I have a client situation that is multi related and wondering which, if ANY at all would qualify for the Sec 179 depreciation on qualified leasehold improvements. I don't believe any are, but just want it confirmed.
A business client 100% owns a professional office building as a Schedule E rental property-direct ownership - no LLC.
He also owns as a single member an LLC (proprietorship) which is an active business entity
that's reported on Schedule C. The LLC is the sole owner of a C Corporation. The LLC does NOT occupy the C corp's space. It operates from another unit in the building. The C corporation became a tenant during 2011 in its own unit.. (The LLC is more management related activity than anything else, but does financially support some major C corp activities -since it acts as a parent).
Each of these 3 entities paid for various elements of construction improvement work necessary for the C corp to operate and function due to its specialized business. There is a lease between C corp and building rental activity.
The way I see it - since it's all non-arms length, none of the entities can use the Sec 179 to depreciate the leasehold improvements. Each one has to use the 15 year leasehold improvement depreciation.
The building everything is situated in is about 30 years old.
A business client 100% owns a professional office building as a Schedule E rental property-direct ownership - no LLC.
He also owns as a single member an LLC (proprietorship) which is an active business entity
that's reported on Schedule C. The LLC is the sole owner of a C Corporation. The LLC does NOT occupy the C corp's space. It operates from another unit in the building. The C corporation became a tenant during 2011 in its own unit.. (The LLC is more management related activity than anything else, but does financially support some major C corp activities -since it acts as a parent).
Each of these 3 entities paid for various elements of construction improvement work necessary for the C corp to operate and function due to its specialized business. There is a lease between C corp and building rental activity.
The way I see it - since it's all non-arms length, none of the entities can use the Sec 179 to depreciate the leasehold improvements. Each one has to use the 15 year leasehold improvement depreciation.
The building everything is situated in is about 30 years old.
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