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Tax Issues Identified

Identify the tax issue or issues suggested by the following situations and state each issue in the form of a question.(need two questions for each situation)

1.Guenther is researching a tax issue involving the deductibility of costs to remodel an office building. He has found several authorities permitting such costs to be deducted, and several others requiring that remodeling costs be capitalized and depreciated for tax purposes.(tax research)

2.ROJ Inc. purchased a 20-acre industrial complex consisting of three warehouses and two office buildings surrounded by parking lots. About 12 acres of the land is undeveloped. ROJ paid a lump-sum purchase price of $19.4 million.(property acquisitions and cost recovery deductions)

3.WRT owns a chain of retail bookstores. It recently decided to add coffee bars in each store to sell gourmet coffee drinks and pastries to the bookstore costumers. WRT has not yet obtained the necessary lisenses required under local law to serve food to the public. However, it has incurred almost $30,000 in up-front expenditures on the coffee bars.(property acquisitions and cost recovery deductions

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Case #1
How the costs of remodeling an office building are to be recognized in the books for tax purposes?
How the costs of remodeling are to be depreciated for tax purposes ...

Solution Summary

The expert identifies tax issues.