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We are selling our office building and are completing FTB…

We are selling our...

We are selling our office building and are completing FTB form 593-E (Real Estate Withholding) prior to close of escrow. Our accountant said that any cost of additions or improvements to the building that have already been fully expensed should not be included on Line 10. Does that sound correct?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

The building is owned by a single-member LLC

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Answered in 1 minute by:
3/12/2018
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
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Your account is correct.

When incur cost for additions or improvements the cost is added to your cost basis, unless you have previously expensed (or deducted) the cost of the improvements. --

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Below are the instructions for line 10 of the FTB form 593-E

https://www.ftb.ca.gov/forms/2017/17_593bk.pdf

Line 10 – Additions and Improvements These add to the value of your property, prolong its useful life, or adapt it to new uses. Examples include room additions, landscaping, new roof, insulation, new furnace or air conditioner, remodeling, restoration project, etc. The cost of repairs are not included. Do not include any additions or improvements on line 10 that were included on line 4

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Customer reply replied 1 month ago
Ok, thank you very much for your assistance.

I would agree, that even the instructions would suggest, you add the price of the improvements. However, if you have previously received a tax deduction for the improvement then you would subtract from the cost of the improvement any tax deduction you previously received for the improvement.

Chad EA, CFP ®
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Category: Tax
Satisfied Customers: 2,183
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