Gifting Business Interests: Will The Parent’s Tax Treatment Be Visited Upon The Child?*

Farrell Fritz, P.C.
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The Tax Gene?

King of Swamp Castle: One day, lad, all this will be yours.

Prince Herbert: What, the curtains?

King: No, not the curtains, lad. I’m talking about all of my business and investment interests, along with the related tax reporting positions.[I]

Have you ever wondered how much our parental genes define us? What about the impact of external factors?

It is a scientific fact that an individual’s genetic make-up, as passed down to them from their parents, influences their physical characteristics, and even their behavior. Each of us, therefore, “owes” a great deal to our parents for who were are.

It has also been scientifically established that the environment in which one is raised plays a significant role in one’s development as an individual. Poverty and poor nutrition, for example, may greatly influence whether one’s genetic abilities will ever be fully realized. These factors may also be attributed to who our parents were.[ii]

Until recently, however, I never seriously considered whether a parent’s tax reporting position – of all things – may be passed on to their child in such a way that it is determinative of the child’s own tax reporting. Surprisingly, that seemed to be the argument that the IRS made in a case decided by the Tax Court last week.[iii]

Dad’s Interest Expense

Dad was a real estate entrepreneur who owned[iv] a 50-percent interest in each of several partnerships (the “Partnerships”) that owned, operated, and actively managed rental real estate. The remaining interest in each partnership was held by an unrelated person.

The Partnerships borrowed money from Bank and distributed the proceeds to Dad and his partner.[v] The terms of the loans were substantially similar. Each loan had a 5.88% interest rate, and was evidenced by a note that was secured by the partnership’s assets. Neither Dad nor his partner was personally liable on the notes.[vi]

Dad invested the funds distributed to him in money market funds and other investment assets, which he held until his death.

Of course, the Partnerships incurred interest expense on the Bank loans. Each partnership issued to Dad for each year a Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc., reporting his distributive shares of its rental real estate income and of its interest expense.

On his federal income tax return for each year, Dad reported his distributive shares of the interest expense on the loans as “investment interest.”[vii]

Father to Son

A couple of years before his death, Dad transferred to Son, by gift, his ownership interests in the Partnerships.[viii] Son agreed to be bound by each Partnership’s operating agreement,[ix] but he did not become personally liable on any of the Bank loans.

However, by “gratuitously” transferring his interests in the Partnerships to Son, Dad was relieved of his shares of the partnership liabilities represented by the loans.

On his federal income tax return for the year of the gift, Dad treated the nonrecourse partnership liabilities of which he was “relieved” as amounts realized on the gift transfers of his partnership interests.[x] Accordingly, Dad reported taxable capital gains to the extent the amount realized exceeded his adjusted basis in his partnership interests.[xi]

Son’s Interest Expense

The Partnerships paid interest on these loans, and issued Schedules K-1 to Son reporting his distributive shares of the Partnerships’ rental real estate income and of the interest expense attributable to the Bank loans.

Son filed his federal income tax return on IRS Form 1040, to which he attached Schedule E, Supplemental Income and Loss.[xii] He took the position that the interest paid by the Partnerships on the Bank loans was not “investment interest,” as it had been in the hands of Dad, because Son had not received any of the loan proceeds, and had not used any partnership distributions to acquire investment assets.

Rather, Son treated the interest as having been paid on indebtedness properly allocable to the Partnerships’ real estate assets, and thus treated his distributive shares of the interest expense as fully deductible against his distributive shares of the Partnerships’ real estate income. Accordingly, on each Schedule E, Son netted against the rental income for each partnership the corresponding amount of interest expense.

The IRS Disagrees

The IRS examined Son’s tax returns and issued a timely notice of deficiency in which it asserted that Son’s distributive shares of the interest paid by the Partnerships on the Bank loans should properly have been reported on the Schedules A of his Forms 1040 as investment interest – the way Dad had reported the interest.

Investment interest, the IRS pointed out, is deductible only to the extent of a taxpayer’s “net investment income.” Because Son had insufficient investment income to utilize the interest expense allocated to Son by the Partnerships, the IRS disallowed the deductions for all of the passed-through interest attributable to the Bank loans.[xiii]

Son then timely[xiv] petitioned the U.S. Tax Court for a redetermination of the deficiencies resulting from the disallowed deduction.[xv]

Interest Deductions

The Code generally provides that “[t]here shall be allowed as a deduction all interest paid or accrued within the taxable year on indebtedness,”[xvi] but this rule is subject to a number of limitations.

