New Tax Bill May Require Real Estate Professionals to Rethink Long-Held Tax Truths

Cozen O'Connor

Cozen O'Connor

Some practitioners view the changes in the Tax Cuts and Jobs Act (the Act) as a net plus for the real estate industry given that: (i) the ability of real estate owners to complete Code Sec. 1031(a) exchanges was retained; (ii) no changes were made to the passive activity safe harbor for real estate professionals; and (iii) owners of unincorporated real estate businesses generally should be able to take advantage of the 20 percent deduction available under Code Sec. 199A. Although these provisions of the Act will benefit real estate professionals, a more granular examination of other provisions of the Act may also upend some commonly held beliefs about the tax aspects of real estate ownership and operation. In particular, the assumption that real estate professionals are able to generate substantial rental real estate losses that are then available to shelter income from other sources, especially for professionals accustomed to having significant net operating loss carryovers that eliminate all of their current year’s federal income tax liability, may no longer be true. Real estate professionals should prepare themselves for a post-2017 world in which there is a likelihood that they will have a current tax payment liability.

Real Estate Professionals Will Be Affected by the Act in 2018

It is a truth universally acknowledged that the ownership of income-producing real estate provides at least three significant tax advantages. First, in the case of an active real estate professional, the losses and deductions generated by their ownership of rental real estate generally are available to offset not only income from passive rental activities but income from other trades or businesses and their investment portfolio income. Second, owners of the income-producing real estate can usually monetize the equity value of their real estate by borrowing against the value of the real estate, rather than by selling the appreciated property. This permits them to avoid recognizing taxable gain, including taxable gain attributable to earlier losses or deductions generated by the real estate and used to offset other income. Third, taxpayers holding appreciated real property until their death are able to escape taxation on the built-in real estate gain. Although the Act did not change these three real estate advantages directly, it did alter in important ways how losses from active real estate businesses and deductions attributable to interest on borrowings are treated for income tax purposes. As a consequence, active real estate professionals will have to model more closely their real estate operations in order to avoid unexpected “potholes” that could preclude their ability to claim deductions or losses.

Because the changes in the Code described below are generally effective for taxable years beginning after December 31, 2017, i.e., the 2018 calendar year, real estate professionals must review their tax and business models now, rather than at year-end, in order to capture the benefits of the new rules and avoid the problems that could arise by assuming the pre-2018 income tax principles will govern the calculation of their 2018 taxable income.

The following discussion highlights several important benefits and handicaps in the new rules. Every real estate professional’s case is different, however, and there are unlikely to be broad, one-size-fits-all solutions to issues created by the new rules. Rather, tailoring solutions to the impact of these rules is likely to be more bespoke than in response to other Code overhauls. The earlier the adverse effects of the Act are identified, the sooner solutions can be implemented to make current operations more tax efficient. Any solutions are unlikely to be effective back to January 1, 2018, so that there is not a moment to lose in reviewing and responding to the issues raised by the Act.

Changes in the Act Affecting Real Estate Professionals Directly

The Act contains a number of changes to the Code that should have a positive tax impact, i.e., increased or accelerated deductions, for real estate professionals. Keep in mind, however, that unless the taxpayer qualifies as a real estate professional under Code Sec. 469(c)(7), losses and deductions from rental real estate investments are still limited by the “passive activity” loss rules so that the benefits of an increase in, or acceleration of, deductions may be ephemeral.

The Act Makes Changes to the Depreciation and Expensing of Real Estate Improvements

The Act eliminates the separate Code definitions of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property, replacing them with a separate category, “qualified improvement property” (QIP). Although it appears that the intent of the drafters was that QIP placed in service after December 31, 2017, generally would be depreciable over a 15-year period using the straight-line method, the statutory language in the Act failed to carry through the description of the change in the Committee Report. In addition, the Act did not provide that the recovery period for QIP was less than 20 years so that a technical correction will also be needed to confirm the availability of Code Sec. 179 expensing for QIP. In the absence of those technical amendments, QIP appears to be depreciable over a 39-year recovery period.

