The expenditures should be capitalized?

[NPH]

We are a nonprofit real estate developer. We received $5,000,000 orphan site cleanup assessment grant from State of California. In 2006, we spent $3,800,000 on groundwater monitoring, feasibility testing and environmental assessment.

The expenditures in the amount of $3,800,000 should be capitalized?

[veritas]

Let me understand

you got 5 million and you don't have an accountant lined up to take care of the paperwork?

[RLymanC]

Grant

Geez,,,,,only in America,,,and California of all places.....the state is broke

[ED SMITH]

Maybe NPH IS the accountant!

[S T]

Maybe

Maybe is NPH the "in house accountant"

Maybe this operation needs a professional to assist, although the posts have presented some issues that all of us might have learned from.

Sandy

[Bees Knees]

TTB, page 8-7 says:

Environmental clean-up costs. These costs are generally capital
expenditures. However, for qualified environmental cleanup
costs paid before January 1, 2008, a taxpayer can choose to deduct
these costs as a current business expense. Qualified environmental
cleanup costs are expenses paid to abate or control hazardous
substances at a qualified contaminated site. See IRS Pub. 535 for
further details.

The link to Pub 535 from the WebCD takes you to page 28 and gives you a column and a half of information on what is considered qualified environmental cleanup costs. I don't know if your monitoring and assessment expenses would fall into that category, but that would be the place I would start in researching this issue.

[NPH]

Thanks.

Yes, we have hired accountants and auditors, but sometimes I doubt the accountants and auditors are correct.

Total clearup cost of the orphan sites is $3,800,000.

Total value of the sites (land) which our company owns is $1,200,000

$3,800,000 was capitalized by auditors in 2006.

Now our assets in the book are hugh, but real assets are about 3 times smaller.

[NPH]

TTB, page 8-7 says:

Environmental clean-up costs. These costs are generally capital
expenditures. However, for qualified environmental cleanup
costs paid before January 1, 2008, a taxpayer can choose to deduct
these costs as a current business expense. Qualified environmental
cleanup costs are expenses paid to abate or control hazardous
substances at a qualified contaminated site. See IRS Pub. 535 for
further details.

The link to Pub 535 from the WebCD takes you to page 28 and gives you a column and a half of information on what is considered qualified environmental cleanup costs. I don't know if your monitoring and assessment expenses would fall into that category, but that would be the place I would start in researching this issue.

thanks. I will research later.