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Small Taxpayer Safe Harbor unadjusted basis of eligible building

February 06, 2017 • Kathleen Inman • Log In to Post Comments

In calculating the Small Taxpayer Safe Harbor do you use 2% of the original unadjusted basis of the eligible building, or do you add additional building improvements along the way and therefore calculate a higher threshhold in later years when applying the 2% to the revised unadjusted basis?  My understanding was that we should use the original unadjusted basis of the building.  But I cannot find anything that addresses that directly.


Comments

Kathleen,

Treas. Regs. 1.263(a)-3(h)(1)(i) discusses unadjusted basis.  The election is an annual election, so you should analyze the unadjusted basis annually, which would include building improvements.

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