This article analyzes Gluck and examines the important lessons inherent in the case for partners in real estate investment partnerships. It also considers how taxpayers might avoid a factual scenario similar to that in Gluck, where the Court ultimately denied petitioners’ request for redetermination of the IRS disallowance of their claimed §1031 like-kind exchange treatment on the sale of a real estate asset.
Background
Laurence Gluck is a true denizen of New York City. Born and raised in the Bronx, and a graduate of Queens College and St. John’s University School of Law, Mr. Gluck left his practice as a litigation associate at Proskauer, Rose, Goetz, & Mendelssohn in the early 1980s to become a real estate attorney at another, smaller New York City law firm.3 It was during his tenure as a real estate specialist that Mr. Gluck purchased his first investment property and, in 1985, formed a property management company with one of his law partners called Stellar Management.4 When the real estate market in the United States collapsed in 1998, Mr. Gluck dissolved Stellar Management and caused this partnership to distribute the residential properties previously held by it, which he continued to own and manage under the Stellar Management name.5 Since the early 2000s, Mr. Gluck purchased dozens of mostly aging residential buildings in New York City under soon-to-expire housing subsidies.6 He typically renovated these properties and, as the subsidies expired, replaced the rent-regulated tenants with market rate tenants.
In the past two decades, his company, Stellar Management, acquired over 24,000 apartment units in New York, Chicago, Washington, D.C., and San Francisco.7
- T.C. Memo 2020-66.
- All section references herein are to the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), or the Treasury regulations promulgated thereunder, unless otherwise indicated.
- Laurence Gluck Wikipedia (2019), available at https://en.wikipedia.org/.
- Laurence Gluck Wikipedia (2019).
- Laurence Gluck Wikipedia (2019).
- Laurence Gluck Wikipedia (2019).
- Laurence Gluck Wikipedia (2019).