Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

Do I record depreciation on the books commercial building

Customer Question
Do I record depreciation on...
Do I record depreciation on the books for a commercial building that was received in a Section 1031 exchange? The book basis is $2,000000 and the tax basis is $35,000. Thank you
Submitted: 2 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 25 minutes by:
9/23/2015
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,885
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi,

...

Depending on your objective, no, not generally.

...

In most respects, the company maintains records for its own use, called book accounting, that largely use the same data as accounting for taxes for tax purposes ( tax accounting ).

...

This is one of them.

...

You must continue to record depreciation, for TAX purposes, in order to correctly show gain when the property is ultimately sold, (The basis, as it appears has been done here) follows into the replacement property in a 1031 exchange.

...

You may treat assets differently, making adjustments for tax purposes, (to take advantage of tax savings), but the book value of assets is adjusted in ways that meet other accounting guidelines or reporting needs for the company. (Management generally uses "book" to reflect the true physical life of assets, for example.

...

Inventory valuation, and treatment of maintenance and repairs typically drive much of the differences. For some organizations maintaining a separate ledger to record the different depreciation rates and bases, makes sense. For example, in book accounting, a company might use straight-line depreciation to reduce the value of an asset over its useful life of 10 years. For tax purposes, this might be a 7 or 5 year asset, resulting in a tax benefit for the company *(and another depreciation method to track).

...

So, with a commercial building, tracking only tax (essentially having book BE your tax deprecation) might make sense ... there is no rule here (on the management side).

...

The tax computations MUST be continued.

...

Let me know if you have questions

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

The reason to track separately would be to more accurately show the real net worth (as the property actually - typically - appreciates in value.

...

But the BOOK accounting standard is to recod at cost, anyway... so market valuation os really only pertinent to gain

Ask Your Own Tax Question
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,885
12,885 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
In which cases can I change the basis for depreciation on a
In which cases can I change the basis for depreciation on a building? The building is a HDFC located in New York City and the prior manager used to do the taxes, the cost basis is really low. … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
738 satisfied customers
I am a Card holder planning to sell foreign assets (property
Hi....I am a Green Card holder planning to sell foreign assets (property in India)...I am aware that I will have to pay the higher of the 2 tax liabilities (either Indian or American)..I expect my US … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
738 satisfied customers
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
My question is about depreciation for rental property. My
Hello. My question is about depreciation for rental property. My rental property had no income during one year. In this case, since there was no income, I do not need to claim depreciation for that sa… read more
Fred Rook
Fred Rook
Corporate Controller
BSBA
32 satisfied customers
How to report cancellation of debt on rental property?
I received a 1099-C for my rental property that I held for over 1 year. According to the worksheet provided in IRS Publication 4681 I was insolvent just prior to the debt being canceled. My question i… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
Small schedule c business donates fully depreciated
small schedule c business donates fully depreciated furniture to charity. They've been told that the FMV is $1,000. What is the deduction for contributed property? … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,885 satisfied customers
I want to maximize my tax saving I recently started to
I want to maximize my tax saving I recently started to invest in my retirement account and I dont know what would be the best scenario to have the best tax saving … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
How to report the sale of a property outside US? How to
How to report the sale of a property outside US? How to claim the taxes paid abroad on the profit made by selling property overseas?… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,885 satisfied customers
An S Corporation is selling its assets under an Asset
An S Corporation is selling its assets under an Asset Purchase Agreement. The 2 stockholders materially participate in the operation of the business. The business provides credit card processing softw… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,885 satisfied customers
For non tax reasons, i want to transfer assets, non property
For non tax reasons, i want to transfer assets, non property assets, non 1231, 1245 assets, that are currently in an S corporation to a new S corporation. … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I didn't claim depreciation on a rental property for 8
I didn't claim depreciation on a rental property for 8 years. I'm about to sell the property. How many years of the past annual depreciation can I claim? … read more
Lane
Lane
JD, CFP, MBA, CRPS
12,885 satisfied customers
I sold a rental property and fully depreciated furniture and
I sold a rental property and fully depreciated furniture and fixtures such as refrigerator/oven/doors etc. Would I have to recapture the FF&E depreciated amounts as ordinary income with the sale when … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
I need the depreciation rate for my 2014 tax return, I now
I need the depreciation rate for my 2014 tax return My name is*****: What kind of computer do you have? Customer: I now have a lenovo and daughter filed for me so not to sava on here … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
I've been under-depreciating a business property over the
I've been under-depreciating a business property over the last 8 years. Is there any way I can make that up, by, say bumping up the depreciation over the remaining life or taking a one-time adjustment… read more
Lane
Lane
JD, CFP, MBA, CRPS
12,885 satisfied customers
How can i report one asset exchange to two assets in form
how can i report one asset exchange to two assets in form 8824? do I need to fill out two 8824 forms or just one? thanks. HL… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
682 satisfied customers
What can I do with asset that has been depreciated down to
What can I do with asset that has been depreciated down to $0.00? I know that if I sell it I have to indicate a capital gain but some assets are truly used up. If the asset is thrown out, does the acc… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have an S-corp that depreciated a group of assets on the
I have an S-corp that depreciated a group of assets on the 2015 tax return. However, several of the assets were sold in 2016. Would it be easier to amend 2015 and break out the asset group and depreci… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
This tax question regards depreciation, cost basis and asset
Hello, this tax question regards ***** ***** basis and asset reporting when you tear down one vacation rental property and replace it with another on the same lot. The original vacation cottage still … read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
682 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x