On a more positive note, Code Sec. 179 was amended to make the following types of building improvements — not normally within the definition of qualified improvement property because they are a structural component of a building — eligible for Code Sec. 179 expensing: (i) roofs, (ii) heating, ventilation, and air-conditioning systems, (iii) fire protection and alarm systems, and (iv) security systems. The Code Sec. 179 ceiling was increased to $1,000,000 for tax years beginning after 2017, with the phase-out beginning at $2,500,000 of qualifying assets placed in service.

There Is a New Deduction for up to 20 Percent of the Qualified Business Income of Passthrough Entities

The Act establishes a new deduction for owners of passthrough entities that may enable those owners to deduct up to 20 percent of their qualified business income. This deduction is effective for taxable years beginning after December 31, 2017, but expires in taxable years beginning after December 31, 2025.

The special Code Sec. 199A deduction is available not only for individuals but also for trusts and estates. In combination with the reduction in individual income tax rates, taxpayers eligible to claim the full 20 percent deduction will face an effective maximum marginal federal income tax rate of 29.6 percent (plus, the Medicare tax on unearned income, to the extent applicable) on their eligible passthrough entity income.

In calculating qualified business income, capital gain income is excluded. As a result, no material deduction would be available to a taxpayer owning rental real estate if there is little or no net income generated over the property’s holding period and the only material income is the gain recognized on the disposition of the property.

There are a number of specific limitations that can affect the availability of this deduction:

  • Income from services, especially professional services, is not qualified business income.

There is a specific exception from treatment as qualified business income for income earned by the taxpayer from the performance of services (i) in health, law, accounting, consulting, financial services, brokerage services, or any trade or business where the principal asset of the trade or business is the reputation or skill of one or more of its employees or owners, or (ii) consisting of investing or investment management, trading, dealing in securities, partnership interests or commodities.

  • Amounts earned by real estate brokers and salespersons, loan originators, etc. are unlikely to be eligible for the special Code Sec. 199A 20 percent deduction. Appraisers might also be subject to this exclusion depending upon whether the preparation of the appraisal report is viewed as providing a service or the sale of product.
  • Nothing screams reputation and personal skill like a real estate ad trumpeting the real estate sales expertise of the “Smith Team.” Persons trying to qualify for the Code Sec. 199A deduction will likely be advised to moderate some aspects of their advertising.
  • The “reputation and skill” question is likely to bedevil both the IRS and taxpayers for so long as this deduction is available. Virtually every product is the result of some person or person applying skill of one type or another to materials in order to finalize the output, e.g., a chef applying his or her skill to the preparation of the food. Apart from the professions identified in the Code, the reach of new Code Sec. 199A is uncertain, especially in the real estate industry. Take the case of a typical real estate developer. The developer’s personal skills are critical to identifying suitable development parcels, negotiating the local approval process, negotiating and approving the design, and construction contracts and successfully leasing the property. Nevertheless, few would argue that the net rental income from the property was ineligible for the deduction.
  • The deduction is limited to 100 percent of the taxpayer’s combined qualified business income so that, if the taxpayer’s aggregate qualified business income is less than $0, the taxpayer’s deduction would be $0.
  • Losses realized in a trade or business and not used to offset income in the year are carried over. Consequently, taxpayers will not be eligible to claim the 20 percent deduction until the business has cumulative net income.
  • Because the deduction is not a deduction taken into account in determining adjusted gross income, the deduction is unlikely to affect the taxpayer’s state or local income tax liability if the state determination begins with federal adjusted taxable income.
  • Most importantly for real estate professionals, there are limits imposed on the amount of the deduction that are a function of either the taxpayer’s proportionate share of a percentage of the W-2 payroll expense of the qualified business or a combination of a proportionate share of a lower percentage of the W-2 payroll expense of the qualified business plus 2.5 percent of the original cost of depreciable tangible property (not land) used in the qualified business. These limits apply to taxpayers with taxable income in excess of certain threshold amounts ($157,500 for single taxpayers $315,000 for joint filers). As a practical matter, real estate management companies that have few employees and who mostly engage independent contractors, e.g., plumbers, electricians, cleaning services, are likely to find that these limits will virtually eliminate their ability to claim the Code Sec. 199A deduction with respect to their share of income from the real estate management business. Owners of the income-producing real estate, however, are likely to have few W-2 employees, will benefit from the provision allowing them to calculate the ceiling on the deduction by reference to 2.5 percent of the unadjusted cost of the depreciable tangible property.