For example, in the case of taxpayers other than corporations, “personal interest” is generally nondeductible.[xvii]

However, nondeductible personal interest is defined to exclude (among other things) “interest paid or incurred on indebtedness properly allocable to a trade or business,” and any interest which is taken into account in computing income or loss from a passive activity.”[xviii]

Personal interest also excludes “any investment interest.”[xix]

Investment Interest

The IRS contended that the interest paid by the Partnerships on the Bank loans, part of which was passed through to Son,[xx] constituted “investment interest.”

Investment interest is defined as interest that is “paid or accrued on indebtedness properly allocable to property held for investment.”[xxi]

The Code allows a deduction for investment interest, but subject to a limitation. Specifically, it provides that, “[i]n the case of a taxpayer other than a corporation, the amount allowed as a deduction * * * for investment interest for any taxable year shall not exceed the net investment income of the taxpayer for the taxable year.”[xxii]

The interest in question was incurred by the Partnerships. These entities owned, operated, and actively managed apartment buildings and other rental real estate. The loans on which the interest was paid were secured by those real estate assets.

The IRS did not contend, however, that the operating assets held by the Partnerships constituted “property held for investment.”

How, then, could the IRS treat Son’s share of the Partnerships’ interest expense as investment interest?

Tracing the Debt Proceeds

The Court explained that tracing rules are utilized for determining when debt is “properly allocable to property held for investment.”[xxiii]

In general, according to these rules, “[d]ebt is allocated to expenditures in accordance with the use of the debt proceeds and * * * interest expense accruing on a debt * * * is allocated to expenditures in the same manner as the debt is allocated.”[xxiv] In other words, “debt is allocated by tracing disbursements of the debt proceeds to specific expenditures.”[xxv]

For example, if a taxpayer uses debt proceeds to make a personal expenditure, the interest is treated as nondeductible personal interest. If a taxpayer uses debt proceeds in connection with a passive activity, the interest is subject to the passive loss limitations.[xxvi] And if a taxpayer uses debt proceeds to make “an investment expenditure,” the interest incurred on the debt is allocable to such investment expenditure, and the interest is treated, for purposes of the interest deduction disallowance rule, as investment interest.[xxvii]

Although the tracing rules do not specify how they are to be applied to partnerships and their partners, the IRS has provided that, if a partnership uses debt proceeds to fund a distribution to its partners – i.e., to make debt-financed distributions – each partner’s use of the proceeds determines whether the interest passed through to them constitutes investment interest.[xxviii]

Thus, if a partner uses the proceeds of a debt-financed distribution to acquire property that they hold for investment, the corresponding interest expense incurred by the partnership and passed on to the partner will be treated as investment interest.

In short, if a taxpayer uses debt proceeds to acquire an investment, the interest on that debt is investment interest regardless of whether the debt originated in a partnership.

The Issue

Reduced to its essentials, the question before the Court was whether Son – who had acquired interests in the Partnerships by gift from Dad – was required to treat the interest expense passed through to him in the same manner as Dad.

The IRS argued that Son in effect stepped into Dad’s shoes, with the supposed result that the interest, properly reported by Dad as investment interest, remained investment interest as to Son so long as the loans remained on the Partnerships’ books.

Dad received debt-financed distributions from the Partnerships. He used the proceeds of those distributions to acquire shares of money market funds and other assets that he held for investment. Consistently with the tracing rule, Dad properly treated the interest expense incurred by the Partnerships and passed through to him as investment interest.

Son, however, did not receive, directly or indirectly, any portion of the debt-financed distributions that the Partnerships made to Dad. Nor did Son use distributions from the Partnerships to make investment expenditures.

The Court determined that the facts which caused the passed-through interest to be investment interest in Dad’s hands did not apply to Son.

Acquisition Indebtedness?

The Court then explained how debt should be allocated where (as in Son’s case) no loan proceeds were disbursed to a taxpayer:

If a taxpayer incurs or assumes a debt in consideration for the sale or use of property * * * or takes property subject to a debt, and no debt proceeds are disbursed to the taxpayer, the debt is treated * * * as if the taxpayer used an amount of the debt proceeds equal to the balance of the debt outstanding at such time to make an expenditure for such property * * *.

