The Small Balance Intersection Update - August 26, 2026

Quote of The Day:

"I love Mondays because it's the start of a new week with new opportunities. I'm excited to see what the week brings!" - Arianna Huffington, founder of Huffington Post

Welcome to the August 26th edition of the Small Balance Intersection Update! Today, we delve into the impact of debt forgiveness, potential rent price collusion, and key developments in digital transformation, both in small business and tax compliance. We're eager to hear how these topics resonate with you—share your thoughts or questions in the comments. Your insights shape our future content, so let’s connect and grow together!

Debt Forgiveness Avenue commercial real estate sector is under pressure from falling property values and lower rental incomes, leading to difficulties in mortgage servicing. Property owners negotiating with lenders may face "Cancellation of Indebtedness" (COD) income, which is taxable as ordinary income unless specific exceptions apply, such as insolvency. Effectively managing these tax implications is crucial as the market continues to evolve under financial strain.

Algorithm Avenue

The DOJ and eight states have sued RealPage, alleging that its rent-setting algorithm enables landlords to illegally coordinate rent increases, affecting around three million units. The case claims RealPage's software stifles competition by sharing confidential information among landlords, creating an illegal monopoly. This lawsuit highlights concerns over the influence of technology in pricing and could set significant precedents in regulating the housing market.

Innovation Drive

Small businesses must adopt technologies like POS systems, e-commerce platforms, and CRM software to stay competitive in today's digital world. These tools streamline operations, enhance customer engagement, and expand market reach. Integrating digital solutions positions small businesses for long-term success by improving efficiency and customer loyalty.

Compliance Avenue I The IRS has made significant progress in its digital transformation efforts, allowing taxpayers to handle interactions online and enhancing compliance measures, especially against high-income tax evaders. The agency's modernization includes improving in-person services, expanding electronic filing, and upgrading IT infrastructure. These advancements aim to ensure more efficient tax administration and fairness in compliance.

Let’s navigate the complexities of the commercial real estate landscape together!

#HousingAffordability #smallbalanceloans #MarketTrends #CPACE #CPA #Lawyers #Equity #Realestate #CRE #MBA #NAR #AI #SmallBusinessOwners #CommercialLoans #CREInvestors #FannieMae #HUD #FreddieMac #CREF #SmallBalanceCRE #SBA #SFR #DSCR #FixandFlip #Economy #Housing #Affordability #NFIB #BTR #DST #STNL #AirBNB #Cannabis #TaxPlanning

Debt Forgiveness Avenue

Navigating COD Income in Commercial Real Estate Workouts

The commercial real estate market is experiencing significant adjustments due to declining property valuations and reduced rental income, particularly in office buildings affected by remote and hybrid work trends. With interest rates expected to remain higher than pre-pandemic levels, property owners are increasingly facing difficulties in servicing their mortgage loans. These challenges often lead to negotiations with lenders, which can result in the cancellation or forgiveness of debt. Such debt forgiveness usually triggers "Cancellation of Indebtedness" (COD) income, which is considered ordinary income for tax purposes and can create substantial tax liabilities for borrowers. However, there are exceptions, such as when the borrower is insolvent or in bankruptcy, which can mitigate the tax impact of COD income.

For nonrecourse loans, where borrowers aren't personally liable for the forgiven debt, the canceled amount is treated as proceeds from a deemed sale of the property, leading to different tax implications. Certain real estate investors can also exclude COD income if the debt was tied to improving business property, although this may reduce other tax benefits. Understanding these nuances is critical for property owners as they navigate workout negotiations, particularly in a market where many sectors are under financial strain. As the commercial real estate market continues to evolve, effectively managing COD income and associated tax considerations will be essential for achieving favorable outcomes.

For more details, click here .

Algorithm Avenue

DOJ Sues RealPage Over Alleged Rent Price Collusion

The U.S. Department of Justice and eight states have filed a lawsuit against RealPage, a real-estate software company, accusing it of using a rent-setting algorithm that allegedly enables landlords to coordinate illegal rent increases. The lawsuit, one of the most significant actions against a private company in the rental housing sector, claims RealPage holds an 80% market share in commercial rent management software, impacting rents for approximately three million units. The Justice Department asserts that RealPage's software stifles competition by allowing landlords to share confidential information and align their rental prices, effectively creating an illegal monopoly. Despite these allegations, RealPage denies any wrongdoing, arguing that its software is legally compliant and can also suggest lowering rents. This legal action underscores a broader governmental push to regulate the influence of large companies in the housing market, especially as renters face escalating costs. The lawsuit also highlights concerns over the use of software and algorithms to manipulate pricing, drawing parallels to other industries like meatpacking. The case could set a precedent for how technology companies are held accountable for potential anti-competitive practices in various sectors.

For more details, click here .

Innovation Drive

Embracing Digital Transformation: A Blueprint for Small Business Success

In the rapidly evolving digital landscape, small businesses must adopt modern technologies to stay competitive and meet changing customer expectations. Key technologies include Point of Sale (POS) systems, which streamline operations and provide valuable sales insights. Online ordering and delivery platforms are essential for businesses, especially in the food industry, to capture a broader customer base and enhance convenience. Customer Relationship Management (CRM) software helps businesses manage customer interactions, fostering long-term loyalty and improving personalized marketing efforts.

Expanding into e-commerce allows businesses to operate 24/7 and reach a global audience, while digital marketing tools like social media management and SEO platforms are crucial for attracting and retaining customers. Additionally, cloud-based collaboration tools facilitate efficient teamwork, especially in remote work environments. By integrating these technologies, small businesses can improve efficiency, boost sales, and enhance customer engagement, positioning themselves for long-term success in the digital era.

For more details, click here .

Compliance Avenue

IRS Reports Major Milestones in Digital Transformation and Tax Compliance

The IRS has marked two years of significant advancements under the Inflation Reduction Act, focusing on improving taxpayer services, modernizing technology, and enhancing tax compliance. One key achievement is the ability for all taxpayers to handle IRS interactions digitally, reducing the need for physical mail and expediting processes. The IRS has also expanded in-person services, particularly in rural and underserved areas, and introduced callback options to minimize phone wait times, saving taxpayers millions of hours. Additionally, the IRS has enhanced its scanning and electronic filing capabilities, moving towards a fully digital workflow that could eliminate up to 125 million paper documents annually.

To combat tax evasion, the IRS has intensified efforts to pursue high-income individuals and businesses using complex strategies to avoid taxes, with over $1 billion collected from high-end cases. The agency is also focusing on non-filers and abusive use of partnerships, and has launched new initiatives targeting improper use of corporate aircraft. On the technology front, the IRS has made strides in modernizing its IT infrastructure, including deploying new data analytics tools, replacing outdated equipment, and enabling mobile-friendly form submissions. These improvements are part of the IRS's broader mission to enhance tax administration, disrupt scams, and ensure fairness in tax compliance.

For more details, click here .

Let’s navigate the complexities of the commercial real estate landscape together!

#HousingAffordability #smallbalanceloans #MarketTrends #CPACE #CPA #Lawyers #Equity #Realestate #CRE #MBA #NAR #AI #SmallBusinessOwners #CommercialLoans #CREInvestors #FannieMae #HUD #FreddieMac #CREF #SmallBalanceCRE #SBA #SFR #DSCR #FixandFlip #Economy #Housing #Affordability #NFIB #BTR #DST #STNL #AirBNB #Cannabis #TaxPlanning