The really critical inquiry, which will have to await guidance from the IRS, is whether taxpayers can combine similar trades or businesses conducted through separate entities into a single trade or business or whether the trade or business definition will be determined on an entity-by-entity basis.

  • Code Sec. 1031 exchanges are still available but proceed cautiously.

The Act retained the ability of taxpayers holding real property for investment or for use in a trade or business to engage in a Code Sec. 1031(a) like-kind exchange. It repealed like-kind exchange treatment for all other classes of property, however. As a result, the distinction between real property and personal property, particularly in the manufactured housing space, will become more acute. Likewise, to the extent that the taxpayer engages in a cost segregation study and identifies elements of its buildings as personal property, e.g., ornamentation on the façade of a building, the value attributable to that ornamentation would not be eligible as relinquished or replacement property in a like-kind exchange. Inevitably, that may put the buyer and seller of the real estate in an adversarial position with respect to the allocation of the purchase price. This may present an unpleasant surprise to acquirers of replacement properties counting on accelerating their depreciation deductions by means of an aggressive cost segregation study. Moreover, classifying elements of the building as other than real property could cause a proposed Code Sec. 1031(a) exchange to fall short in acquiring replacement property that is equal to the value of the real property relinquished. (Also note the discussion of the new limits on NOLs below.)

  • The Act revises the rules for so-called technical terminations of partnerships.

The Act permanently repeals the Code Sec. 708(b)(1)(B) partnership technical termination rule, effective in 2018. As a result of this change, partnerships and LLCs will no longer need to be concerned with resetting of the depreciable lives of their assets following a disposition by partners of more than half of the partnership’s outstanding capital and profits interests in a 12-month period of filing multiple short-year returns. Making a Code Sec. 754 election to step-up the basis of partnership assets for the transferee of a partnership interest is still critical. Further, the basic rule of Code Sec. 708(b)(1)(A) remains unchanged. If all of the interests in the partnership profits and capital become owned, directly or through one or more disregarded entities, by a single taxpayer, the partnership will terminate because the business is no longer carried on by “partners in a partnership.”

  • REITS continue to be tax-efficient vehicles for the ownership of income-producing real estate.

The effective maximum marginal income tax rate for REIT dividends falls in 2018 from 39.6 percent (plus the unearned income Medicare tax) to an effective maximum marginal tax rate of 29.6 percent on REIT dividends received by individuals (plus the unearned income Medicare tax).  REIT earnings that are received as a dividend by individual taxpayers continue to receive a favorable income tax rate differential compared with C corporation earnings that are distributed as a dividend, despite the reduction in the corporation income tax rate to 21 percent.

Important Changes that Could Negatively Affect Real Estate Professionals

The Act contains a number of important limitations or restrictions that do not target real estate but could have an adverse effect on real estate transactions and real estate professionals. One of the most prominent changes involves the enactment of a new statutory framework governing the taxation of some or all of the gain attributable to a “carried interest,” or “profits interest” in a partnership or LLC issued in exchange for the performance of services.

  • New rules apply to the taxation of long-term capital gains attributable to certain profits interests.

New Code Sec. 1061 provides that, if a taxpayer owns an “applicable partnership interest” during the year, the excess (if any) of (x) the taxpayer’s net long-term capital gain with respect to such interest for that year, over (y) the taxpayer’s net long-term capital gain with respect to that interest calculated as if the long-term capital gain holding period was three years rather than one year, is taxed as short-term capital gain. Basically, taxpayers need to accrue a three-year holding period before their share of gains attributed to the profits interest, whether allocated from the partnership or from a sale of the partnership interest, will be a long-term capital gain.

