A Secret City, and Passive Loss Limitations

Flannery Associates' secretive purchase of Solano County land reveals ambitious plans for a tech-backed city, prompting scrutiny; the rise of short-term rentals like Airbnb complicates tax considerations with passive activity loss rules; and Federal Reserve Chair Jerome Powell asserts the ongoing need for vigilance on inflation, even as rates appear to moderate.

In this issue of Above the Line, we give you the three most important stories in Real Estate, Investing, and Taxation.

Tech billionaires’ secretive plan to build a California city from scratch
The Los Angeles Times
Flannery Associates, a company shrouded in secrecy, bought, at above market rates, thousands of acres of farmland in Solano County, California, leaving residents and officials puzzled about its intentions. Recently, the company revealed plans for a new city with thousands of homes, a large solar farm, orchards, and parks, sparking concerns and investigations into its actions and backers, including tech entrepreneurs and venture capitalists.

Passive loss limitations on rental real estate
Journal of Accountancy
The surge in short-term rentals epitomized by Airbnb and Vrbo has upended the real estate sector. Amid this upheaval, tax professionals must skillfully navigate the intricate web of passive activity loss (PAL) rules, exceptions, and material participation criteria to ensure their clients maximize returns while staying compliant with the tax code.

Fed’s Powell holds the line, declaring inflation isn’t beaten yet
Politico
Federal Reserve Chair Jerome Powell, in a speech at the Fed's annual conference in Jackson Hole, stressed the central bank's commitment to curbing inflation, even as inflation rates have moderated to around 3%. Powell noted that while there has been progress, more needs to be done to achieve price stability, emphasizing that the Fed is still concerned about inflation and will carefully consider whether to tighten monetary policy further in the coming months.

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