IRC 266

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  • Start date



This is IRC 266.

Summarizing in plain English, for personal property they allow you to
add the following to the cost basis for personal property (section

(a) Taxes you pay an employee to fix up your home.
(b) Mortgage interest
(c) Property taxes
(d) Other carrying charges

And for investment property, I think section (ii) applies:

(a) Mortgage interest
(b) Taxes you pay an employee to fix up the home.
(c) Taxes you pay on materials and storage
(d) Expenses for the development of the property

I think it is strange that they don't allow you to capitalize the
property tax paid.

So it looks like you can apply IRC 266 to your tax return by April/
15. And it looks like you can choose what items you want to
capitalize, such as property tax only.

Is there a way to eFile the election? If you already eFiled, can you
file an amended return and make the election? Can you make the
election for federal purposes but not state (that is, in state deduct
the property tax)?


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