A Broader Perspective Fall 2013 Contents etin Tax News and Developments A Publication of Bryan Cave UP Tax Advice and Controversy Practice Group Feature Best Practices in Code Sec. 1031 Art Exchanges By Lou Weller 1 Real Estate Capital Markets IRS REIT Working Group By Daniel F Cullen & Peter R. Matejcak 11 Tax Controversy Court of Federal Claims Weighs in on Requisite -Intent to Evade Tax" in Applying Statutes of Limitation for Assessment By Cathryn Benedict & Lauren K. Shores Pelikan 17 Tax Exempt Organizations Interactive Form 1023 By Nathan Boyce 21 Europe Expatriates In Germany — Tax Consequences for Employers and Employees By Stefan Skulesch 24 Asia China Exported Services: Zero-Rated VAT or Exemption By Ye Zhou 29 www.bryancave.com FEATURE BEST PRACTICES IN CODE SEC. 1031 ART EXCHANGES Introduction Code Sec. 1031 has been used, albeit inconsistently, for years by savvy owners of fine art to preserve capital by deferring the gain on the sale of appreciated artworks. Motivation to use Code Sec. 1031 has recently intensified due to: • a very active market that is driving prices higher by way of increased competition; • higher tax rates on gain, with the new 3.8% tax on Net Investment Income' in effect and ever-hungrier local taxing authorities seeking to collect sales and use taxes; and • low interest rates for investors using leverage to buy or refinance after the fact. Art held for investment is not excluded from Code Sec. 1031 treatment, but in contrast to real estate for which the availability of Code A Broader Perspective America I Asia I Europe 1 EFTA01122861