
the capital gain from the sale.  In other words, we must 
determine whether a tax on such a capital gain is a tax "on 
account of" the project.  Concluding that it is and that it thus 
falls under the tax concession, we reverse the decision of the 
Appellate Tax Board (board) to the contrary.3 
 
1.  Background.  The following facts are taken from the 
parties' undisputed statement of facts and the exhibits attached 
thereto. 
 
a.  The limited partnership interests.  The taxpayer James 
J. Reagan, Jr., was the sole beneficiary of Newbury Realty 
Trust, which held a minority interest in three limited 
 
 
3 We acknowledge the amicus briefs submitted by the New 
England Legal Foundation and PioneerLegal, LLC. 
4 
 
partnerships -- St. James Company (St. James), Blackstone 
Company (Blackstone), and Kenmore Abbey Limited Partnership 
(Kenmore Abbey) (collectively, c. 121A partnerships) -- each of 
which owned, operated, and maintained an urban redevelopment 
project undertaken pursuant to G. L. c. 121A, § 18C.  Newbury 
Realty Trust was a nominee trust that was disregarded for 
Federal and Massachusetts tax purposes; accordingly, Reagan was 
treated as the direct owner of the three limited partnership 
interests. 
 
b.  The urban redevelopment projects.  For nearly forty 
years, and with the approval of the then-named Boston 
Redevelopment Authority (BRA),4 the c. 121A partnerships invested 
over $45 million to acquire blighted properties and to 
construct, operate, and maintain urban redevelopment projects in 
Boston (city) pursuant to G. L. c. 121A (c. 121A projects).  
Specifically, St. James transformed an abandoned and 
structurally unsound eight-story building in Boston's South End 
district into 193 dwelling units devoted to elderly housing.  
Blackstone redeveloped a long-abandoned school property in 
Boston's West End section into 145 residential units devoted to 
affordable housing and housing designated for the elderly and 
 
 
4 The BRA was renamed the Boston Planning and Development 
Agency in September 2016.  Marchese v. Boston Redev. Auth., 483 
Mass. 149, 150 n.1 (2019). 
5 
 
individuals with disabilities.  Kenmore Abbey transformed two 
vacant hotels on Commonwealth Avenue and Kenmore Street in 
Boston into 199 residential rental units for the elderly and 
individuals with disabilities, and approximately 12,000 square 
feet of commercial space.  For each c. 121A partnership, the 
c. 121A project constituted its sole asset; the c. 121A 
partnerships conducted no activities unrelated to their 
respective c. 121A projects. 
 
Each of the c. 121A projects was approved by the city –- in 
1975 for St. James, in 1977 for Blackstone, and in 1982 for 
Kenmore Abbey -- for a forty-year term5 pursuant to a G. L. 
c. 121A, § 6A, contract with the city6 and a G. L. c. 121A, 
§ 18C, regulatory agreement (§ 18C regulatory agreement) with 
 
 
5 Pursuant to G. L. c. 121A, § 10, urban redevelopment 
corporations organized pursuant to G. L. c. 121A, § 3 (§ 3 
corporations), and G. L. c. 121A, § 18C, entities (§ 18C 
entities, and together with § 3 corporations, c. 121A entities) 
are exempt from taxes for fifteen years, but the exemption is 
extendable to up to forty years, in the aggregate. 
 
 
6 General Laws c. 121A, § 6A, provides that when a c. 121A 
entity determines to carry out an approved urban redevelopment 
project, it shall contract to carry out the project with the 
municipality in which the project is to be situated.  The 
c. 121A entity may also contract to pay the city or town an 
amount in addition to the excise prescribed by G. L. c. 121A, 
§ 10, see note 8, infra.  General Laws c. 121A, § 6A, further 
provides:  "All amounts payable, in addition to the [c. 121A] 
excise . . . , pursuant to a contract or agreement executed 
under this section shall be in lieu of taxes assessed and levied 
upon the [c. 121A entity's] real and personal property." 
6 
 
the BRA.7  Each c. 121A partnership agreed to pay an annual 
excise pursuant to G. L. c. 121A, § 10 (c. 121A excise),8 and 
also agreed to make additional annual payments to the city.  
Furthermore, pursuant to their § 18C regulatory agreements with 
the BRA, St. James's cumulative annual return on investment was 
limited to six percent; and each of Blackstone's and Kenmore 
Abbey's cumulative annual returns on investment was limited to 
eight percent.9 
 
 
7 General Laws c. 121A, § 18C (c), requires § 18C entities 
to "agree by regulatory agreement entered into with the 
department of housing and community development, or in Boston 
with the [BRA], as to financing the cost of the project." 
 
 
8 General Laws c. 121A, § 10, provides, in relevant part, 
that a c. 121A entity shall annually pay, in addition to certain 
other excises not relevant to this appeal, the c. 121A excise, 
which is either a minimum defined amount or, if greater: 
 
"an excise equal to the sum of the following:  namely, an 
amount equal to five per cent of its gross income in such 
preceding calendar year, from all sources, and an amount 
equal to ten dollars per thousand upon the . . . fair cash 
value . . . of all real and tangible personal property of 
such corporation." 
 
