<p>Accruit and other members of the Federation of Exchange Accommodators convene at the FEA 2018 Annual Conference in Kansas City September 12 -14 to discuss issues relevant to like-kind exchanges and the 1031 industry. The theme of this year's conference is "Building for the Future."</p>

<p>Accruit Executive Vice President, Martin Edwards, will take FEA members through a 1031 Reverse Exchange Boot Camp on Wednesday afternoon, and Accruit Vice President, Steve Chacon, will lead a discussion of existing state regulatory regimes on Friday.</p>

<p><a href="https://1031.org/FEA2018AnnualConference&quot; target="_blank">Register and learn about the FEA 2018 Annual Conference here</a>.</p>

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<p>Accruit EVP Max Hansen charts the evolution and passage of the 2017 Tax Reform Act and its impact on property exchanges under Section 1031 of the Internal Revenue Code in a program conducted by Northwest Farm Credit Services for its loan officers at Fairmont Hot Springs Resort near Anaconda, Montana.&nbsp; Max will also discuss the current state of real property exchanges and some of the recurrent issues faced by ag lenders and their customers.</p>

<p>Northwest Farm Credit Services (Northwest FCS) is a financial cooperative providing financing and related services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners and crop insurance customers through 44 branch offices in Montana, Idaho, Oregon, Washington and Alaska. Northwest FCS is a member of the Farm Credit System that supports agriculture and rural communities with reliable, consistent credit and financial services.&nbsp;</p>

<p>In his previous role as President and CEO of American Equity Exchange, Max worked with Northwest FCS customers as they use 1031 exchanges to expand and diversify their operations.&nbsp; Max and the Accruit organization look forward to a continuing collaboration with Northwest FCS and its customers.</p>

<p>The descriptions of these entities are organized according to their functional characteristics, such as formation, management and conduct of business, firm property, ownership interests, dissociation of owners, and dissolution of the firm. This allows the reader to compare and contrast the alternatives offered by the various forms.</p>

<h2>Tax Law and Business Law Considerations of Real Estate Entities</h2>

<p>Investors can choose from several different organizational forms for purposes of purchasing real estate. Most organizational entities are separate and apart from the assets and liabilities of any other entity or owner. The choice of entities in owning real estate is usually dependent upon a combination of business law and tax factors.</p>

<p>Tax law considerations include:</p>

<ul>
<li>Federal and state income tax treatment and consequences</li>
</ul>

<ul>
<li>The nature of the property to be owned by the investors</li>
</ul>

<ul>
<li>Distributions of cash and appreciated property</li>
</ul>

<ul>
<li>Organization, re-organization, sale, and the ability to do business in another state</li>
</ul>

<p>Business law considerations include:</p>

<ul>
<li>The number of individual investors</li>
</ul>

<ul>
<li>An investor’s anticipated involvement in the operation and management of the real estate</li>
</ul>

<ul>
<li>The risk involved in the investment</li>
</ul>

<ul>
<li>Personal liability</li>
</ul>

<ul>
<li>Allocations of management authority within the entity</li>
</ul>

<ul>
<li>Qualifications of owners</li>
</ul>

<ul>
<li>Sharing of profits and losses</li>
</ul>

<ul>
<li>Duration of the entity, transferability of interests, exit strategies, and liquidation</li>
</ul>

<h2>Common Organizational Structures for Owning Real Estate</h2>

<p>Several different ownership structures exist for purposes of owning real estate. Some of the more common forms include:</p>

<ul>
<li>Individual/Sole Proprietorship</li>
</ul>

<ul>
<li>Tenancy in Common</li>
</ul>

<ul>
<li>Land Trust</li>
</ul>

<ul>
<li>General Partnership</li>
</ul>

<ul>
<li>Limited Partnership</li>
</ul>

<ul>
<li>Corporation (C-corp &amp; S-corp)</li>
</ul>

<ul>
<li>Limited Liability Company (LLC)</li>
</ul>

<p>Many investors choose a limited liability company as their organizational form to purchase real estate because of its tax treatment, flexibility in power structure and management responsibilities, and limited liability. The best way to understand the unique features of an LLC is to distinguish it from the other entities.</p>

<p>We will begin our discussion with the most basic of all forms: a sole proprietorship.</p>

<h2>Sole Proprietorships</h2>

<p>A sole proprietorship is owned by a single person and exists absent a statutory scheme. It has no separate legal existence from its owner. In other words, no legal formalities are required to bring this form into existence. There are no organizational or operational costs, and no qualification requirements exist for doing business in other states.</p>

<p>The sole proprietor may hire employees or independent contractors; however, all the decision-making is centered with the individual owner. The owner is not insulated from liability and directly assigned all profits and losses. Also, the sole owner does not need to file a separate tax return. Only minimal reporting to is required through Form 1040 and Schedule C. The income or loss of Schedule C is added or subtracted to the 1040 to determine tax liability. Business profits are subject to only one tax at the individual level.</p>

<h2>Tenants in Common</h2>

<p>Another way to hold an interest in real estate is as tenants in common. Tenancy in common (TIC) is the ownership of real estate by more than one person, with each owner retaining an undivided interest in the property. Like the sole proprietorship, no entity is formed to own that interest. An investor can own the interest as he wants on his tax return.</p>

