Nassau Properties Partnership: Tax Consequences for Real Property

In August 2021, the co-owner of the property management and rental business Nassau Property Partnership, located in London, Ontario, asked his brother, a senior partner in a tax firm, for help with the tax structure of various operational and strategic decisions, both for his business and personal affairs. The business managed well over the COVID-19 pandemic, but several recent major events required advice from an experienced tax professional. Regarding his personal life, the co-owner was considering retiring from his company, which was a partnership, and had already put down a deposit on a second home in Florida. He wanted to fund the remaining part of the purchase through either a sale of his business interests to his daughter or through the sale of his family cottage. However, both of these decisions may have repercussions.

This case is suitable for an intermediate income tax course at the undergraduate level. Students should have a basic understanding of personal and corporate tax. This case provides an opportunity for students to analyze tax issues for business owners that are specifically relevant to a partnership. The case also discusses common tax themes such as nature of expenses, timing of deductions, and transfer of assets on a tax-deferred basis. Students consider all tax consequences of transactions in the case from the perspective of a corporation, a partnership, and an individual. Specifically, after completion of this case, students will be able to<ul><li>identify and understand the unique tax profile of a partnership and the partners of a partnership;</li><li>analyze the income and allowable expenses through a corporate structure involving a partnership;</li><li>discuss the pros and cons of different legal forms;</li><li>identify the requirements for tax-deferred transfers and the lifetime capital gains exemption; and</li><li>make connections between several tax concepts, including residency and tax-deferred transfers.</li></ul>

• Income Tax, Individual, Corporation