"Gross income" is defined as "payments actually made by persons 
for the right to reside in or occupy any portion or all of the 
project."  G. L. c. 121A, § 10.  Essentially, the c. 121A excise 
comprised one percent of the valuation of the c. 121A project 
plus five percent of the rental income. 
 
 
9 Pursuant to G. L. c. 121A, § 18C (e), to be eligible for 
G. L. c. 121A tax-exempt status, partnerships cannot "receive or 
accept as net income from a project any sum in excess of eight 
per cent of the amount invested by them in such project for each 
year in which they own or have owned the project."  Until an 
amendment was enacted in 1975, the cumulative annual return on 
7 
 
 
The c. 121A partnerships paid the c. 121A excise, as well 
as the additional payments to the city, for each year they owned 
and carried out their respective c. 121A projects, including for 
2012 (the tax year at issue). 
 
c.  The property transfers.  In the tax year at issue, as 
the tax-exempt period neared the end of the approved forty-year 
term, the c. 121A partnerships sold their respective c. 121A 
projects pursuant to G. L. c. 121A, § 11, to unrelated buyers.  
An application was submitted to the BRA requesting permission 
for each proposed sale.  The applications specified that upon 
transfer, the buyers would be required to continue to operate 
the c. 121A projects, pursuant to the same restrictions as had 
applied to the c. 121A partnerships.  The BRA approved the 
transfers, as did the mayor of Boston. 
 
The buyer of each c. 121A project entered into a G. L. 
c. 121A, § 6A, contract with the city and a § 18C regulatory 
agreement with the BRA.  Upon the transfer, each new owner 
continued operating their respective c. 121A project. 
 
Following the sales, each c. 121A partnership distributed 
to Reagan his distributive share of the sale proceeds. 
 
d.  The Reagans' 2012 tax filings.  Reagan and his wife, 
Irene M. Reagan, reported the capital gains from the sales of 
 
investment was capped at six percent.  See St. 1975, c. 827, 
§ 16. 
8 
 
the c. 121A projects in their 2012 Federal income tax return.  
The Reagans submitted their 2012 Massachusetts income tax 
return, which reflected no taxable income from the c. 121A 
partnerships.  The Reagans disclosed their distributive share of 
the capital gains in their Massachusetts filing, but they did 
not include it in their total taxable capital gains, taking the 
position that the gains were exempt from tax under G. L. 
c. 121A, § 18C (f), because the gains were "on account of" the 
c. 121A projects. 
 
In March 2016, the Commissioner of Revenue (commissioner) 
issued a notice of assessment to the Reagans related to their 
capital gains from the sales of the c. 121A projects, and in 
March 2017, denied the Reagans' application for abatement. 
 
The Reagans timely appealed to the board.  The Reagans and 
the commissioner submitted a statement of agreed facts to the 
board.  In July 2020, the board issued a decision upholding the 
assessment; and in August 2021, the board issued its findings of 
fact and report.  The Reagans timely appealed, and we 
transferred the case to this court sua sponte. 
 
2.  Discussion.  To determine whether the tax exemption 
applies to the capital gains on the sales of the c. 121A 
projects, we must determine whether imposing a tax on the 
capital gain realized from the sale of a c. 121A project is a 
9 
 
tax "on account of" a project as that phrase is used in G. L. 
c. 121A, § 18C (f). 
 
a.  Standard of review.  "We review conclusions of law, 
including questions of statutory construction, de novo."  New 
England Forestry Found., Inc. v. Assessors of Hawley, 468 Mass. 
138, 149 (2014). 
"In doing so, the general and familiar rule is that a 
statute must be interpreted according to the intent of the 
Legislature ascertained from all its words construed by the 
ordinary and approved usage of the language, considered in 
connection with the cause of its enactment, the mischief or 
imperfection to be remedied and the main object to be 
accomplished, to the end that the purpose of its framers 
may be effectuated" (quotation and alteration omitted). 
 
Oracle USA, Inc. v. Commissioner of Revenue, 487 Mass. 518, 522 
(2021), quoting Commissioner of Revenue v. Gillette Co., 454 
Mass. 72, 76 (2009). 
 
Where, as here, we are asked to construe the scope of a tax 
exemption, we are guided by the principle that "an exemption 
from taxation 'is a matter of special favor or grace,' and . . . 
statutes granting exemptions from taxation are therefore to be 
strictly construed."  South Boston Sav. Bank v. Commissioner of 
Revenue, 418 Mass. 695, 698 (1994), quoting State Tax Comm'n v. 
Blinder, 336 Mass. 698, 703 (1958).  An exemption is "to be 
recognized only where the property falls clearly and 
unmistakably within the express words of a legislative command."  
Blinder, supra.  "The burden is on the taxpayer to demonstrate 
10 
 
entitlement to an exemption claimed."  South Boston Sav. Bank, 
supra. 
 
