Mass. Justices Nix Cap Gains Tax On Exempt Urban Projects

Richard Jones was quoted in the article "Mass. Justices Nix Cap Gains Tax On Exempt Urban Projects," published by Law360 [sub. req'd] on March 10, 2023.

The article analyzes a recent decision by the highest appellate court in Massachusetts that the state cannot impose a capital gains tax on the sale of a tax-exempt urban development project, flipping a ruling by the state's Appellate Tax Board. In Reagan v. Commissioner of Revenue, (SJC-13287, 3/10/2023), the Supreme Judicial Court found that a 40-year tax exemption meant to spur private investment in constructing, operating, and maintaining urban redevelopment projects applies to the capital gains realized if the projects are sold within the project term.

Rich represented investors in such redevelopment projects, who were assessed tax on their capital gain when the projects sold. The dispute centered on whether the Commissioner of Revenue was justified in limiting the scope and availability of the statutory tax exemptions for such investors.

In the article, he tells Law360 he is "delighted" with the SJC's ruling, remarking that it "preserved the broad statutory tax exemption designed to incentivize the investment of private capital in blighted areas."

"It is essential that Massachusetts taxpayers can rely on clearly-worded statutory exemptions," Rich added. "The court's thoughtful and well-reasoned opinion affirms that principle."