Son acquired his ownership interests in the Partnerships by gift from Dad. He acquired those interests subject to the Bank debts that were then on the Partnerships’ books. Thus, Son was treated as using his allocable share of that debt to make an expenditure for the acquisition of his partnership interests.[xxix]

In the case of a debt-financed acquisition (as opposed to a debt-financed distribution), such as the purchase of an interest in a partnership, the Court explained that the debt proceeds and the associated interest expense should be allocated among all the assets of the partnership “using any reasonable method.”

In short, whereas Dad received a debt-financed distribution, Son was treated as having made a debt-financed acquisition of the Partnership interests he acquired from Dad. For purposes of the investment interest limitation, therefore, the debt proceeds were allocated among all of the Partnerships’ real estate assets, and the interest paid on the debt was allocated to those assets in the same way.[xxx]

Because the Partnerships’ real estate assets were actively managed operating assets, they did not constitute “property held for investment.” Therefore, the interest paid on the Bank loans was not investment interest.

The IRS’s Alternative Argument

The IRS disputed the relevance of the tracing rules, urging that Son, when acquiring the Partnership interests from Dad, did not “assume[] a debt” or “take[] property subject to a debt.” The IRS emphasized that Son had no personal liability on the Bank loans, which were nonrecourse, and that the liens held by Bank ran against the Partnerships’ real estate assets, not against Son’s partnership interests.

The Court rejected the IRS’s position. In fact, it pointed out that the IRS itself had previously reasoned that, where partnership interests are transferred, each transferring partner’s share of partnership nonrecourse liabilities would be considered as a liability to which the partnership interest was subject.

Thus, Son acquired his interests in the Partnerships subject to the Bank debts, even though Son did not personally assume those debts, which remained nonrecourse with respect to the partners individually.

In the converse situation, the Court continued, where a partner sells a partnership interest, the regulations provide that the partner’s “amount realized” includes his share of the partnership liabilities of which he is relieved, even if the liabilities are nonrecourse.[xxxi]

Thus, the fact that a partner is not personally liable for a partnership’s debt does not mean that their partnership interest is not “subject to a debt” for purposes of the partnership tax rules.

The Court’s Decision

For the foregoing reasons, the Court concluded that the interest expense passed through to Son from the Partnerships was not investment interest.

The Court noted that, even if the tracing rules were somehow inapplicable, the IRS failed to articulate any principle or rule that would affirmatively require the interest expense in question to be characterized as investment interest. According to the Court, the principle that required such interest to be characterized as investment interest in Dad’s hands clearly did not apply because Son (unlike Dad) did not receive any debt-financed distributions from the Partnerships.

The IRS’s position thus was reduced, the Court stated, to the contention that, because Son acquired the partnership interests from Dad, he stood in Dad’s shoes and had to treat the passed-through interest the same way Dad did. But, the Court continued, neither the investment interest limitation rule nor its implementing regulations include any family attribution rule or similar principle that would require this result.

Purchase and Sale

When Dad gratuitously transferred interests in the Partnerships to Son, he was required to include the partnership debt from which he was relieved[xxxii] as an “amount realized,” and he reported capital gains accordingly. To the extent Dad was relieved of the debt, liability was necessarily shifted to the other partners, including Son. Son thus took his Partnership interests “subject to the debt,” even though the liabilities were nonrecourse.

It seemed obvious, the Court explained, that Son would have no “investment interest” if he had acquired his ownership interests in the Partnerships from a third party for cash. The IRS did not explain why the result should be different because Son acquired those interests from Dad by a partial gift. The Court determined that the IRS failed to articulate a principle that would justify characterizing the interest expense passed through to Son as “properly allocable to property held for investment” by Son.

Once Investment Interest . . . ?

The IRS then urged the Court to adopt a “once investment interest, always investment interest” rule on the theory that any other approach would “place a myriad of additional administrative burdens on both taxpayers and the government.”

Again, the Court turned the IRS away, pointing out that both the tracing rules and the partnership tax rules clearly dictated different outcomes depending on whether a partner received a debt-financed distribution or made a debt-financed acquisition.

Recognition that partnership interests may change hands, the Court observed, was thus an inherent part of the regulatory structure.

In sum, the Court held that the interest expense passed through to Son from the Bank loans was not investment interest. When Son acquired the partnership interests from Dad, he was in the same position as any other person who acquired partnership interests encumbered by debt. He did not receive the proceeds of those debts, and he did not use the proceeds of those debts to acquire property that he subsequently held for investment. Thus, there was no justification for treating the interest expense passed through to him as investment interest. Rather, Son correctly reported it on Schedule E as allocable to the real estate assets held by the Partnerships.

