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Subject Author Date
AMT - capitalize taxes? Benjamin Yazersky CPA 06-08-2007
Posted by Benjamin Yazersky CPA on June 8, 2007, 1:21 pm
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 When an individual taxpayer is in amt, frequently no benefit
will be had for deducting property taxes on the residence.

Has anyone had any experience in electing to capitalize the
property taxes, rather than taking a useless deduction? What
issues exist?

The only effect that I see is doing so will increase the
basis in the residence. But that may be moot if there is not
enough gain to generate tax on the sale.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

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Posted by Harlan Lunsford on June 12, 2007, 1:06 am
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 Benjamin Yazersky CPA wrote:

> When an individual taxpayer is in amt, frequently no benefit
> will be had for deducting property taxes on the residence.
>
> Has anyone had any experience in electing to capitalize the
> property taxes, rather than taking a useless deduction? What
> issues exist?
>
> The only effect that I see is doing so will increase the
> basis in the residence. But that may be moot if there is not
> enough gain to generate tax on the sale.

My question is where in the code is this even permitted?

ChEAr$,
Harlan Lunsford, EA n LA

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Brew1 on June 12, 2007, 1:06 am
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> When an individual taxpayer is in amt, frequently no benefit
> will be had for deducting property taxes on the residence.
>
> Has anyone had any experience in electing to capitalize the
> property taxes, rather than taking a useless deduction? What
> issues exist?
>
> The only effect that I see is doing so will increase the
> basis in the residence. But that may be moot if there is not
> enough gain to generate tax on the sale.

I'm not certain this would affect capitalizing property
taxes but in a recent case, the IRS calculated the (property
and income) taxes as an addition on the 6251, taking the
position that it didn't matter whether the taxpayer claimed
them or not. Sorry, I don't have the reference handy.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by San Diego CPA on June 12, 2007, 1:06 am
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> When an individual taxpayer is in amt, frequently no benefit
> will be had for deducting property taxes on the residence.
>
> Has anyone had any experience in electing to capitalize the
> property taxes, rather than taking a useless deduction? What
> issues exist?
>
> The only effect that I see is doing so will increase the
> basis in the residence. But that may be moot if there is not
> enough gain to generate tax on the sale.

I do this on clients that hold property for investment
purposes but haven't done it for personal residence.

While the the home is the biggest investment in many
people's lives, it's a "personal" residence and I don't
think there's a good "investment property" argument,
especially if you're deducting mortgage interest on a
"qualified residence" rather than investment interest. This
does not imply that treating interest as investment would
convert the principal residence to investment property.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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