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James Duffy

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Jim is a partner in Taft’s Tax practice and practices principally in the areas of federal tax law; tax credit financing; individual, partnership and corporate tax planning; M&A; tax-exempt organizations and general commercial and corporate law.

Jim has been actively practicing in the area of the New Markets Tax Credits (NMTC) program since its inception in 2001. He has organized community development entities (CDEs) and represented CDEs, borrowers and other parties in structuring and closing numerous NMTC transactions. Jim also advises clients regarding Qualified Opportunity Zone matters.

Jim advises LLCs, partnerships, corporations and individuals in connection with the formation of new companies, mergers and acquisitions, formation of joint ventures, like-kind exchanges, ownership succession planning, and general business operations. These clients are involved in a variety of industries, including banking, venture capital, real estate, construction, consulting and investing.

Jim also advises charitable and non-charitable tax-exempt organizations, including health care entities, schools, religious and civic organizations. In addition to advising management of these organizations with respect to matters pertaining to general operation and maintenance of tax-exempt status, Jim has assisted clients in forming, restructuring and dissolving tax-exempt organizations, as well as forming donor- advised funds.

Prior to joining the firm, Jim worked at the law firm of Lewis Rice and Fingersh in St. Louis, Missouri, where he concentrated his practice in federal and state taxation. He also clerked for the Hon. Robert P. Ruwe of the U.S. Tax Court in Washington, D.C.

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It is widely understood that you can defer taxation of the gain on a sale of investment real estate if the sale proceeds are reinvested into new investment real estate within 180 days. This timing can be challenging to meet.

Well-known strategies for mitigating this timing challenge, including conducting a reverse exchange or investing in a TIC interest with a sponsor. Another alternative that people are less familiar with is the Delaware Statutory Trust (DST). A DST is a trust…

Continue Reading Did you know that you can make a like-kind exchange into an interest in a Delaware Statutory Trust?

We frequently deal with companies that would like to issue profits interest retroactively. The typical scenario is that the company intended to or agreed to issue profits interests to a service provider and for one reason or another the paperwork was never done and the profits interest was never issued. As a result, the service provider misses out on the appreciation in the value of the company that occurred during the intervening two or three (or however many) years.

While…

Continue Reading Did you know that you can make up for that profits interest that you intended (but forgot) to issue in a prior year?

Section 83(b) allows taxpayers to elect to include in their current taxable income certain compensation that would not otherwise be taxable until a future year. For example, a taxpayer that receives restricted stock compensation that would be taxable in future years as it vests often will make a Section 83(b) election to be taxed on the full value in the year the stock is awarded in order to be taxed on a lower value. Section 83(b) elections are also commonly…

Continue Reading Did you know that you can file a Section 83(b) election with the IRS electronically?

The One Big Beautiful Bill Act (OBBBA), which made the Opportunity Zone program permanent also established detailed reporting obligations for Qualified Opportunity Funds (QOFs). It also imposes reporting requirements on the Qualified Opportunity Zone Businesses (QOZBs) owned by the QOFs.

Since their creation in 2017, Opportunity Zones have offered major tax benefits to investors who reinvest otherwise taxable gains into low-income areas designated as Qualified Opportunity Zones. Concerns have been voiced in the interim about the lack data to show…

Continue Reading Did you Know that the 2025 Tax Act Creates New Reporting Rules for Opportunity Funds?
  • nonresidential real property
  • used as an integral part of a qualified production activity—i.e., facilities directly involved in manufacturing, production, refining, agricultural, or chemical production
  • QPP
… Continue Reading Did you know that you can take 100% bonus depreciation on real property used in manufacturing?

As discussed in a prior “Did You Know,” pre-closing income tax liabilities have historically not been much concern for the buyer of LLC interests, since the income of LLCs (taxed as partnerships) is not a liability of the target company but its selling partners. However, under the “new” 2018 partnership audit procedures, any tax liability arising from an audit of a partnership (LLC) must be paid by the LLC itself unless the LLC makes a “push out“ election causing the…

Continue Reading Did you know that you can avoid the “push out” election negotiation with R&W insurance in the sale of an LLC?

The QOZ tax credits were enacted in 2017 and sunset on December 31, 2026. This credit allows taxpayers to defer until December 31, 2026, the taxation of gain that they reinvest in a QOZ. The amount of deferred gain that is taxable is reduced by 10% if the QOZ investment has been held for 5 years as December 31, 2026, and another 5% if it has been held for 7 years at that time. Any additional gain on the investment…

Continue Reading Did you know that the Qualified Opportunity Zone tax credit has been permanently extended and (at least arguably) enhanced?

Most investors know that Qualified Opportunity Funds (QOFs) offer powerful tax benefits.  Taxpayers can defer the tax on the gains that are reinvested in the QOF until the earlier of December 31, 2026 or when they sell the QOF investment.  Investors in QOFs also have the potential to eliminate tax on all appreciation in excess of the original deferred gain if the investment is held for at least 10 years.  However, many investors are not aware that even if they…

Continue Reading Did You Know That You Can Defer Gain on the Sale of Your Qualified Opportunity Fund Investment by Reinvesting in Another QOF?

Installment sales can be a great way to defer and sometimes actually reduce tax on the sale of property.  If certain requirements are met, a seller can report and pay tax on the profit from an installment sale as payments are received, rather than reporting and paying tax on all of the profit at the time of sale.  

However, be careful when a buyer assumes an existing loan on the property or takes a property “subject to” the loan in…

Continue Reading Did you know that when you sell in an installment sale if a buyer assumes debt on a property that you may have taxable gain even though you don’t receive cash?

This is true because:  


The income of partnerships and LLCs (taxed as partnerships) is taxed directly to the partners and the LLC members. By contrast, a C corporation pays tax on its income and then the shareholders must pay tax again on the after-tax profits distributed by the corporation resulting in higher overall taxes.

 
While S corporations, unlike C corporations, are not taxable on their income, partnerships are still superior to S corporations because of the greater ability to deduct…

Continue Reading Did you know that it is almost always better to hold business real estate in a partnership than in a corporation – even an S corporation?