News
American Agricultural Law Association (“AALA”) awards Jess Phelps the Organization’s 2017 Professional Scholarship Award
At its annual meeting in October, the AALA awarded Phelps the top award for his recent article, Defining the Role of Conservation in Agricultural Conservation Easements, published in Ecology Law Quarterly, the University of California-Berkeley’s environmental law review. The President of the AALA explained that “Jess’ article provides a thorough examination of the tension between conservation interests and the demands of evolving farm uses on lands encumbered by agricultural conservation easements,” Zwagerman said. “Jess’ reputation as an excellent writer and scholar is known by all who have worked with him over the years. This well-deserved honor recognizes his work and skill on a national level.”
For a link to the article, click here.
For a link to the full press release, click here.
New England Super Lawyers Recognizes Ritchie Berger and Karen McAndrew Among the Top 100 Attorneys in New England
Dinse is pleased to announce that Ritchie Berger and Karen McAndrew have been included by Super Lawyers in the Top 100 Attorneys in New England.
Ritchie is head of the firm’s litigation group and one of Vermont’s premier trial lawyers. His practice concentrates on the defense of complex civil litigation throughout Vermont and New England.
Karen is senior litigation counsel at Dinse. Her practice focuses on commercial litigation, college & university law, and employment law.
Dinse Brief: How 70 ½ Year-Olds Can Make Charitable Distributions Directly From a Retirement Account and Receive a Tax Benefit
Malory Lea and Dan Sharpe
Charitable contributions have long been tax-favored. Federal and Vermont taxpayers who itemize their deductions reduce their Federal and Vermont taxable income with contributions to United Way, American Red Cross, churches and synagogues, and other charitable, religious and educational organizations. After taking into account the state and Federal deductions, a charitable gift of $1,000 by a Vermont taxpayer in 2017 might have “cost” only $700 as a result of a reduced overall income tax liability of $300.
For 2018, the out-of-pocket cost of charitable contributions will rise significantly. The dramatic increase in the Federal standard deduction from $12,700 to $24,000 for married, joint tax filers and from $6,350 to $12,000 for single taxpayers means that many taxpayers will no longer itemize deductions. More taxpayers will no longer receive any tax benefit from making charitable contributions. While there are many reasons to be charitable, a tax deduction provides a valuable monetary incentive for taxpayers to make these contributions. Charitable organizations are understandably worried that this increase in the standard deduction will reduce donations.
Individuals who have reached age 70 ½ and have individual retirement accounts (“IRAs”) are required to take minimum distributions from their IRAs. The “required minimum distribution” or “RMD” is often calculated by the trustee or custodian of an IRA. The amount is based on the immediately prior year-end value of the account and the IRA-holder’s age.
A special rule for IRAs applies to charitable distributions made after the account holder reaches age 70 ½. Distributions made directly by an IRA trustee or custodian to a tax-qualified charity for an account-holder who has reached age 70 ½ are “Qualified Charitable Distributions” or “QCDs.” QCDs are not only excluded from a taxpayer’s gross income, but they are included in meeting the required minimum distribution from your IRA. Double counting is not permitted. To the extent a QCD is excluded from gross income, a charitable deduction may not also be claimed.
This special rule, limited to $100,000 annually, allows charitably-minded individuals subject to the RMD rules to avoid Vermont and Federal income taxes on the charitable distribution, avoid the loss of an itemized deduction that might result from the increased standard deduction, and meet their RMD requirement.
If you are subject to the RMD rules for your IRA for 2018 and want to take advantage of the special QCD rules, you must act in concert with your IRA trustee or custodian in advance of the year end. Contact Malory Lea at mlea@dinse.com or 802-864-5751 for more information or assistance.
Spencer Knapp Rejoins Firm as Senior Counsel
Dinse announced today that Spencer Knapp rejoined the firm as Senior Counsel, after stepping down as Senior Vice President & General Counsel of UVM Health Network and UVM Medical Center on September 30. Mr. Knapp served in those positions for 16 years.
Before joining the Medical Center, Mr. Knapp was a longtime partner of Dinse where his law practice focused on corporate and health care matters. He said, “I am so pleased to return to the firm where I began my professional career years ago and look forward to renewing old friendships and client relationships.”
On rejoining the firm, Mr. Knapp will serve as senior counsel and consultant, concentrating on health care law and strategic issues, as well as non-profit corporate governance, collaborations, joint ventures, and mergers and acquisitions.
Jeff McMahan, Dinse’s Managing Partner, said “We are very excited to have Spencer back. His work in a leadership role at the Health Network will be a valuable complement to his years of legal experience, to the benefit of Dinse clients.”