"We defer to the board's expertise with respect to the 
interpretation of tax laws in the Commonwealth."  U.S. Auto 
Parts Network, Inc. v. Commissioner of Revenue, 491 Mass. 122, 
127 (2022), quoting VAS Holdings & Invs. LLC v. Commissioner of 
Revenue, 489 Mass. 669, 674 (2022).  See Oracle USA, Inc., 487 
Mass. at 522, quoting Shaffer v. Commissioner of Revenue, 485 
Mass. 198, 203, cert. denied, 141 S. Ct. 819 (2020) ("[B]ecause 
the board is an agency charged with administering the tax law 
and has expertise in tax matters, we give weight to its 
interpretation of tax statutes").  If the board's construction 
of a tax law "is reasonable, we will defer to its 
interpretation."  Oracle USA, Inc., supra. 
 
"At the same time, principles of deference are not 
principles of abdication; '[t]he proper interpretation of a 
statute is a question of law for us to resolve.'"  Oracle USA, 
Inc., 487 Mass. at 522, quoting Gillette Co., 454 Mass. at 76.  
"Board decisions will be set aside for an error of law."  VAS 
Holdings & Invs. LLC, 489 Mass. at 674.  Where the taxpayer 
meets it burden to show entitlement to a tax concession, we will 
reverse a decision of the board denying an exemption.  See, 
e.g., New England Forestry Found., Inc., 468 Mass. at 159 (board 
erred in concluding that forest property owned by nonprofit was 
11 
 
not tax exempt from property tax where nonprofit carried its 
burden to show it occupied land for charitable purpose). 
 
b.  Plain language.  We begin with the "ordinary and 
approved usage of the language" of the statute.  Oracle USA, 
Inc., 487 Mass. at 522, quoting Gillette Co., 454 Mass. at 76.  
General Laws c. 121A, § 18C (f), exempts G. L. c. 121A, § 18C, 
entities (§ 18C entities) "from taxation of real and personal 
property and from betterments and special assessments and from 
the payment of any tax, excise or assessment to or for the 
[C]ommonwealth or any of its political subdivisions on account 
of a project" (emphasis added).  The ordinary meaning of the 
phrase "on account of" is "because of."  Random House Dictionary 
of the English Language 10 (1973) (defining "on account of" as 
"by reason of" and "because of"); Merriam-Webster Online 
Dictionary, https://www.merriam-webster.com/dictionary/account 
[https://perma.cc/WEC4-2UMP] (same).  "On account of" requires a 
causal connection "between the term that the phrase 'on account 
of' modifies and the factor specified in the statute at issue."  
Rousey v. Jacoway, 544 U.S. 320, 326 (2005).  See Gross v. FBL 
Fin. Servs., Inc., 557 U.S. 167, 176 (2009) (using "on account 
of" synonymously with "because of").  Accordingly, the plain 
meaning of G. L. c. 121A, § 18C (f), exempting a qualifying 
entity from "any" tax "on account of" a project, is a tax 
12 
 
concession for any taxes causally connected to the project.  See 
Rousey, supra. 
 
Capital gain falls within this provision; plainly, the gain 
is causally related to the project.10  Contrary to the board's 
conclusion, this determination is supported by the definition of 
the term "project."  The statute defines "project" as: 
"any undertaking consisting of the construction in a 
blighted open, decadent or sub-standard area of . . . 
residential, commercial, [or other] buildings . . . and the 
operation and maintenance of such buildings . . . after 
construction . . . [and] may include as incidental thereto 
. . . acquisition and assembly of the land (and buildings 
and structures and other improvements thereon, if any) 
within a blighted open, decadent or sub-standard area." 
 
G. L. c. 121A, § 1.  Consistent with this definition, the c. 
121A partnerships each "acqui[red]" property in an area that had 
been blighted, decadent, and substandard.  Each c. 121A 
partnership invested in the "construction" of buildings on those 
acquired properties.  Thereafter, each c. 121A partnership 
"operat[ed]" and "maint[ained]" such buildings.  Indeed, 
 
 
10 Contrary to the commissioner's argument, this 
construction is supported by O'Gilvie v. United States, 519 U.S. 
79 (1996), in which the United States Supreme Court concluded, 
as we do here, that "on account of" means "for the sake of:  by 
reason of:  because of."  Id. at 83, quoting Webster's Third New 
International Dictionary 13 (1981).  Because the punitive 
damages in that case were not "'received . . . on account of' 
the personal injuries, but rather were awarded 'on account of' a 
defendant's reprehensible conduct and the jury's need to punish 
and to deter it," they fell outside of the tax exemption there 
at issue.  O'Gilvie, supra. 
13 
 
although not required by the statute, for each c. 121A 
partnership, the c. 121A project was its sole asset. 
 
