If I understand you correctly, the Corporation has a depreciable asset and the corporation has paid property taxes on that asset, and the company is not in revenue yet.
If so, you depreciate the asset (fences are 15 years) from its original cost. You want to know how to treat the property tax paid.
pass the donuts, please.
Yes.....I am already depreciated the fence at 15 years......How do I treat the property tax, now I am thinking it is a prepaid asset???
BTW - that is only my stage name.
Normally, it adjusts basis for determining gain or loss without affecting depreciation. I am looking for an alternative option.
I'm thinking it could be an ordinary expense.
In this case, it generates an NOL. Since it is within the corp, the NOL just carries forward til used.
The fence has a life, but it cannot be moved. It is unlikely to be sold for gain or loss.
Reading publication 551, Basis in Assets, one gets the strong opinion that the property taxes would NOT go to basis in this situation, and, in fact, would be ordinary expense.
If it did go to basis, then DO modify the depreciation as basis has changed. But I favor the expense option.
So, that will be my answer today!
I had it as an expense, but I moved it......I guess I will move it back....Thanks