Mr. Knapp has also been active in community affairs. He serves currently on the Boards of Vermont Community Foundation, The Curtis Fund, and Local Motion, and he has previously served on the Boards of Vermont Public Radio, United Way of Chittenden County (Chair), Greater Burlington YMCA (Chair), Champlain Valley Union High School; Lund Family Center (Chair), and Vermont Business Roundtable, among others.
Mr. Knapp and his wife, Barbara Cory, live in Shelburne.
Dinse Welcomes New Litigation Attorney
Dinse is pleased to announce that Andrew Sullivan has joined the firm as an associate attorney.
Andrew is a member of the firm’s litigation group, and provides support and counseling in a variety of areas, including personal injury, insurance defense, medical malpractice, employment, and education, among others. Prior to joining the firm, he was a judicial law clerk for the Rutland Unit of the Vermont Superior Court. Andrew graduated from the University of Richmond School of Law, where he served as Copy Editor for the Richmond Journal of Law and Technology.
New England Super Lawyers Recognizes Thirteen Dinse Attorneys
Dinse P.C. announces that eleven attorneys have been selected for inclusion on the 2018 New England Super Lawyers list in six different practice areas, and two attorneys have been selected for inclusion on the 2018 New England Rising Stars list. Attorneys are identified as “Super Lawyers” based on extensive nomination and polling among New England attorneys aimed at identifying New England’s top attorneys in each class. Attorneys are identified as being “Rising Stars” based on extensive nomination and polling among New England attorneys who are asked to nominate the best attorneys who are 40 or under, or who have been practicing for 10 years or less.
The practice areas and the attorney(s) listed in each area for the 2018 New England Super Lawyers list are as follows:
- Business Litigation: Ritchie Berger, Karen McAndrew
- Business/Corporate Law: Jeffrey McMahan, Brian Murphy, Afi Ahmadi, David Gurtman
- Employment & Labor Law: Jeffrey Nolan
- Estate Planning & Probate: Mark Langan
- Health Care Law: Linda Cohen
- Real Estate Law: Molly Langan, Austin Hart
The practice areas and attorneys listed for the 2018 New England Rising Stars list is as follows:
- Civil Litigation: Defense: Andy MacIlwaine
- Civil Litigation: Plaintiff: Kendall Hoechst
Audio of discussion regarding draft of OCR Notice of Proposed Rulemaking available for download
On September 14, 2018, the National Association of College and University Attorneys (“NACUA”) posted a draft copy of the U.S. Department of Education Office for Civil Rights’ (“OCR”) Notice of Proposed Rulemaking on Title IX of the Education Amendments of 1972. The draft Notice outlines many potential changes in how OCR will enforce Title IX, including changes to the definition of sexual harassment, the scope of institutional obligations to address sexual harassment, and how institutions should respond to sexual harassment. The draft Notice is available here: https://www.nacua.org/docs/default-source/new-cases-and-developments/2018/draft-title-ix-regulations-september-2018.pdf?sfvrsn=118374be_2. In posting the document, NACUA emphasized that: “The draft Notice is currently undergoing review in the Office of Management and Budget. This is not a final copy of the Proposed Rules, but we wanted to make the draft available to members in light of the significance of the forthcoming regulations and the expected release of the draft in various news outlets.”
On September 17, 2018, Jeffrey J. Nolan, Chair of Dinse’s Education Practice Group, presented a webinar regarding the language and implications of the draft Notice. An audio recording of that webinar is available here: Part 1; Part 2.
Please contact Jeff Nolan at jnolan@dinse.com if you have any follow-up questions. Thank you.
Dinse Brief: Qualified Opportunity Zones
By Ted Lawrence
Background
To encourage investment in low-income communities, the Tax Cut and Jobs Act created a new section of the Internal Revenue Code, 26 USC § 1400Z, that address investments made in “Qualified Opportunity Zones.”
What are Qualified Opportunity Zones?
Qualified Opportunity Zones are specific geographic areas that have been designated as such by the U.S. Treasury Department. Earlier this year, the U.S. Treasury Secretary certified a number of Vermont towns and neighborhoods as Qualified Opportunity Zones. The certified areas include Winooski, parts of Burlington and South Burlington, Vergennes, and Rutland. Investing in a Qualified Opportunity Zone may provide significant tax benefits to an investor.
Benefits
Investment in a Qualified Opportunity Fund provides three potential tax advantages to the investor:
- A deferral of tax on gains that are invested.
- Partial forgiveness of tax due with respect to those gains.