Are There Tax Genes?

So, was the IRS crazy to argue that Dad’s tax treatment of the interest expense should have determined Son’s treatment as well?

Probably, but not entirely.[xxxiii]

When one individual transfers a partnership interest to another by gift, the recipient generally takes the interest with an adjusted basis equal to the donor’s adjusted basis in the interest.[xxxiv] In this way, the unrealized gain in the donor’s hands is preserved when the property is transferred to the recipient.

In addition, the recipient of the gifted partnership interest will take the donor’s holding period for the interest gifted, thereby preserving the long-term/short-term character of any capital gain inherent in the property.[xxxv]

The donor’s amount at risk with respect to the gifted partnership interest will be added to the recipient’s amount at risk for such interest.[xxxvi]

When a donor gifts a partnership interest in a passive activity, the adjusted basis for the interest is increased by the amount of the donor’s suspended passive losses allocable to such interest, in effect allowing the recipient to utilize such losses in determining their gain on a subsequent taxable disposition; the gift is not treated as a disposition that would allow the donor to utilize such losses.[xxxvii]

In the case of a gift of a partnership interest in which the donor has a Section 754 basis adjustment, the donor is treated as transferring, and the recipient as receiving, that portion of the basis adjustment attributable to the gifted partnership interest.[xxxviii]

Likewise, when an individual makes a gift of a partnership interest that they received in exchange for a contribution of built-in gain property[xxxix] to the partnership, the built-in gain will be allocated to the recipient as it would have been allocated to the donor.[xl]

Unfortunately for the Service, there are just as many instances in which the recipient of a gift of property does not step into the shoes of the donor. In general, these instances involve the application of rules where the relationship of the gift recipient to the property interest at issue rightly supplants that of the donor.

For example, the recipient of a gift of real property that had been used by the donor in a trade or business cannot rely upon the donor’s use for purposes of themselves engaging in a like kind exchange with such property; rather, the recipient must establish their own qualifying use of the property.[xli]

Most importantly insofar as Dad and Son are concerned, the otherwise gratuitous transfer of property that is encumbered by indebtedness – or, in the case of a partnership interest, to which debt has been allocated under the partnership tax rules[xlii] – is treated as a sale and purchase of such interest to the extent of such indebtedness.

As in the case of any sale between unrelated persons, the buyer takes a cost basis in the property acquired, and begins a new holding period for such property. The buyer determines their own at-risk-amount, and ascertains whether the property constitutes an interest in an activity in which the buyer materially participates, without regard to the seller’s history. And the buyer determines their own relationship to the property for purposes of the limitations on the deduction of interest.

So, to the question of whether a parent’s personal tax traits can be genetically passed down to their children, the answer is no.[xliii]

————————————————————————————————————-

*Of course, the reference is from the Old Testament, appearing first in Exodus, Chapter 20 (the presentation of the Ten Commandments): “For I the LORD your God am a jealous God, visiting the iniquity of the fathers upon the sons to the third and fourth generation of those that hate me, and showing mercy to thousands of those that love Me and keep My commandments.”

[i] With sincerest apologies to Monty Python. What follows is the complete dialogue from this scene in Monty Python and the Holy Grail:

King of Swamp Castle: One day, lad, all this will be yours.
Prince Herbert: What, the curtains?
King: No, not the curtains, lad.
King: I built this kingdom up from nothing. When I started, all I had was swamp! Other kings said I was daft to build a castle on a swamp, but I built it all the same, just to show ’em! It sank into the swamp, so I built a second one. That sank into the swamp. I built a third one. It burned down, fell over, and then it sank into the swamp. But the fourth one stayed up! And that’s what you’re going to get, lad–the strongest castle on these islands!
King: Listen, lad, in twenty minutes you’re going to be married to a girl whose father owns the biggest tracts of open land in Britain.
Prince Herbert: But I don’t want land.
King: Listen, Alice–
Prince Herbert: Herbert.
King: Herbert. We built this castle on a bloody swamp, we need all the land we can get!
Prince Herbert: But I don’t like her.
King: Don’t like her? What’s wrong with her?! She’s beautiful, she’s rich, she’s got huge . . . tracts of land.

[ii] Fate? Karma? The alignment of the stars and planets? Just dumb luck? According to the character in the movie, A Knight’s Tale, “from peasant to knight, one man can change his stars.”

