A Q&A with alumnus Steven Ross LLM ’66 in celebration of the 75th anniversary of the Graduate Tax Program.
Section 341 in the ’54 code.
More than 50 years later, Stephen Ross LLM ’66 still remembers the tax code section pertaining to collapsible corporations that guided him in his early career as an associate advising clients in real estate transactions.
Ross credits an understanding of tax law, particularly his year in NYU Law’s LLM program, with laying the groundwork for his success as a real estate developer and entrepreneur. As chairman and founder of the Related Companies and owner of the Miami Dolphins, Ross has utilized skills gained at NYU Law to deftly navigate the complexity of business deals.
He’s also recognized for his philanthropic endeavors, supporting causes related to education, the arts, healthcare, and sustainability, as well as his alma maters. In 2015, he made an unrestricted $20 million gift to NYU Law. Recently, he brought his total gift to the Ross Initiative in Sports for Equality (RISE) to $30 million. RISE is a nonprofit Ross founded in 2015 that identifies its mission as “educating and empowering the sports community to eliminate racial discrimination, champion social justice and improve race relations.”
In a conversation with Professor Steven Dean, faculty director of the Graduate Tax Program, Ross reminisced about his LLM education, provided insight on his foray into real estate development, and explained why a tax education is valuable beyond the world of tax.
Dean: I’ve heard you describe your year at NYU as the best year of your life. Those are pretty strong words, I’d love to learn more about that.
Ross: I did tell Trevor [Morrison] that, and I still do believe it today. I think from an educational standpoint, what I learned and how I learned to think—it was really the tax program that benefitted me the most out of any schooling I had. I really attribute my success to what I learned there, especially the ability of how to think and solve problems.
Dean: What you’re saying really resonates with my experience. When I teach corporate tax, I’m trying to get my students to see not just the problem, but the opportunities. I think that is what you’re doing now that you’ve gone beyond tax. Is that still how you’d describe your goal?
Ross: There’s no question. When you go to school, you really learn the basics that prepare you for the future, and the future is much broader than whatever you’re studying. But you start in one area and you expand your horizons and how you look at things, and ultimately you apply it in many places other than just law. I think there’s nothing better than an education in tax because it all starts with deals, and how do you best get those deals done, and you want to make them work at the least amount of cost because then you have a greater chance for success. You want to have the basic broad education that allows you to think and be creative and have a vision to really accomplish what you would love to do as a kid. I never dreamt I’d be where I am today, but I just followed my dream.
Dean: I want to change gears a little bit. I’m curious to learn more about how you made that pivot from law to real estate.
Ross: Well, I was practicing law. I had some real estate clients and some really complex issues with collapsible corporations. In particular, there was one of the largest collapsible corporation cases that I was handed and I was on it for about two years for a real estate client. And as I was working with them, structuring real estate deals, they were asking questions and listening to me, and then they asked me about the deals themselves—the fundamentals, the real estate. And I found out I really enjoyed that aspect.
Dean: Was it a D re-org? When I think about collapsible corporations, I think about the service affirmatively deploying tax-free D reorganization status.
Ross: Well, this was when many corporations were taking advantage of the tax laws by creating all these corporations to reduce taxes. And it was a very, very complex area. It was Section 341, I remember, back in the ‘54 code.
Dean: It’s interesting hearing you describe this, somebody both with the technical expertise as an LLM and your years of experience in business. What do you think most people get wrong about tax law?
Ross: I think everybody wants to maximize or optimize what they’re doing, and they’re not looking for unfair advantages.
Dean: How do you see tax lawyers using their knowledge to benefit society?
Ross: I think the understanding of the tax code will put anybody in a better position to really have an impact and an influence because they can speak with the knowledge of how you collect revenues and how you encourage and incentivize people. I think in getting to…solutions, you have to have a real knowledge of how things work.
Dean: What advice would you give to somebody considering the LLM program? What would you say to somebody who has done maybe a year or two in their JD program, had a great federal income tax class and is now interested in the program, but is unsure whether they want to be a tax lawyer?
Ross: Well, I assume people are looking to be successful from an economic standpoint, and I think it gives you the basics to allow you to use it in business like no other aspect of the law once you graduate. Everybody graduating law school should be required to have taken at least a tax course, and then see if you want to go beyond—that’s what I did. And when I look back and reflect upon it, knowing my whole education and what I gained and what allowed me to grow in business, and broaden myself, my thinking. I think the basics all came from the tax program.
Dean: That’s wonderful and I am so grateful to have the opportunity to speak with you today, Stephen. It’s really been fun as a tax nerd to talk to another tax nerd.
Ross: Don’t tell anyone that, I try to disguise it!
Dean: Okay, I won’t tell anyone.
This interview has been edited and condensed.