    • The recharacterization of long-term gain to short-term gain applies regardless of whether the taxpayer made a Code Sec. 83(b) election with respect to the profits interest.
    • Where a taxpayer owns an interest received, in part, in exchange for a capital investment and, in part, as a profits interest received for services, the gains attributable to the interest are required to be bifurcated. This will have an impact on the typical real estate venture between a real estate professional and an institutional partner supplying substantially all of the capital. The promoted interest payable to the real estate professional after the return to the investor would be a profits interest and gains allocated to the professional within three years after the formation of the venture could be subject to the new rules.
    • On their face, the new Code Sec. 1061 rules appear to apply to applicable partnership interests regardless of their date of issuance. Therefore, it is possible that the new rules would apply to gains attributable to interests acquired before 2018 where the taxpayer does not meet the three-year holding period when the gain is recognized.
    • An applicable partnership interest is a partnership interest issued in exchange for services where the partnership conducts a trade or business that is regularly and continuously carried on and where the trade or business involves: (A) raising or returning capital, and (B) either (x)investing in (or disposing of) “specified assets” (or identifying specified assets for investing or disposition), or (y)developing specified assets. The term “specified assets” generally focuses on securities as defined in Code Sec. 475(c)(2), real estate for rental or investment, options, or derivative contracts and an interest in a partnership to the extent of the partnership’s proportionate interest in specified assets. There are two important limitations on the application of this restriction that could be of particular utility to real estate professionals:

First, the limitation does not apply to assets held for portfolio investment on behalf of third-party investors and second, does not apply to any interest in a partnership directly or indirectly held by a corporation. Under the Act, there is no limitation on the definition of a “corporation” so that, on its face, a profits interest owned by one or more individuals through an S corporation would appear to avoid the application of the limitation.

  • The Act makes the receipt of state and local government funding for development projects taxable.

In an important change for urban redevelopment and infrastructure projects, the Act amended Code Sec. 118 to eliminate the ability of a corporation to exclude from its gross income contributions and grant payments received from governmental entities or civic groups (rather than a contribution made by a shareholder in exchange for stock of commensurate value). Those payments will now be taxable as ordinary income to the recipient.

  • In commonly used structures, state governments and municipalities often would make grants of land or cash to encourage the relocation of entities, infrastructure improvements, or significant capital investments (think, improvements to induce the Amazon relocation). The payments were not in exchange for stock (or for a partnership or other interest in the venture). Rather, they were nonshareholder contributions to the capital of the corporate recipient that are not gross income to the recipient and which increased the capital of the corporation.
  • Under the Code Sec. 118 prior to its amendment, the corporation could exclude that contribution from its gross income (at the cost of taking a $0 basis in its assets acquired). Although the IRS long took the position that such amounts could not be excluded by noncorporate entities, e.g., partnerships and LLCs, recipients usually tried to interpose a corporate entity to be the recipient of the grant or payment so that the corporation could avail itself of the exclusion and the project could benefit indirectly.
  • Governmental and civic grants will have to be restructured to the extent that direct grants would now be includible in the recipient’s gross taxable income. In restructuring grants and related improvements, a key, but unanswered, question will be how the new rules address subsidized or below market rents or easements of property acquired by, and financed with the grants from, governmental units but not owned by the corporation.
  • Local lobbying expenses of taxpayers are no longer deductible.

The Code generally prohibits a taxpayer from deducting lobbying expenditures, i.e., expenditures incurred in attempting to influence legislation, or direct communications with elected officials to influence their official actions. Historically, there has been a limited exception from the denial of the deduction for the ordinary and necessary expenses incurred by a taxpayer in connection with legislation or lobbying of a local council or similar governing body. Prior to the Act, taxpayers could deduct expenditures for appearances before, submission of statements to, or communications with the committees or individual members of a local council or body with respect to legislation or proposed legislation that was of direct interest to the taxpayer. Deductions were also available for communications between the taxpayer and an organization of which the taxpayer was a member with respect to legislation or proposed legislation, including a portion of the dues paid to the organization by the taxpayer. Effective for amounts paid or incurred after December 22, 2017, these expenditures generally will be disallowed as lobbying and political expenditures.

