Demolition costs after casualty loss

[THS982]

Rental property was completely destroyed after fire. Taxpayer will have casualty gain and taxpayer has no intentions on rebuilding. Do the costs of demolishing the building and hauling away debris need to be added to the cost basis of the land or can they be expensed?

[Burke]

When I have dealt with demolition costs, they were added to the basis of the land. Not sure if this changes because it is a casualty gain/loss, but I wouldn't think so. They are added to the basis of the land to be taken when it is sold. See IRS Publication 551, page 4. They cannot be expensed.