Justin Wright and Dr. David Thomas, Accounting & Information Systems
Thompson on Real Property, Thomas Edition is a comprehensive commentary on real property law. Each year, Dr. Thomas, Editor-In-Chief, produces a supplement to each volume of the treatise; the supplement updates both text and footnotes to the original volume and to the prior year supplement. During my brief training period, Dr. Thomas demonstrated several legal-research techniques and showed me several software research tools he uses to update the yearly supplement, including Lexis-Nexis, WESTLAW, and InfoTrac. Dr. Thomas assigned me to update chapters 12 and 97.
Initially, I dove into chapter 12 hoping to find every morsel of valuable updating information. This chapter deals with the intricacies of selecting a type of business entity for acquiring and holding real property interests in order to position the entity for maximum benefit to all investing parties. For example, the chapter addressed a real estate investor’s liability risks, financial capital raising abilities, tax ramifications, profitability, and other issues associated with organizing a partnership, a limited liability company or partnership, a corporation, an S corporation, a real-estate investment trust, and other business entities. Using a hypothetical business entity, the chapter walks the reader through the process of legally structuring several types of business entities and explains the pros and cons associated with each entity.
The first update in chapter 12 related to an accounting error in a sample income statement provided in the 1996 supplement. Specifically, I found a mislabeled account in the income statement and a mathematical error. I continued to find editing errors throughout the updating process. I made several contextual updates; however, I will not list them in this report for the purpose of brevity.
The second update related to new regulations and tax implications. Occasionally, a law treatise presents a cursory explanation of an area of law such as the legal structure of a corporation, then, suddenly delves into the deepest abyss of the tax code. For example, Proposed Treasury Regulation § 301.7701 is a recent regulation that allows certain business entities to elect corporate taxation even if the legal structure of the entity is not a corporation. To update this portion of the chapter, I spent hours searching commentaries on tax law and the Internal Revenue Code to understand the ramifications of the new regulation. Updating the tax portion of the chapter proved to be the most grueling, and I had numerous consultations with several law students in order to navigate through the Internal Revenue Code.
Chapter 97, however, was less tax intensive. Again, the treatise used hypothetical scenarios to illustrate points of tort liability concerning the construction of apartments, shopping centers, commercial buildings, and other real-estate investments.
The first update related to a tort liability issue for the construction industry and for real estate investors. I updated the supplement by including recent case law that warns investors of a new tort threat. For example, a new issue has evolved concerning indoor air quality in newly built offices — sometimes referred to as “sick-building syndrome.” Due to the increased concern of energy saving heating and air-conditioning systems, “stale” air occasionally results from insufficient replacement of “new” air in energy efficient office buildings; employees report symptoms of nausea, fatigue, or headaches from working in such buildings. In some cases, employees of commercial tenants have brought action against tenants and have also named contractors, landlords, and architects in the suit.
The second update covered issues of negligence in the construction contract. I cited in the supplement several new methods for both contractors and investors to design the construction contract in a way that alleviates negligence risks for both parties. These contract design methods included maintenance contract issues especially for renovations of century-old structures.
In conclusion, this research resulted in a larger project than I had originally anticipated. At times, I was “in over my head;” but I enjoyed this opportunity for expansion of my technical knowledge. Because the bulk of my chapter 12 research dealt with tax issues, this research fostered a greater interest to study tax in my graduate degree.