As a result of these investments in the c. 121A projects 
over the course of nearly four decades, the value of the 
properties in the formerly blighted areas increased.  This 
increased value is reflected in the capital gain.  In other 
words, the capital gain -- the increased value -- was causally 
related to the project -- the "acquisition," "construction," 
"operation," and "maintenance" efforts of the c. 121A 
partnerships.  See G. L. c. 121A, § 1.  Thus, despite the canon 
of statutory construction requiring us to construe tax 
concessions narrowly, see South Boston Sav. Bank, 418 Mass. at 
698, here the Legislature's choice of the phrase "on account of" 
requires the construction we adopt. 
 
c.  Statutory framework.  The conclusion that the tax 
exemption extends to the capital gain from the sale of a c. 121A 
project is buttressed by the statute as a whole.  See City Elec. 
Supply Co. v. Arch Ins. Co., 481 Mass. 784, 790 (2019), quoting 
LeClair v. Norwell, 430 Mass. 328, 333 (1999) ("[w]hen the 
meaning of a statute is brought into question, a court properly 
should read other sections and should construe them together").  
See also Plymouth Retirement Bd. v. Contributory Retirement 
Appeal Bd., 483 Mass. 600, 605 (2019) ("Beyond plain language, 
courts must look to the statutory scheme as a whole, so as to 
14 
 
produce an internal consistency within the statute.  Even clear 
statutory language is not read in isolation" [quotations, 
citations and alteration omitted]); Commonwealth v. Morgan, 476 
Mass. 768, 777 (2017) ("The plain language of the statute, read 
as a whole, provides the primary insight into that intent. . . .  
We do not confine our interpretation to the words of a single 
section"). 
 
In particular, the Legislature confirmed its choice to 
grant a broad tax concession by codifying its intent in the 
statute itself.  See Brookline v. Commissioner of the Dep't of 
Envtl. Quality Eng'g, 398 Mass. 404, 412 (1986) (court may 
consider codified intent as part of statute as whole where it 
does not conflict with more specific provisions).  Specifically, 
G. L. c. 121A, § 2, sets forth the Legislature's finding that 
"blighted open, decadent or sub-standard areas" comprised a 
"growing menace, injurious . . . to the safety, health, morals 
and welfare of the residents of the [C]ommonwealth."  The 
Legislature also acknowledged that, particularly in areas where 
blight existed, there was a shortage of "decent, safe and 
sanitary buildings" for residential and other purposes.  Id.  
The Legislature further found that this "menace" could not be 
remedied solely by the Commonwealth's regulatory police powers 
and that it could not "be dealt with effectively by the ordinary 
operations of private enterprise without the aids" provided in 
15 
 
G. L. c. 121A.  Id.  Accordingly, the Legislature intended G. L. 
c. 121A to 
"stimulate the investment of private capital in blighted 
open, decadent or sub-standard areas, and in the 
construction, maintenance and operation in such areas of 
needed decent, safe and sanitary residential, commercial, 
industrial, institutional, and recreational buildings; 
. . . the construction, maintenance and operation of such 
buildings on such land in such areas will assist in 
achieving permanent and comprehensive elimination of 
existing slums, and sub-standard, decadent and blighted 
conditions and in preventing the recurrence or 
redevelopment of such conditions." 
 
Id.  In sum, the statute sets forth the Legislature's intent to 
provide a significant incentive to spur private investment to 
transform blighted areas of the Commonwealth's cities and towns, 
and to build sorely needed low income housing,11 to remedy a 
 
 
11 The statute has encouraged private development of 
affordable housing: 
 
"The most frequent application of Chapter 121A has been in 
the construction of housing for low and moderate income 
families.  Approximately [ninety-four percent] of all 
Chapter 121A projects developed to date have been 
residential. . . . 
 
"Chapter 121A is designed to stimulate development in 
Massachusetts by making tax payments on eligible 
investments both predictable and affordable.  Tax 
agreements are established to assure the feasibility of 
certain desirable projects.  They are negotiated to 
compensate for the state's over-reliance on the property 
tax, and to provide the tax predictability which is 
necessary for major investments under certain 
circumstances." 
 
Executive Office of Communities & Development, Chapter 121A:  A 
Handbook for Local Officials 3 (Nov. 1979). 
16 
 
situation that had become a public exigency, which the 
Commonwealth's police powers alone could not solve and which was 
not being addressed by operation of the private marketplace in 
the absence of such an incentive.  See Boston Edison Co. v. 
Boston Redev. Auth., 374 Mass. 37, 45 (1997), citing G. L. 
c. 121A, § 2 ("Chapter 121A was enacted in response to a 
legislative determination that the continued existence of blight 
and decay posed a threat to the health and safety of the 
inhabitants of the Commonwealth.  The Legislature concluded that 
such conditions constituted a public exigency and that their 
elimination would be in the public interest"). 
 
Yet, other than the tax concession, the statute provides 
little to entice private entities to invest in c. 121A projects, 
which by necessity are highly regulated.  See, e.g., G. L. 
c. 121A, § 3 (project must be "authorized and approved by the 
Boston Redevelopment Authority" or local housing board); G. L. 
c. 121A, § 5 (application must specify, inter alia, "the reasons 
why the project is necessary or desirable [and] the uses to 
which the project is to be put," and include site plan); G. L. 
c. 121A, § 6A (G. L. c. 121A, § 3, corporations [§ 3 
corporations] and § 18C entities [together, c. 121A entities] 
must contract with city or town "for the carrying out of such 
project in accordance with the application, the provisions of 
[G. L. c. 121A], and the rules, regulations and standards 
17 
 
prescribed by the housing board for such project"); G. L. 
c. 121A, § 18C (e) (requiring regulatory agreement with BRA and 
compliance with inspections and financing regulations). 
 
