WASHINGTON, DC–The Tax Cut and Jobs Act is the biggest change tothe US tax code in 30 years. There is still much about it thatneeds clarification. Even the provisions that areperfectly clear, such as the tax rates, lead to further questions,at least in the commercial real estate community.
For instance, many real estate firms are be grappling with thequestion of whether to structure as a C corp. to take advantage ofthe new 21% corporate tax rate or to continue on as a pass-throughentity.

The lower rate notwithstanding, this can be a surprisinglycomplex decision to make, says Montgomery McCracken SeniorTax law partner Gary M. Edelson. Here's one reason why:there is still the accumulated earnings tax and the personalholding company tax and therefore, a C corp. can't be used to tohold a large portfolio of stock and bonds. “Business entities wherethey need every nickel they can get their hands on and have nointention of distributing anything to the equity owners for as longas they can, would do well to opt to be a C corp.,” Edelsonsays.