1. Taxpayers own several parcels of vacant, unimproved land. They started buying in 2002 and last bought in 2010.
2. Buying and selling land is not and has never been the taxpayers' trade or business. All property is owned by the taxpayers individually. They bought for investment. They never occupied any of the parcels as a residence of any type.
3. Some of the parcels were acquired at property tax foreclosure sales, some bought outright during the economic downturn, and all were vacant when purchased. None of the parcels are adjacent, and none have been split during taxpayers ownership. When purchased, all had existing "driveways" and where needed culverts provided & maintained by a county or other governmental authority.
4. For many prior years, they itemized deductions and included the property taxes paid on the vacant parcels on Schedule A.
5. Vacant land property taxes were always paid in the current income tax year.
6. While some of the parcels are wooded, they have not sold off any timber during their ownership, or done anything to improve the parcels (other than occasional surveys).
7 Taxpayers began selling parcels in 2012 (and for what it is worth, they sell the land and any mineral rights). TP reach age 65 in 2012, spouse age 65 in 2013, and spouse is legally blind.
8. Starting in 2012, each year they told their preparer (for whom I do some off season work) they still wanted to itemize, but it didn't make a difference; the preparer prepared and printed them a schedule A anyway, while filing using standard deduction.
9. It two of the last 3 years, itemization would have resulted in a federal tax due (with Schedule A listing all the vacant land property taxes paid in that year).
10 Question: can they amend the open years and make the Section 266 election without itemizing? (by attaching a list?)
11 . Another question: could they amend and itemize (in the two of the preceding 3 years where they would owe federal tax if they had itemized) and make the Section 266 election?
12. Yes, I thumbed through the earlier threads on Section 266/capitalized expenses (but not those threads on amended returns).
13. They are selling two parcels this year (2017) for cash. They do not plan on any installment sales. Each parcel remaining (9) will likely result in $30,000+ gain when eventually sold (they plan within the next 5 years). .
14 They are not doing like kind exchanges.
15. If they had capitalized the property taxes over the years of ownership their basis would be higher: for 2016, for example, their taxable income would have been reduced by $6000.00 and a tax reduction (federal and state) of about $1100.00
2. Buying and selling land is not and has never been the taxpayers' trade or business. All property is owned by the taxpayers individually. They bought for investment. They never occupied any of the parcels as a residence of any type.
3. Some of the parcels were acquired at property tax foreclosure sales, some bought outright during the economic downturn, and all were vacant when purchased. None of the parcels are adjacent, and none have been split during taxpayers ownership. When purchased, all had existing "driveways" and where needed culverts provided & maintained by a county or other governmental authority.
4. For many prior years, they itemized deductions and included the property taxes paid on the vacant parcels on Schedule A.
5. Vacant land property taxes were always paid in the current income tax year.
6. While some of the parcels are wooded, they have not sold off any timber during their ownership, or done anything to improve the parcels (other than occasional surveys).
7 Taxpayers began selling parcels in 2012 (and for what it is worth, they sell the land and any mineral rights). TP reach age 65 in 2012, spouse age 65 in 2013, and spouse is legally blind.
8. Starting in 2012, each year they told their preparer (for whom I do some off season work) they still wanted to itemize, but it didn't make a difference; the preparer prepared and printed them a schedule A anyway, while filing using standard deduction.
9. It two of the last 3 years, itemization would have resulted in a federal tax due (with Schedule A listing all the vacant land property taxes paid in that year).
10 Question: can they amend the open years and make the Section 266 election without itemizing? (by attaching a list?)
11 . Another question: could they amend and itemize (in the two of the preceding 3 years where they would owe federal tax if they had itemized) and make the Section 266 election?
12. Yes, I thumbed through the earlier threads on Section 266/capitalized expenses (but not those threads on amended returns).
13. They are selling two parcels this year (2017) for cash. They do not plan on any installment sales. Each parcel remaining (9) will likely result in $30,000+ gain when eventually sold (they plan within the next 5 years). .
14 They are not doing like kind exchanges.
15. If they had capitalized the property taxes over the years of ownership their basis would be higher: for 2016, for example, their taxable income would have been reduced by $6000.00 and a tax reduction (federal and state) of about $1100.00
Comment