Indeed, despite the tax exemption, c. 121A entities are not 
unencumbered by payments to the Commonwealth.  Significantly, in 
consideration of the tax concession, c. 121A entities must pay, 
in addition to other excises, the c. 121A excise, calculated 
based on a formula that considers the entity's annual rental 
income as set forth in G. L. c. 121A, § 10.  See note 8, supra.  
Also, local authorities can require that the entities "pay to 
the city or town with respect to one or more years such specific 
or ascertainable amount in addition to the [c. 121A] excise 
. . . as may have been stated in the application."  G. L. 
c. 121A, § 6A.  See note 6, supra.  Further, the statute caps 
the cumulative annual return on investment at eight percent.  
G. L. c. 121A, § 18C (e).  See note 9, supra. 
 
These other limiting provisions of the statute bolster our 
construction of the tax concession and, particularly, of the 
term "on account of" in order to achieve the codified intent to 
"stimulate the investment of private capital in blighted open, 
decadent or sub-standard areas," and to encourage the 
"construction, maintenance and operation in such areas of needed 
decent, safe and sanitary residential, commercial, industrial, 
institutional, and recreational buildings."  G. L. c. 121A, § 2. 
18 
 
 
One of the most effective "aids" provided in G. L. c. 121A, 
to "stimulate the investment of private capital" is the tax 
exemption.12  G. L. c. 121A, § 2.  See Dodge v. Prudential Ins. 
Co. of Am., 343 Mass. 375, 383-384 (1961), quoting Opinion of 
the Justices, 341 Mass. 760, 778 (1960) ("since 'urban 
redevelopment corporations, although in a sense private 
corporations, perform functions for the public benefit analogous 
to those performed by various other types of corporations 
commonly called public service corporations, property owned by 
them and used in such service may receive favored treatment in 
the matter of taxation'").  See also Boston Edison Co., 374 
Mass. at 50 (because c. 121A projects "serve public purposes," 
they "are subsidized by grants of tax concessions").  Achieving 
a capital gain from the sale of a c. 121A project is often a 
significant driver for real estate investors;13 construing "on 
account of" to extend to the capital gain from the sale of a 
project thus not only falls within the broad language the 
Legislature chose for the tax concession, but is supported by 
the statute's "main object" to spur private investment in 
 
 
12 Chapter 121A also provides tax predictability.  See note 
11, supra. 
 
 
13 See generally A. Baum & D. Hartzell, Global Property 
Investment:  Strategies, Structures, Decisions xi (2012) (real 
estate investors are generally driven by ability to "earn income 
from rents and from selling the asset at the end of a holding 
period for more than they paid for it"). 
19 
 
blighted areas.  See Oracle USA, Inc., 487 Mass. at 522, quoting 
Gillette Co., 454 Mass. at 76. 
 
d.  Legislative history.  Given the unambiguous meaning of 
"on account of," we need not examine the provision's history.  
See Osborne-Trussell v. Children's Hosp. Corp., 488 Mass. 248, 
254 (2021), quoting Doherty v. Civil Serv. Comm'n, 486 Mass. 
487, 491 (2020) ("If the statutory language is clear, 'courts 
must give effect to its plain and ordinary meaning and need not 
look beyond the words of the statute itself'").  Nevertheless, 
it is notable that the breadth of the tax exemption contemplated 
finds further support in the statute's legislative history.  In 
its original form, G. L. c. 121A provided that c. 121A projects 
could be carried out only by § 3 corporations.  St. 1945, 
c. 654.  Such corporations are created "for the purpose of 
carrying out a project authorized and approved, or to be 
authorized and approved, by the housing board," and cannot 
"undertake more than one project."  St. 1945, c. 654, § 3.  The 
statute initially exempted such corporations only from property 
taxes.  See St. 1945, c. 654, § 10 ("The real estate and 
personal property of any such corporation shall for a period of 
forty years after its organization be exempt from taxation under 
[G. L. c. 59]"). 
 
In 1956, with blight persisting, the Legislature amended 
the statute to expand the tax benefits for § 3 corporations.  It 
20 
 
provides that, for the exemption period, the corporations "shall 
be exempt from taxation and from betterments and special 
assessments; and . . . shall not be required to pay any tax, 
excise or assessment to or for the [C]ommonwealth or any of its 
political subdivisions," except for the c. 121A excise and 
certain other excises, if applicable.14  St. 1956 c. 640, § 4. 
 
In 1965, the Legislature recognized that the statute did 
not foster incentive sufficient to lure private investment in 
addressing the problem of blight.  Accordingly, it again 
expanded the reach of the statute, amending G. L. c. 121A to 
extend the tax advantages previously provided only to § 3 
 
 
14 In 1956, the House of Representatives asked the Justices 
of this court to determine whether it was 
 
"within the competency of the General Court . . . to enact 
a law exempting urban redevelopment corporations and their 
property, including certain leased property, from taxation, 
betterments and special assessments for a period of forty 
years after their organization, and providing that during 
said period such corporations shall pay no tax, excise or 
assessment, except a corporate excise and certain other 
excises." 
 