- A basis step-up on those gains.
In addition, investment in a Qualified Opportunity Fund allows investors to receive favorable tax treatment on real-estate investments without actually owning or managing the development of real property (unlike, for example, a 1031 exchange property).
Investment Process
Investment in a Qualified Opportunity Zone is made through a tiered structure. There are three different types of entities and properties involved in the process:
- Qualified Opportunity Zone Funds;
- Qualified Opportunity Zone Businesses; and
- Qualified Opportunity Zone Business Property.
Qualified Opportunity Fund
A Qualified Opportunity Fund is the umbrella entity through which all investments in the Qualified Opportunity Zone program must be made. A Qualified Opportunity Fund must:
- Hold at least 90 percent of its assets in “qualified opportunity zone property”—i.e., the stock or interests of a Qualified Opportunity Zone Business, or Qualified Opportunity Zone Business Property.
- Not make investments in another Qualified Opportunity Fund.
- Make certain tax filings.
Qualified Opportunity Zone Business
A Qualified Opportunity Zone Business is an entity that owns and operates “tangible property”—i.e., real estate or personal property—in a Qualified Opportunity Zone. It is the entity that actually performs the development work in a Qualified Opportunity Zone. A Qualified Opportunity Zone Business must meet the following requirements:
- “Substantially all” of the tangible property owned by the Business must be Qualified Opportunity Zone Business Property.
- Follow certain statutory standards detailed in other sections of the Internal Revenue Code.
- Not function as a “sin business”—e.g., owning golf courses, liquor stores, massage or hot tub parlors, or tanning salons.
Qualified Opportunity Zone Business Property
Qualified Opportunity Zone Business property is tangible property that is:
- Acquired by the Qualified Opportunity Fund or Business after December 31, 2017.
- “Originally acquired” (i.e., a new investment) or “substantially improved” (i.e., becomes more highly valued) by the Qualified Opportunity Fund or Business.
Unanswered Questions
There are a number of unanswered questions regarding investments in Qualified Opportunity Zones, including:
- Whether the deferral and forgiveness on “gains” invested in a Qualified Opportunity Fund refers to all gains or just capital
- The meaning of “substantially improve” in the context of Qualified Opportunity Zone Business Property.
- How the basis step-up on gains invested in a Qualified Opportunity Fund will be calculated.
- Whether Qualified Opportunity Funds and Qualified Opportunity Zone Businesses may organize as LLCs.
The U.S. Treasury and Internal Revenue Service are likely to issue further guidelines on investing in Qualified Opportunity Zones in the near future. We will send a further update when such guidance is issued.
Best Lawyers Recognizes Thirteen Dinse Attorneys
Dinse P.C. announces that thirteen of its attorneys were recently selected by their peers for inclusion in the The Best Lawyers in America® 2019 (Copyright 2012 by Woodward/White, Inc., of Aiken, S.C.) in twenty different practice areas. Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence. Because Best Lawyers is based on an exhaustive peer-review survey in which more than 36,000 leading attorneys cast almost 4.4 million votes on the legal abilities of other lawyers in their practice areas, and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a singular honor. Corporate Counsel magazine has called Best Lawyers “the most respected referral list of attorneys in practice.”
The practice areas and the attorney(s) listed in each area are as follows:
- Commercial Litigation: Ritchie E. Berger, Karen McAndrew
- Corporate Compliance Law: David Gurtman
- Corporate Governance Law: Brian Murphy
- Corporate Law: Jeffrey J. McMahan, Brian R. Murphy
- Education Law: Jeffrey J. Nolan, Karen McAndrew
- Employee Benefits (ERISA) Law: Daniel R. Sharpe
- Employment Law – Management: Amy M. McLaughlin, Jeffrey J. Nolan, Karen McAndrew
- Immigration Law: Leigh Cole
- Litigation – Construction: Karen McAndrew
- Litigation – Intellectual Property: Shapleigh Smith, Jr., Karen McAndrew
- Litigation – Labor & Employment: Amy M. McLaughlin
- Medical Malpractice Law – Defendants: Ritchie E. Berger
- Mergers & Acquisitions Law: Brian R. Murphy
- Non-Profit / Charities Law: Brian R. Murphy
- Personal Injury Litigation – Defendants: Ritchie E. Berger, Karen McAndrew
- Product Liability Litigation – Defendants: Shapleigh Smith, Jr.
- Real Estate Law: Austin D. Hart, Molly Langan
- Tax Law: Mark A. Langan
- Technology Law: Jeffrey J. McMahan
- Trusts and Estates: Mark A. Langan