LENLennar

We note your discussion and analysis of the change in income tax (benefit) expense for fiscal year ended November 30, 2015 when compared to November 30, 2014. Please expand your disclosures to quantify all the material factors disclosed and provide a more meaningful analysis discussing the reasons behind each and whether the material factors impacting the effective tax rate are expected to have a continuing impact.

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As an example, we note that your disclosures indicate that the effective tax in 2015 rate included tax benefits for the domestic production activities deduction and energy tax credits which reduced the effective tax rate by 1.92%, however there is no robust discussion explaining the nature of those tax credits and whether they may be expected to have a continuing impact on the effective tax rate in the future. Please refer to Item 303(a)(3) of Regulation S-K and Sections 501.12.b.3 and 501.12.b.4. of the Financial Reporting Codification for guidance.

The reduction in the Company’s tax rate from 34.80% for the year ended November 30, 2014 to 32.72% for the year ended November 30, 2015 was primarily from tax credits related to our increased investment in solar energy systems in 2015 compared with 2014, and the retroactive enactment of the new energy efficient home credit.

As a result of the Consolidated Appropriations Act of 2016, enacted in December 2015, the 30% tax credit for eligible solar energy property was extended.

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The Act adds a phase-out for the solar energy credit under which the "energy percentage" on which the credit is based will gradually be reduced from 30% to 10% in 2022. The Company is eligible for this tax credit through its Sunstreet residential solar business. For the year ended November 30, 2015, the impact of this credit on the Company’s effective tax rate was (0.91%).

In addition, in December 2014, the 2014 Tax Increase Prevention Act ("TIPA") was enacted. TIPA retroactively restored and extended the new energy efficient home credit for homes delivered in 2014. The Company is eligible for this tax credit to the extent its homes meet the energy efficiency standards required under the tax code. Since the legislation was enacted in our fiscal year ended November 30, 2015, the impact of this legislation on the Company’s effective tax rate for fiscal 2015 was (1.01%).

The Company will continue to be eligible for this credit through fiscal 2016 since the new energy efficient home credit was extended in December 2015 by the enactment of the Protecting Americans from Tax Hikes Act to homes delivered through 2016, including retroactively for homes delivered in 2015.

In addition to the solar energy tax credits and the energy efficient home credit mentioned above, the Company also expects its effective tax rate to continue to benefit from the domestic production activities deduction ("DPAD"), provided the Company continues to generate positive taxable income. The DPAD is currently not subject to sunset or phase-out. For the fiscal year ended November 30, 2015, the impact of the DPAD on the Company’s effective tax rate was (3.01%).

In future Form 10-K filings, we will provide a more detailed analysis of material changes in the Company's tax rate from period to period and whether we expect the cause of particular changes to have a continuing impact on the Company's effective tax rate in the future. In our Form 10-Q filings, we will update our disclosures for any significant changes in our effective tax rate. We expect that the expanded disclosures in our Form 10-Q for the three months ended February 29, 2016 will be as follows:

"In the first quarter of 2016 and 2015, we had a tax provision of $56.2 million and $59.7 million, respectively. Our overall effective income tax rates were 28.08% and 34.19% in the first quarter of 2016 and 2015, respectively. The reduction is primarily the result of the reversal of an accrual due to a settlement with the IRS, which reduced our effective tax rate by (5.42%). We do not anticipate similar settlements during the remainder of fiscal 2016. The effective tax rate for the first quarter of 2016 and 2015 included tax benefits for the domestic production activities deduction and energy tax credits, offset primarily by state income tax expense. During the first quarter of 2016, tax legislation was passed extending the new energy efficient home credit through 2016, as well as extending the 30% investment tax credit for solar energy property through 2022. Both of these tax credits benefited and we expect will continue to benefit our effective tax rate."

Rialto-Investments in Unconsolidated Entities, page 58

Comment No. 2

We note your disclosure that Rialto adopted a Carried Interest Plan which provides participants in the plan an equity interest in a Rialto subsidiary that entitles them to specified percentages of distributions. We further note your disclosure that Rialto recorded $3 million related to the amortization of compensation expense of the plan over the vesting period. In order to better understand the Company’s policy in accounting for this plan and given that your Rialto operations are considered a critical accounting estimate, please tell us and expand your disclosures to include a more robust discussion around how the Company is accounting for the compensation expense for the carried interest that the Rialto employees may be entitled to under the plan. In providing your response, please tell us and expand your disclosures to include the following:

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Whether the amount of compensation expense recorded relates to the entire carried interest in the funds or just amounts not subject to clawback, such as the advance distributions to cover taxes;

The timing of the recognition of compensation expense and how and when the Company determines it has a liability for that compensation expense;

To the extent the compensation expense relates to the total carried interest, your expanded disclosures should state that the timing of recognition of compensation expense precedes the recognition of any management revenue related to carried interest given the Company’s policy to only recognize revenue related to carried interest when collectability is reasonably assured and in effect not subject to clawback; and

The amount of compensation expense that could be reversed in the future to the extent it is subject to clawback.

