Hosted by the Tax Section
The Internal Revenue Code has a variety of special accounting rules that apply to businesses that own or deal in real estate and which influence timing for recognition of income and expense items. This advanced two-hour course reviews both the key rules and the most recent developments in the area and is geared not only for tax attorneys, but also for real estate and business attorneys who need to enhance their knowledge of the relevant standards.
The course will commence with coverage of the basic requirements for methods of accounting under the Code and then turn to standards governing the timing when businesses can recoup costs for tax purposes, including capitalization requirements under section 263A, and the economic performance requirements of section 461(h) in the context of real estate businesses.
Other topics include:
- Allocating basis between land and improvements for purposes of calculating depreciation and determining gain on disposition
- The alternative cost method for including the cost of common improvements in the basis of properties sold by a developer
- The tax accounting rules for long-term contracts, including an historical overview and a discussion of the percentage of completion method and the completed contract method
- A review of recent developments on the use of the completed contract method by merchant homebuilders, residential land developers, and subcontractors engaged in on-site residential land development
- An overview of tax accounting issues associated with condominium developments
- Installment sale reporting issues applicable to real estate, including standards for dealer and non-dealer dispositions, related party rules and rules governing timeshares and residential lots
- Recent developments in the areas of like-kind exchanges, the fractions rule UBTI exception for certain tax-exempt investors, and FIRPTA for foreign investors in US real estate