  • This change is likely to impact land development projects where local lobbying of land use boards and similar bodies is a necessary part of the development approval process. The need to interact and inform such bodies will not change. The income tax costs of the interaction likely will.
  • There are three important revisions to the Code that are likely to cause real estate professionals to become taxpayers on an annual basis.

Three general Code changes in the Act have the potential to adversely affect real estate professionals. These are: (i) the limits on the ability of taxpayers to claim interest deductions related to their trades or businesses, (ii) the changes in the amount of the taxpayer’s losses from business activities that are available to shelter non-business income, and (iii) the new limitations on the carryover of net operating losses of individuals. These changes could cause real estate professional to suddenly and unexpectedly become taxpayers. At a minimum, they overturn commonly held perceptions about the ability of real estate professionals to easily minimize or avoid federal income taxes.

The Act imposes new limits on the deductibility of the business interest expense of taxpayers.

Prior to the Act, the deduction for the business interest expense of taxpayers (not otherwise required to be capitalized) was generally unlimited. If the interest expense otherwise puts the taxpayer in an overall loss position, the loss was generally a net operating loss and could be carried over under the applicable NOL rules.

The Act imposes new limits on a taxpayer’s net interest deduction, subject to a bewildering array of exceptions and exclusions that only a tax professional could love. These limits likely will reduce a typical real estate professional’s current deduction for interest incurred with respect to real estate projects.

In general, a taxpayer’s interest expense is limited to the taxpayer’s business interest income and 30 percent of the taxpayer’s taxable income, as adjusted under these rules. The taxpayer’s adjusted taxable income for this purpose is computed by adding back any business interest expense or business interest income, the 20 percent deduction for passthrough income, and the amount of any net operating loss deduction. Prior to January 1, 2022, adjusted taxable income also is calculated by adding back deductions for depreciation, depletion, and amortization. Basically, adjusted taxable income for this purpose corresponds to EBIDTA so that a convenient shorthand for judging the amount of the deduction in the current year is 30 percent of EBIDTA.

Special Rules Apply to Partners and PartnershipsThe interest deduction limit is first determined at the partnership (or LLC) level, and any deduction available after applying the limitation is then included in the partners’ nonseparately stated taxable income or loss from the partnership. Any partnership business interest that is not allowed as a deduction in computing partnership taxable income for the taxable year is then allocated to each partner as “excess business interest” in the same manner as nonseparately stated taxable income or loss of the partnership. The excess business interest expense is not carried forward by the partnership. The partner can deduct its share of the partnership’s excess business interest in any future year, but only against excess taxable income allocated to the partner by such partnership. A partner’s share of the disallowed interest expense immediately reduces the partner’s adjusted basis in its partnership interest, but amounts that remain unused upon disposition of the interest are restored to basis immediately prior to disposition.

  • At a minimum, this change will further complicate income tax compliance and the preparation of the K-1s of partners and members.

Special Rules Apply to Taxpayers Engaged in Certain Real Estate Businesses that Can Take Them Out of the Rules, but at a Cost. At the taxpayer’s election, any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business can make an irrevocable election to avoid the interest limitation rules of the Act. The cost of this election is that the real property of the business must be depreciated under the ADS depreciation system. Under ADS, the taxpayer must depreciate its real estate rental buildings over an ADS life of 40 years, any improvements made by the taxpayer that meet the definition of QIP would be required to be depreciated over an ADS life of 20 years (assuming the Code is ever amended to provide a 20-year ADS life). Finally, ADS depreciation of qualified improvement property would be required so that those assets would not be eligible for 100 percent expensing.

  • In an attempt to ease the burden on smaller taxpayers businesses, some businesses also may be excluded based on their average gross receipts
  • Taxpayers with average annual gross receipts of less than $25 million for the three preceding taxable years are exempt from the interest deduction limits.

Finally, the statutory interest limitation provision applies to taxable years beginning after December 31, 2017. It does not grandfather previously incurred indebtedness so that taxpayers should act promptly to gauge the impact of the new deduction limitations. One area of uncertainty is whether, if a real estate business elects to be excluded from the new interest limitations, it must adjust its depreciation periods for all of its real property owned on January 1, 2018, or only real property acquired post-2017.

