NASSAUSUFFOLK

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  • 1.  Repair or improvement?

    Platinum Most Valuable Member
    Posted 09-27-2016 07:59 PM

    One of my client's had major exterior repairs done to the building.  Cost basis of building purchased back in the eighty's is about $3 million.  The Stucco work cost about $33,700.
    Should this expenditure be treated as a repair or as a capital improvement increasing the cost of the building?

    Thank you for everybody's imput.

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    David Rothfeld
    DAVID J. ROTHFELD, CPA
    Hicksville NY
    516-433-2129
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  • 2.  RE: Repair or improvement?

    Posted 09-28-2016 08:19 AM
    I would go through the facts and circumstances analysis. https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Whatisthefactsandcircumstancesanalysis


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    Laura Sabbagh
    LAURA SABBAGH, CPA PC
    Wantagh NY
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  • 3.  RE: Repair or improvement?

    Bronze Most Valuable Member
    Posted 09-28-2016 10:01 AM

    I would vote for improvement, since it has a useful life of more than one year.

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    Alan Aron
    ALAN ARON, CPA PC
    MELVILLE NY



  • 4.  RE: Repair or improvement?

    Posted 09-29-2016 12:59 PM
    Brick pointing also extends the life of the building yet it is permitted as an expense. I am uncertain as to how closely stucco application resembles brick pointing when it comes to the building facia. Both are used for sealing and protecting from external moisture.


    David Vishnia via iPhone




  • 5.  RE: Repair or improvement?

    Bronze Most Valuable Member
    Posted 09-29-2016 01:00 PM
    Thanks. 

    Please excuse any Typos!


    Sent from my iPad





  • 6.  RE: Repair or improvement?

    Bronze Most Valuable Member
    Posted 09-29-2016 01:20 PM

    There are many tax cases out there regarding real estate improvements/maintenance and the ability to expense instead of capitalize.. Not sure of the details of this case but there is one out there for pointing/white washing (City National Bank, 11 T.C.M. (CCH) 411 (1952).

     

    I recently defended a client on an IRS audit regarding the resurfacing of a parking lot (cost in excess of 40,000) that we expensed. I cited the Toledo Home Federal Savings and Loan case form the 1960's and the agent excepted the write off.

     

    As we all know, this does not always happen but my philosophy is that if you have sufficient documentation (supporting cases, tax law interpretation etc.) in support of your tax position then there is no reason not to proceed. Worse case - you lose but since you had the supporting documentation, you usually will not be assessed a penalty.

     

     

     

     

     

    Vincent J. Preto, CPA

    Senior Partner

    Wagner & Zwerman LLP

    450 Wireless Blvd.

    Hauppauge, NY 11788

    Tel. (631) 777-1000 Ext. 340

    Fax  (631) 777-1008 

     

     

      logo-wagner-zwerman2                 image005.png@01D1E40C.9CB93920              images                          

     

     

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The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.