Opinion of the Justices, 334 Mass. 760, 761 (1956).  The 
Justices answered in the affirmative.  Id. at 764.  The Justices 
again addressed similar questions regarding amendments in 1960 
pertaining to, inter alia, whether a particular redevelopment 
project should qualify as an urban redevelopment project, in 
Opinion of the Justices, 341 Mass. 760, 770 (1960).  The 
Justices concluded that if "each project is properly found (in 
accordance with [G. L. ]c. 121A as amended by the bill) to be 
for a public purpose," then yes, it was within the competency of 
the Legislature to exempt qualifying projects, as redefined in 
the proposed bill, from taxation.  Id. at 780. 
21 
 
corporations to § 18C entities.  See G. L. c. 121A, § 18C, 
inserted by St. 1965, c. 859, § 1.  Specifically, the 
Legislature allowed "[i]ndividuals, and associations of persons 
organized in the [C]ommonwealth in the form of joint ventures, 
partnerships, limited partnerships or trusts, resident or 
organized in the [C]ommonwealth, or charitable corporations" to 
"undertake projects . . . or acquire a project which has been 
authorized and approved and which has been developed or is being 
developed."  Id. 
 
However, unlike § 3 corporations, whose sole business is 
cabined to activities related to c. 121A projects, the 
Legislature permitted § 18C entities to undertake business and 
activities other than c. 121A projects.  Compare G. L. c. 121A, 
§ 3 ("No [§ 3] corporation shall undertake more than one project 
or engage in any other type of activity"), with G. L. c. 121A, 
§ 18C (providing no similar restriction on business activities 
of § 18C entities).  Accordingly, the Legislature provided that 
§ 18C entities would enjoy the same tax concession as § 3 
corporations, but only to the extent of their G. L. c. 121A 
business activities.  G. L. c. 121A, § 18C (f).  Other business 
activities of such entities -- their non-G. L. c. 121A 
activities -- do not enjoy the G. L. c. 121A tax exemption; to 
accomplish this end, the Legislature limited the exempt 
22 
 
activities to those "on account of" -- i.e., causally related to 
-- urban redevelopment projects.15 
 
In 1975, the Legislature again expanded the incentives 
available to c. 121A entities, by enacting G. L. c. 121A, § 18D, 
to permit the construction and sale of residential condominium 
units within c. 121A projects.  St. 1975, c. 827, § 19.  The 
amendment extends, for a limited duration, certain benefits, 
including the tax concession, to purchasers of condominium units 
within c. 121A projects, "as an additional means of stimulating 
the investment of private capital in" blighted areas.  G. L. 
c. 121A, § 18D. 
 
In sum, the legislative history of G. L. c. 121A evinces an 
intent to spur private entities to invest in urban redevelopment 
projects by expanding the available tax exemption, which is 
consistent with our construction of "on account of" to include 
the capital gain from the sale of a project. 
 
e.  Board's analysis.  Passing over the plain language and 
legislative history, the board rested its conclusion that the 
capital gain from the sale of a c. 121A project did not fall 
 
 
15 By contrast, the "on account of" language was unnecessary 
for § 3 corporations, whose sole business are projects under 
G. L. c. 121A, § 3.  Consequently, the Legislature did not use 
the "on account of" language in setting forth the tax exemption 
for § 3 corporations.  See G. L. c. 121A, § 10 ("such 
corporation shall not be required to pay any tax, excise, or 
assessment to or for the [C]ommonwealth or any of its political 
subdivisions"). 
23 
 
within the tax concession on three grounds:  (1) that the 
capital gain was realized after the sale of the projects when, 
the board contended, the c. 121A partnerships were no longer 
eligible for the tax concession; (2) that the expansion of the 
tax exemption to condominium owners and the required use of the 
profits from such sales to create a guaranty fund evinced the 
legislative intent to preclude capital gain from the tax 
exemption, see G. L. c. 121A, § 18D; and (3) that it was 
required in deference to the commissioner's Letter Ruling 94-7 
(Oct. 4, 1994). 
 
i.  Timing of capital gain.  The board principally relied 
on the observation that after a § 18C entity sells the project, 
it can no longer derive rental income from the project, and thus 
it is no longer entitled to the privilege of the tax concession.  
Reagan vs. Commissioner of Revenue, Appellate Tax Bd., No. 
C332548, ATB 2021 at 221-222 (Aug. 18, 2021).  While the board's 
observation is true,16 its conclusion that capital gain is not 
"on account of" a project is a non sequitur. 
 