One workaround for the new interest limitations may be to structure lending transactions as preferred equity investments with a defined return on the invested capital rather than as interest on indebtedness. The line in the usual case was uncertain so that reclassifying the instruments may not be arduous. On the other hand, some lenders may simply be unable to reclassify their investments into equity, or restucture their investment model as equity, because of FIRPTA and UBTI issues. The possibility of those lenders making their loans through a REIT, to the extent possible, should be explored. The return paid to the preferred investor would be effectively deductible in full as an allocation of income (not an interest payment) and, if owned through a REIT, the REIT generally “scrubs” the negative tax consequences of equity classification to the investor. Using preferred capital as an alternative creates issues with the allocation of losses and deductions from the property and could have an impact on whether the contribution of the capital followed by a distribution to the partners or members creates a “disguised sale.” The REIT structure would not solve the reallocation of deductions or disguised sale issues.

The Act imposes important new limits on the ability of taxpayers to use their net operating loss carryovers to offset their taxable income.

The deduction for NOLs arising in post-2017 taxable years is now limited to 80 percent of the taxpayer’s taxable income (calculated without regard to the NOL). This change in the use of the taxpayer’s NOLs does not expire.

Under the NOL rules generally, NOLs are absorbed in chronological order, i.e., the oldest NOLs are absorbed first. Therefore, the effect of this limitation will be felt over time as pre-2018 NOLs are used up by the taxpayer.

Taxpayers that were accustomed to aggressively maximizing their depreciation deductions with a view to generating NOLs that could be carried forward against future income might be advised to temper their enthusiasm for creating NOL. The utility of the NOLs will be diminished as a result of these rules.

The Act also adds new limits on the so-called “excess business losses” of taxpayers other than corporations.

The amount of the taxpayer’s excess business losses are not deductible in the current taxable year and become a part of the taxpayer’s NOL carryover.

  • The taxpayer’s excess business losses are an amount equal to the aggregate deductions of the taxpayer from trade or businesses in excess of the sum of: (x) the aggregate gross income or gain from such trades or businesses plus (y) $250,000 ($500,000 in the case of a joint return).
  • As a result, the taxpayer’s losses from trade or businesses such as rental real estate that will be available to shelter income from other sources, e.g., compensation, investment income, and gains, will be limited. Losses limited in a year are subject to further limits under the NOL rules described above when the NOLs are applied in future years.
  • These rules apply at the partner or shareholder level.
  • Unlike the passive activity rules, suspended losses are not released when the taxpayer sells or disposes of the property giving rise to the loss.
  • The impact of these rules is likely to come as a great surprise to some real estate professionals, as is illustrated by the following example:

Example: Developer D operates a real estate business through an S corporation and constructs and rents suburban office buildings. D is a real estate professional and files a joint return. Each rental property is owned in a separate, stand-alone LLC in which D is the manager and trusts for benefit of D’s family members and long-time investors are the other members. In 2019, D’s income and losses are as follows:

Wages and compensation paid by D’s S corporation and director fees from a REIT where D is a board member 750,000
Investment income 1,300,000
Pre-2018 NOLs (200,000)
2018 NOL (250,000)
2019 net loss from rental real estate (2,000,000)

Pre-2018, D would likely have believed that D would have no material federal income tax liability for 2019 because the items of income ($2,050,000 in the aggregate) were less than his NOL carryovers and losses in the current taxable year ($2,450,000). If D continues to expect that result, D will experience the classic “failure to communicate” and suffer a rude awakening in April 2020 when his tax return preparer asks for a check for the 2019 extension and the 2020 first quarterly estimated payment.

As a result of the changes in the Act, D’s losses from rental real estate (which are otherwise active losses) available to offset non-business income are limited to $500,000. With full deductibility of the pre-2018 and 2018 NOLs, D’s adjusted gross income would be $1,100,000 and his NOL carried out of 2019 would be $1,500,000.


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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JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

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

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

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 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 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

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:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (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
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit 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 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:

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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.