<p>Tenancy in common also allows for continuous ownership upon death or bankruptcy of any other owner. The owner may sell his interest, initiate a sale and partition suit (which is essentially a forced sale which generally occurs because the owners of property are unable to agree upon certain aspects of the ownership), or dissolve the tenancy in common. The TIC interest goes to the heirs of that owner rather than to the other tenants in common. The agreements between tenants in common usually deal with the sharing of expenses and provide one owner with the right to buy out the other owner when used.</p>

<h2>Summary</h2>

<p>In the first of this series on selecting a real estate entity, we looked at the sole proprietorship and tenant in common entities, each of which have distinct characteristics that could influence why one may or may not choose to select them. <a href="/blog/selecting-entity-real-estate-purchase-%E2%80%93-partnerships">In our next installment on entities for real estate purchase, we discuss partnerships</a>.</p>

<p>Accruit President and COO Karen Kemerling joins the <a href="https://sim-colorado.org/event/4th-annual-sim-women-summer-conference/&…; target="_blank">4th Annual SIM Women Summer Conference</a> to share experiences, encourage growth and mentor other women in technology. Karen will facilitate roundtable discussions on conference presentations to help attendees connect material to individual and team growth.</p>

<p>SIM, the Society for Information Management, is a not-for-profit organization of IT professionals whose mission it is to support IT leaders in Colorado. SIM Women is a network within SIM that promotes communication, mentorship, leadership and career development among SIM women.</p>

<h2>SIM Women - Purpose</h2>

<p>The purpose of SIM Women is to:</p>

<ul>
<li>Facilitate LIFELONG relationships and connections</li>
<li>Serve as a strong networking organization COMMITTED to women in technology and their unique needs</li>
<li>Provide a safe environment which allows women the OPPORTUNITY to learn and grow from their peers</li>
<li>Provide MENTORING opportunities to the next generation of technology leaders</li>
<li>Work closely with the business community to encourage DIVERSITY</li>
<li>Provide meaningful programming that will inspire personal and professional GROWTH</li>
</ul>

<p><b>DENVER –</b> <a aria-label="Accruit, Independent 1031 Exchange Qualified Intermediary" href="https://www.accruit.com/&quot; title="Accruit, Independent 1031 Exchange Qualified Intermediary">Accruit</a>, a financial technology company that manages more than $8 billion in money flow annually, has announced the addition of Pat Frawley as the company’s Chief Financial Officer. Frawley has over <span style="background:#fdfdfd"><span style="color:#111111">30 years’ experience in accounting and finance at organizations ranging from early-stage to multi-national businesses</span></span>.</p>

<p>“We are thrilled to welcome Pat to our executive team. His background and experience will immediately provide insight and direction around revenue, expense and deployment of capital to continue promoting our financial technology strategy and bolster Accruit’s long-term value,” said Accruit President Karen Kemerling. “As our CFO, Pat will play a lead role in identifying and executing targeted growth opportunities such as acquisitions, partnerships and strategic alliances.”</p>

<p>Frawley, a veteran of the United States Air force, spent nine years with Liberty Global, the world's largest international television and broadband company. At Liberty Global he progressed from senior director of consolidations and reporting to vice president of accounting and finance operations with Unitymedia, the company's $3 billion German cable division. Pat’s career includes holding a variety of financial leadership roles at technology, ecommerce and venture capital companies.</p>

<p>“I am very excited to join Accruit and support the company’s long-term plans for growth. This is a team whose core values of accountability and teamwork are reflected in the world-class products they provide to the market, “ said Frawley.</p>

<h2><span style="tab-stops:268.0pt">About Accruit</span></h2>

<p><span style="tab-stops:268.0pt">Accruit, LLC is a financial technology company that facilitates all types of commercial and individual transactions as a trusted independent escrow agent and qualified intermediary. Accruit specializes in 1031 like-kind exchange services and escrow, including Digital Vault, an escrow solution for digital assets, and PaySAFE®, providing protection to buyers and sellers in online transactions. Learn more about <a aria-label="Paysafe" href="https://paysafeescrow.com/&quot; title="Paysafe">PaySAFE®</a>.</span></p>

<p>Jordan Born, Accruit's Associate General Counsel, will&nbsp; be among the industry experts participating today at the <a href="http://www.cvent.com/events/4th-annual-net-lease-summit/event-summary-6…; target="_blank">4th Annual Net Lease Summit in Chicago</a>. Born will be taking part in roundtable discussions on 1031 exchanges and tax reform.</p>

<p>The Net Lease Summit, hosted by Midwest Real Estate News Magazine, will draw the biggest names in the net lease, sale leaseback and 1031 Exchange markets. Industry experts will discuss the latest trends, financing options and market conditions in the industry.</p>

<p>Born joined Accruit this year. He has worked primarily in real estate law since obtaining his LL.M. in 2006, advising and representing individuals, business entities, lenders, borrowers, landlords and tenants in all matters related to commercial and residential real estate. He is an active member of the Illinois State Bar Association and the Chicago Bar Association.</p>