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Hi and welcome to Just Answer!If payments are made on behalf of the landlord - generally such payments must be classified as rental payments and included into income of the landlord. So the landlord will be able to claim appropriate deductions.Another option to treat such payments are leasehold improvement property - which is treated as a separate property for income tax purposes. The leasehold improvement property may be depreciated.
See for instance this article - http://www.cshco.com/News/Articles/IRS_clarifies_capitalization_of_leasehold_improvements/
The invoices for the engineering are made out to the corporation who paid them.
The name on the invoice is not so important.
Could you please release this question. I'd like to ask a CPA, thank you.
No issues - I will opt out.
That's exactly the issue. He doesn't understand. The owner requested the work through the lessee corporation and paid it through that one. He has no intention of paying it back if I were to set up a receivable. And the rent they pay conveniently is the amount of the mortgage payment of the lessor corporation. And that return has already been filed without those costs capitalized. I just don't think a $15,000 deduction in this year for engineering cost would look good on a return of a corporation who rent it's space. So it looks like my only option now would be to record it as a leasehold improvement... Would you do that or amend the other return at this point.
And because the other corporation has been filed, I'd have to amend it to do the receivable/payable option. But I agree I'd rather the eng costs be with the building... sometimes I want to shoot my clients. :)
You mean you haven't killed any of them yet?I use to have a little fake URN on my counter that said "Ashes of Difficult Clients".Just to be funny I used it for my cigar ashes, (when I smoked cigars many moons ago);We got a lot of comments about it & when someone was giving me a hard time, I'd just point to the URN. We had a lot of fun with that.Steve G.
PS You're right, to do that requires amending as you originally pointed out. In the long run you & the client will be better off.
PSS He needs a lecture!!