[iii] Lipnick v. Commissioner, Docket No. 1262-18; filed August 28, 2019.

[iv] Directly and through a grantor trust. IRC Sec. 671.

[v] Dad received over $22 million. One of the most attractive characteristics of a real estate partnership is its ability to borrow against the equity in the property, to thereby increase its partners’ adjusted bases for their partnership interests, and to distribute the loan proceeds to its partners without causing an immediate taxable event. IRC Sec. 752(a), Sec. 722, and Sec. 731(a).

[vi] The debt was nonrecourse as to them; Bank could only look to the partnership properties securing the debt for satisfaction of the debt.

[vii] On Schedule A of his IRS Form 1040.

[viii] I assume that Dad filed a federal gift tax return on IRS Form 709.

[ix] At this point, presumably, Son was admitted as a partner, and ceased to be a mere transferee with only an economic interest in the Partnerships.

[x] IRC Sec. 752(d); Reg. Sec. 1.752-1(h), and Sec. 1.1001-2(a)(4)(v).

[xi] In other words, Dad’s transfer to Son was part-gift/part-sale; he was treated as having sold (and as having received consideration for) an interest with a fair market value equal to the amount of debt relieved; the equity portion of the interest constituted a gift.

[xii] Part II is used to report income/loss from partnerships, among other things.

[xiii] The disallowed amount is carried forward.

[xiv] In general, 90 days from the date of the notice of deficiency.

[xv] The parties submitted the case for decision without trial.

[xvi] IRC Sec. 163(a).

[xvii] IRC Sec. 163(h).

[xviii] IRC Sec. 163(h)(2)(A), (C).

[xix] IRC Sec. 163(h)(2)(B); IRC Sec. 163(d).

[xx] IRC Sec. 702.

[xxi] IRC Sec. 163(d)(3)(A).

[xxii] IRC Sec. 163(d)(1).

Son had little net investment income for the tax years in issue (meaning, interest, dividends, annuities, royalties, and net capital gain – see IRC 163(d)(5) and Sec. 469(e)). Accordingly, he agreed that, if the interest in question constituted “investment interest” under Sec. 163(d), it would be nondeductible. And the IRS agreed that, if the interest was not investment interest, it was properly reportable and deductible on Son’s Schedule E.

[xxiii] Sec. 163(d)(3)(A); see Sec. 1.163-8T, Temporary Income Tax Regs., 52 Fed. Reg. 24999 (July 2, 1987).

[xxiv] Sec. 1.163-8T(c)(1).

[xxv] Reg. Sec. 1.163-8T(a)(3).

[xxvi] Sec. 469; Reg. Sec. 1.163-8T(a)(4)(ii), Example (1).

[xxvii] Reg. Sec. 1.163-8T(a)(4)(i)(C).

[xxviii] Notice 89-35.

[xxix] The flip-side of the part-gift/part-sale is the part-gift/part-purchase.

[xxx] Reg. Sec. 1.163-8T(c)(1).

[xxxi] Reg. Sec. 1.752-1, 1.1001-2(a)(4)(v), stating that a taxpayer’s “amount realized” on transfer of a partnership interest includes the nonrecourse liabilities of which he is relieved, where the transferee “takes the partnership interest subject to the * * * liabilities.”

For purposes of the partnership tax rules, generally, any increase or decrease in a partner’s share of partnership liabilities is treated as a deemed contribution or distribution, regardless of whether the debt is recourse or nonrecourse. Sec. 752; Sec. 1.752-1.

[xxxii] More accurately, which was allocated away from him and to Son in accordance with the regulations under Section 752 of the Code.

[xxxiii] “There’s a big difference between mostly dead and all dead.” – Miracle Max, from The Princess Bride.

[xxxiv] IRC Sec. 1015.

[xxxv] IRC Sec. 1223.

[xxxvi] Prop. Reg. Sec. 1.465-68.

[xxxvii] IRC Sec. 469(h). That being said, an activity that may have been passive as to the donor may not be treated as passive as to the recipient.

[xxxviii] Reg. Sec. 1.743-1(f).

[xxxix] IRC Sec. 704(c).

[xl] Reg. Sec. 1.704-3(a)(7).

[xli] See, e.g., Rev. Rul. 75-292.

[xlii] IRC Sec. 752 and the regulations issued thereunder.

[xliii] As distinguished from an aversion to paying tax, which is probably a product of both nature and nurture.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.