Sale of Land & Bldg.

[Bird Legs]

Client buys land, Dec. 2004. Client builds an office bldg. on land in April, 2006 for rental purposes.
Client sales land and bldg. in October, 2006.
Should know this but my brain is overloaded. How would you report this sale?
Allocate the sales price between land & bldg. with land LTCG and Bldg. STCG?
Of course, no depreciation on bldg.
How would you allocate the sales price between land & bldg.?
By Costs.

[HBurkholder]

I think you are correct to allocate LTCG on land and STCG on building. Has the Real Estate Tax assessors office assessed the property yet? They usually allocate a value to land and to structures. I would use those percentages for my allocation.

[Bird Legs]

H Burkholter

Appreciate your response. There would have been no tax appraisal on the building
as it was completed and sold within the same year, prior to 12-31-06.
That is why I thought I would use the cost figures to calculate the percentage.
You are very helpful.