 
16 General Laws c. 121A, § 18C, provides that once c. 121A 
entities have "carried out their obligations and performed their 
duties as imposed by" G. L. c. 121A for the tax-exempt period, 
the entities "shall thereafter no longer be subject to the 
obligations of this chapter . . . nor shall they enjoy the 
rights and privileges hereby granted."  See G. L. c. 121A, § 16 
(equivalent provision for § 3 corporations).  The board 
maintained that the tax exemption is one of the "rights and 
privileges" that terminates once the c. 121A entity is no longer 
a c. 121A entity.  This is true but inapposite.  As discussed 
24 
 
 
The board's conclusion seems to rest on a misapprehension -
- namely, that capital gain is realized after the project is 
sold.17  To the contrary, capital gain is realized coincident 
with the sales transaction; it is, by definition, "[t]he profit 
realized when a capital asset is sold or exchanged" (emphasis 
added).18  Black's Law Dictionary 259 (11th ed. 2019).  See 
 
supra, each c. 121A partnership performed its duties until the 
sale, at which time it simultaneously realized the capital gain 
at issue. 
 
 
Similarly, the board's observation that the c. 121A 
partnerships no longer derived rental income from the c. 121A 
projects following the sale of the projects is true but 
inapposite.  General Laws c. 121A, § 18C (f), contemplates a 
quid pro quo –- namely, that "in consideration" of the tax 
exemption, entities carrying out c. 121A projects will pay the 
c. 121A excise.  The parties do not dispute that the c. 121A 
partnerships complied with their G. L. c. 121A obligations, 
including for the tax year at issue; in particular, the c. 121A 
partnerships paid the c. 121A excise based on, inter alia, 
rental income, see note 8, supra. 
 
 
17 At oral argument, counsel for the commissioner 
acknowledged that capital gain is realized "actually 
simultaneous[ly]" with a sale. 
 
 
18 "Property is generally treated as acquired and disposed 
of when title passes or the benefits and burdens of ownership 
are transferred, whichever occurs first."  4 Mertens Law of Fed. 
Income Taxation § 22:18 (2021).  Capital gain is measured as of 
the sale date, confirming that it is realized simultaneously 
with, not after, the sale of a capital asset.  See id., citing 
Fogel v. Commissioner of Internal Revenue, 203 F.2d 347, 349 
(5th Cir. 1953); Rev. Rul. 70-598, 1970-2 C.B. 168 (in 
determining period for which asset has been held, taxpayer's 
holding period generally begins on day after date that property 
was acquired and generally ends on date of disposition).  See 
also Rev. Rul. 54-607, 1954-2 C.B. 177 ("In determining the 
holding period for capital gain and loss purposes, the date the 
25 
 
Minkin v. Commissioner of Revenue, 425 Mass. 174, 180 (1997) 
(capital gain is realized "when the . . . property is liquidated 
at a profit"); id. (transferor realizes "a capital gain . . . on 
the sale" [emphasis added]); Johnson v. Department of Revenue, 
387 Mass. 59, 65 (1982) ("capital gain was realized when the 
sale was made" [emphasis added; alteration and citation 
omitted]).  Accord Boston Elevated Ry. v. Metropolitan Transit 
Auth., 323 Mass. 562, 572 (1949) (capital gain tax "sprang from" 
sale of property; "[u]ntil there was a transaction completed by 
the payment of the cash consideration, there was no taxable 
gain"); Internal Revenue Service, Topic No. 409:  Capital Gains 
and Losses, https://www.irs.gov/taxtopics/tc409 
[https://perma.cc/AZ64-QENH]  ("To determine how long you held 
the asset [for purposes of calculating the capital gain], you 
generally count from the day after the day you acquired the 
asset up to and including the day you disposed of the asset").19 
 
property is acquired is excluded, and the date the property is 
disposed of is included"). 
 
 
19 The board also expressed concern that an entity that 
sells a project prior to the expiration of its tax-exempt period 
would benefit from a tax-exempt capital gain, but an entity that 
did not timely sell, would be required to pay tax on the capital 
gain.  Reagan vs. Commissioner of Revenue, ATB 2021 at 219-220.  
This, however, is inherent in a fixed term; the obligations, 
rights and privileges end when the term ends.  See note 16, 
supra.  There is no suggestion that the c. 121A partnerships 
acted in bad faith or attempted to "game the system" in any way. 
26 
 
 
ii.  Guaranty fund for condominium sales.  The board next 
relied on G. L. c. 121A, § 18D, discussed in part 2.d, supra, to 
support its conclusion that "on account of" a project does not 
extend to capital gain.  In particular, the section requires a 
c. 121A entity that sells condominium units within a project to 
reserve the "profit" from such sales in a guaranty fund to be 
used to pay expenses related to the project's rental units, 
among other restrictions.  G. L. c. 121A, § 18D.  The 
Legislature defined "profit" for the purposes of G. L. c. 121A, 
§ 18D, as the proceeds from the condominium unit sales reduced 
by "the amount invested in the condominium, . . . any related 
costs and expenses reasonably attributable to any such sale 
. . . and all state, federal and other taxes and excises 
applicable to any gain derived therefrom" (emphasis added).  
Because the Legislature defined profit for the purposes of G. L. 
c. 121A, § 18D, as reduced by "all state . . . taxes and excises 
applicable to any gain derived" from condominium unit sales, the 
board concluded that the Legislature impliedly acknowledged that 
State taxes would be "applicable" to the capital gain from the 
sale of a project. 
 
