Was asked in a previous thread but has become stale, so I will present it as a question again.
Partnership owns land for investment purposes - nothing else. Taxes & interest are paid annually by the partners. Partner elects Section §266 to capitalize these costs instead of rolling the dice with possible Sch. A deductions.
However, he is only capitalizing his basis in partnership, right? This is NOT increasing the partnership basis in the land. This means when the partnership sells the land, and passes through its capital gain to the partners via K-1, and the calculation of basis for the partnership does NOT include all the §266 stuff the partner has been capitalizing.
The only way for the partner to receive a benefit for the higher basis would be either
a) sell his share of the partnership, or
b) dissolve the partnership.
Correct? Or no?
Partnership owns land for investment purposes - nothing else. Taxes & interest are paid annually by the partners. Partner elects Section §266 to capitalize these costs instead of rolling the dice with possible Sch. A deductions.
However, he is only capitalizing his basis in partnership, right? This is NOT increasing the partnership basis in the land. This means when the partnership sells the land, and passes through its capital gain to the partners via K-1, and the calculation of basis for the partnership does NOT include all the §266 stuff the partner has been capitalizing.
The only way for the partner to receive a benefit for the higher basis would be either
a) sell his share of the partnership, or
b) dissolve the partnership.
Correct? Or no?