Investment Property

[S T]

T/p was gifted property in a foreign country, which was sold in 2009.

Can t/p add to basis utility expenses paid, local (foreign) taxes paid, and travel expenses?

Thanks,

Sandy

[erchess]

I don't have a cite

but I don't see why not. Where are the really knowledgeable folks when we need them? Busy doing returns maybe

[BHoffman]

Bump

S T - don't know, but I'll give you a bump

[erchess]

Calling all Heroes

ST I don't know who you think of as being at the top of the heap on this board but I think if I were you I would private message them and ask them to post in this thread. Bees, NYEA, Koss, and Veritas all seem to me likely sources not only of your answer but of a cite. This might also be worthy of a paid answer from NAEA or NATP.

[New York Enrolled Agent]

T/p was gifted property in a foreign country, which was sold in 2009.

Can t/p add to basis utility expenses paid, local (foreign) taxes paid, and travel expenses?

Thanks,

Sandy

You didn't say when the gift was made. Is this real property? Assuming it was real property and was truly held in retention by the taxpayer as investment property, my opinion would be that
a) utility expenses could be considered as investment expenses deductible on an annual basis on Schedule A subject to the 2% cut
b) foreign taxes paid are deductible under §164 on an annual basis on Schedule A as real property taxes. For certain real property, a taxpayer may make an election to capitalize these taxes under §266. However, the election must be done on an annual basis and not retroactively. See Reg §1.266-1
c) I think the travel could be treated as a cost of the sale assuming the facts indicate the travel was for the purpose of completing the sale and not part of an additional vacation at the locale.

[S T]

Investment Property

Thanks NYEA for your opinion

It is real estate gifted approx 8-10 years ago.

AGI too high to benefit from Sched A Misc Deduction subj to 2%
Election was never made for the property tax
Travel - T/p is asking regarding "all" travel - I am thinking a percentage, for year of sale, so won't be a significant amount.

Sandy

[New York Enrolled Agent]

Thanks NYEA for your opinion

It is real estate gifted approx 8-10 years ago.

AGI too high to benefit from Sched A Misc Deduction subj to 2%
Election was never made for the property tax
Travel - T/p is asking regarding "all" travel - I am thinking a percentage, for year of sale, so won't be a significant amount.

If the property tax is substantial, you can amend open years to claim the deduction as a Schedule A item. Obviously 2009 taxes will be claimed this year.

Travel in prior years MIGHT have been appropriate as an investment expense but only on Schedule A. I think you can use this year's actual travel expenses as a cost of sale. I may mis-understand what you posted but I see no place to use a percentage. Actual costs based on travel using ordinary rules for primary purpose of the travel would IMO be ok.

[S T]

Foreign Travel

If the property tax is substantial, you can amend open years to claim the deduction as a Schedule A item. Obviously 2009 taxes will be claimed this year.

Thanks, waiting for the amounts from t/p to determine if amended returns would be worthwhile.

Travel in prior years MIGHT have been appropriate as an investment expense but only on Schedule A. I think you can use this year's actual travel expenses as a cost of sale. I may mis-understand what you posted but I see no place to use a percentage. Actual costs based on travel using ordinary rules for primary purpose of the travel would IMO be ok.

On the Travel % (allocation) I was reviewing the Pub 463 rules for Travel Outside the US- Primarily for Business and Primarily for Personal. The t/p will have to confirm for me - however, I do not believe the "travel" was 100% business/investment related and possibly could be more Personal (Vacation)/Investment related (which then would be non-deductible)

Thanks NYEA

Sandy