This conclusion ignores the purpose of G. L. c. 121A, 
§ 18D, which, as specifically stated in the section, is to 
provide "an additional means of stimulating the investment of 
private capital in [blighted] areas, including the construction, 
27 
 
operation, management and maintenance therein of housing for low 
income persons and families"; accordingly, we disagree that the 
Legislature's use of the phrase "all state . . . taxes . . . 
applicable to any gain" evinces an implicit intent to deprive 
c. 121A entities of one of the key incentives in investing in 
blighted areas.  See Conservation Comm'n of Norton v. Pesa, 488 
Mass. 325, 332 (2021), quoting Bellalta v. Zoning Bd. of Appeals 
of Brookline, 481 Mass. 372, 378 (2019) ("we must avoid any 
construction of statutory language which leads to an absurd 
result"); Richardson v. UPS Store, Inc., 486 Mass. 126, 132 
(2020), citing ROPT Ltd. Partnership v. Katin, 431 Mass. 601, 
603 (2000) ("court may not interpret statutes to produce 
illogical result"). 
 
iii.  Letter ruling.  The board also relied on Letter 
Ruling 94-7 to support its construction of "on account of."  
Letter Ruling 94-7 concerned whether the c. 121A excise applied 
to the proceeds from the sale of a project.  The commissioner 
concluded that the excise did not apply to the sale proceeds.  
Letter Ruling 94-7, quoting G. L. c. 121A, § 10.  Although it 
was not relevant to the letter ruling, and without citing any 
authority or providing any rationale whatsoever, the 
commissioner then stated that, "[t]hese proceeds are subject to 
tax, not under [G. L. ]c. 121A, but under the general tax 
provisions of Massachusetts law (i.e., [G. L. ]c. 62 or [G. L. 
28 
 
]c. 63, as the case may be)."  Id.  The conclusory statement, 
which conflicts with the plain language of G. L. c. 121A, § 18C, 
the statute as a whole, and the legislative history, is not 
entitled to deference.20  See G. L. c. 62C, § 3 ("The 
commissioner may prescribe regulations and rulings, not 
inconsistent with law, to carry into effect the provisions of 
[the tax] statutes"); Massachusetts Mun. Wholesale Elec. Co. v. 
Massachusetts Energy Facilities Siting Council, 411 Mass. 183, 
194 (1991) ("an administrative agency has no authority to 
promulgate rules or regulations that conflict with the 
statutes").21 
 
f.  Annual income cap.  In addition to pressing us to defer 
to the board's analysis, the commissioner contends that we 
should affirm the decision based on the use of the term 
"section" in G. L. c. 121A, § 18C (e).  That provision caps the 
cumulative annual return on investment for § 18C entities to 
 
 
20 Following oral argument, the commissioner submitted the 
March 8, 1994 interdepartmental legal memorandum prepared by a 
Department of Revenue attorney, which apparently is the basis 
for the letter ruling.  We afford it no deference.  See 
generally Kisor v. Wilkie, 139 S. Ct. 2400, 2416 (2019) 
(declining to defer to agency staff's "ad hoc statement"). 
 
 
21 Following oral argument, we asked the commissioner to 
provide data regarding the tax treatment afforded to capital 
gain realized by other c. 121A entities that have sold c. 121A 
projects within the tax exemption period.  We agree with the 
parties that the data, which are incomplete, do not alter our 
analysis. 
29 
 
eight percent.  See note 9, supra.  Paragraph (e) also states, 
"Nothing in this section shall be applicable to the payment of 
dividends out of the profits from the sale of the capital assets 
of the corporation" (emphasis added).  G. L. c. 121A, § 18C (e).  
The commissioner maintains that the use of the word "section" 
refers to the entirety of § 18C, including paragraph 18C (f), 
the tax exemption provision, and argues that the term 
eviscerates the tax exemption for dividends (and distributions) 
from asset sales, including any capital gain from the sale of 
the project itself.  We disagree that the use of the term 
"section" should be given such weight. 
 
Instead, it is clear in context that the statement 
regarding dividends from asset sales refers to the eight percent 
cap set forth in paragraph (e) and means only that the cap on 
the annual cumulative return on investment set forth in 
paragraph (e) does not apply to dividends paid from profit on 
asset sales.  This construction of the dividends provision is 
supported by the rest of paragraph (e), which provides that for 
certain projects "the preceding limitations on dividends shall 
not apply" if certain Federal or State agencies "allow[] a 
change in the allowable distribution or other measure to 
increase the rate of return on investment."  G. L. c. 121A, 
§ 18C (e).  Accordingly, we reject the commissioner's argument 
that the Legislature's use of the term "section" evidences its 
30 
 
intent impliedly to limit the scope of the tax exemption set 
forth in paragraph (f), a separate paragraph of G. L. c. 121A, 
§ 18C.  Tellingly, the board declined to adopt the 
commissioner's argument; we decline to do so as well.22 
 
3.  Conclusion.  For the foregoing reasons, we reverse the 
decision of the board. 
So ordered. 
 
 
22 Because we conclude that the capital gain at issue was 
not taxable, we do not reach the Reagans' alternative argument 
that the board erred in adopting the Federal adjusted basis of 
the c. 121A projects.