Response

During 2015, Rialto adopted a Carried Interest Plan (the "Plan"), which provides participants in the Plan the opportunity to participate in distributions made by a fund or other investment vehicle (a "Fund") managed by a subsidiary of Rialto.

Under the Plan, Rialto may assign its right to receive carried interest payments from a Fund to a limited liability company (a "Carried Interest Entity"), wholly owned and consolidated by Rialto, and distribute units, which are considered equity, of the Carried Interest Entity to some employees who are involved in the management of the Fund. The units entitle their holders to specified percentages of distributions made from the Fund to the Carried Interest Entity. Rialto may distribute to some of its employees units entitling them up to 40% of the distributions received by a Carried Interest Entity.

The awards were determined to be share-based payments and were accounted for in accordance with ASC 718, Compensation - Stock Compensation ("ASC 718"). Management determined that the awards did not meet any of the five types of awards described in ASC 718 as awards that should be classified as a liability:

1. An award with conditions or other features that are indexed to something other than a market, performance, or service condition.

Read in the reply ↗

We note your disclosure that Rialto adopted a Carried Interest Plan which provides participants in the plan an equity interest in a Rialto subsidiary that entitles them to specified percentages of distributions. We further note your disclosure that Rialto recorded $3 million related to the amortization of compensation expense of the plan over the vesting period.

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In order to better understand the Company’s policy in accounting for this plan and given that your Rialto operations are considered a critical accounting estimate, please tell us and expand your disclosures to include a more robust discussion around how the Company is accounting for the compensation expense for the carried interest that the Rialto employees may be entitled to under the plan. In providing your response, please tell us and expand your disclosures to include the following:  Whether the amount of compensation expense recorded relates to the entire carried interest in the funds or just amounts not subject to clawback, such as the advance distributions to cover taxes;  The timing of the recognition of compensation expense and how and when the Company determines it has a liability for that compensation expense;  To the extent the compensation expense relates to the total carried interest, your expanded disclosures should state that the timing of recognition of compensation expense precedes the recognition of any management revenue related to carried interest given the Company’s policy to only recognize revenue related to carried interest when collectability is reasonably assured and in effect not subject to clawback; and  The amount of compensation expense that could be reversed in the future to the extent it is subject to clawback.

An award that meets certain criteria of ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). ASC 480 provides guidance for determining whether certain freestanding financial instruments are classified as liabilities and generally excludes stock-based compensation from its scope. Read in the reply ↗

We note your response to our comment 2 from our letter dated March 1, 2016. In order to better understand the Company’s conclusion that the awards issued under the Carried Interest Plan are considered equity awards under ASC 718, please expand on your response to describe the substantive terms of the awards issued under the Carried Interest Plan and why an evaluation of those terms would not result in liability

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classification per the guidance under ASC 718-10-25-6 through ASC 718 -10-25-19. In providing your response, please tell us how you considered that the awards “entitle employees up to 40% of the distributions received by the Carried Interest Entity” in your evaluation. In that regard, it would appear that the holders are entitled to the cash from the Carried Interest Distributions received from the funds and assigned by Rialto. Furthermore, given that it appears that the Carried Interest Plan will continue to be a method of providing additional compensation to employees assisting in managing the funds in your Realto segment, the accounting for the Plan may become material to that segment and important for investors. As such, please confirm that you will expand your disclosures in your Critical Accounting Estimates section to disclose how the Company is accounting for the Carried Interest Plan including that expense recognition would precede the timing of the revenue recognized related to the underlying Carried Interest distributions; to the extent material or becomes material in that segment.

An award with conditions or other features that are indexed to something other than a market, performance, or service condition. The units are not indexed to a factor that is not a market, performance or service condition. Read in the reply ↗

We note the response in your letter dated April 13, 2016, that you intend on expanding disclosures in your critical accounting estimates section if the Carried Interest Plan becomes material. Please confirm that you will expand your disclosures if award issuances or modifications represent a known trend that is reasonably likely to occur and that a material effect on your financial statements is reasonably likely.

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We note the level of complexity and subjectivity involved in the accounting and classification of these units. Specifically, we note there are various factors that may indicate that the awards have characteristics of a bonus or profit sharing arrangement, including: a lack of voting rights, a lack of any initial investment and transfer restrictions related to the awards. However, you attributed significant weight to the units being subject to vesting, and once vested the employee retains the residual interest in the units which is tied to the underlying net assets of the respective Carried Interest Entity. Please note that we may have further comment about your accounting should these awards become material in the future.

Lennar confirms that in future filings it will expand its disclosure related to the Carried Interest Plan in its critical accounting estimates section if award issuances or modifications represent a known trend that is reasonably likely to occur and that a material effect on the Company's financial statements is reasonably likely. Read in the reply ↗