Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-24-2008, 05:34 PM
Junior Member
 
Join Date: Jan 2008
Posts: 1
Can you write off development costs for real estate not purchased.

Is is allowable to deduct losses from a partnerhsip that was formed to buy and develop a piece of real estate? I was a partner in an LLC that was under contract to buy a piece of land. We spent quite a bit of money on legal fees, engineering etc. before backing out of the contract. Is that loss deductible against ordinary income?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 03-09-2008, 04:45 PM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,401
Blog Entries: 3
Can you write off development costs for real estate not purchased?

It would seem that the Partnership has incurred expenses in connection with the production of income. Clearly, if the partnership were to have purchased the land, these costs would have been capitalized and then amortized, in my opinion.

However, I think as the deal did not go through, these expenses could be expensed currently in the year incurred and losses of the partnership would then be limited to the extent of the basis limitations rule. Each partner would then report their respective share of the losses subject to having sufficient basis to deduct the losses.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning