When is Real Estate Placed in Service?

Several tax laws are triggered by when property is purchased. Other tax laws are triggered when property is placed in service. Depreciation on real estate is a good example. It is triggered when property is purchased and placed in service. These dates raise questions about whether property is placed in service and sits idle or…

Records Needed for Partial Asset Dispositions

Using Warrants To Make Future Purchases Of S Corporation Stock

Taxpayers often overlook “partial asset dispositions.” Their tax advisers do too. This may be due to it being a depreciation issue that seems unimportant. It may also be that the partial asset disposition is a relatively new concept. Regardless, partial asset dispositions can save taxpayers quite a bit in taxes (it is a timing issue,…

How to Allocate Tax Basis for Real Estate

Can Defective Deed Defeat Irs Estate Tax Lien?

If you sell real estate, you pay tax on the gain. Gain is the product of the sales price less tax basis. Tax basis in turn is the amount invested in the property. But how do you calculate and then prove tax basis for buildings located on the property when you sell some but keep…

Planning for Start-Up Businesses, Yacht Rental Example

Party Like Its 2017: Deductible Entertainment Expenses

New businesses may not be immediately profitable.  To help mitigate the financial risk, many businesses are started by workers who have a day job.  If the business is not immediately profitable it can help the owner finance the business if the owner is able to use the tax losses from the business to offset the…

Insurance Agent Denied Depreciation Deduction For Airplane

Example Of How The Irs Evaluates Offer In Compromise For Doubt As To Collectibility

In Brown v. Commissioner, T.C. Memo. 2013-275, the U.S. Tax Court denied an insurance salesman’s bonus depreciation deduction for his private jet as it was not placed in service in the tax year. The case highlights the highly factual nature of determining when an asset is deemed to have been placed in service for tax…

Parking Garages: Parking Lot Depreciation Life

Irs Concludes Open-air Parking Garages Are Buildings

In recent Chief Counsel Memo #20125201F, the IRS concludes that open-air parking garages are considered buildings rather than land improvements for tax purposes. The IRS attorneys go on to say that the taxpayer’s conclusion to the contrary warrants the assessment of a negligence penalty. That is a pretty harsh result given that the tax law…

Tax Basis Planning for Inherited Property

Reconsidering Murphy: Restorative Payments Vs. Return Of Human Capital

The gain from the sale property is subject to income tax.  Gain is generally the sales price minus tax basis, and tax basis is generally the cost or investment into the property.  When a person owns property at death and the property passes to the heirs, the heirs get a tax basis equal to the…