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Posted by mmurrell on March 13, 2007, 6:46 pm
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My Client is building storage buildings. In 2006 he
mortgaged his house for capital to begin his business. He
also paid real estate taxes when he closed on the land.
The taxpayer has many many start up expenditures and
organizational costs. He and his wife organized as an LLC
with each of them being members. They want to be taxed as a
partnership.
Do I have to capitalize the "home mortgage interest", or can
I deduct it on his 2006 personal return as an itemized
deduction?
Do I have to capitalize the real estate taxes or could they
also be considered a Schedule A deduction for investment
property?
Both interest and real estate taxes seem to be specifically
excluded as "start-up expenditures if they are deductible.
The business has not begun.....as they are still in the
construciton phase so I don't think they are deductible????
Perhaps I file a 1065 with no income, deduct the interest
and real estate taxes, and flow the expenses back to the
partners through their K-1's. I am wanting to file a 1065
for 2006 just to make IRC Section 709 and 195 elections.
Any thoughts??
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