Leasehold Improvements

[S T]

Limited Partnership received reimbursement from Landlord for Build Out on Leasehold Improvements.

What is the proper way to handle, show as income on the form 1065 or reduce the Leasehold Improvement amount for Depreciation? They haven't received a 1099, but that does not mean one was not issued.

Sandy

[Bees Knees]

The lessee excludes the reimbursement from income under Section 110 if it is for retail space and the lease term is 15 years or less. The lessee would not take a depreciation deduction for the expense that is reimbursed tax free. If the reimbursement is under any other terms, the reimbursement is included in income and the lessee takes a corresponding depreciation deduction for the expense.

[S T]

Leasehold

As always, thanks Bees!!!! First time I have printed out a thread. It is so nice to have both the question and answer/s on one sheet.

Sandy