Tearing Down a Building? The General Asset Account vs. Section 280B Explained скачать в хорошем качестве

Tearing Down a Building? The General Asset Account vs. Section 280B Explained

We are performing a forensic review of the "Demolition Loss"—or rather, the lack thereof. Under IRC Section 280B, if you buy a property and tear down the structure, the IRS forces you to capitalize the remaining basis into the Land. Since land is non-depreciable, that tax deduction disappears into a black hole until you sell the property. As The Finance Observer, I analyze the specific intersection of Revenue Procedure 95-27 (The 75% Safe Harbor) and the powerful General Asset Account (GAA) election. I explain how checking a single box on your Year 1 return allows you to "ghost" the asset, continuing to claim depreciation deductions for 39 years even after the building has been bulldozed. FORENSIC BREAKDOWN: 0:00 The Deduction Trap: Why common sense says "Write It Off" but the Tax Code says "Capitalize It." 01:27 The Statute (IRC § 280B): The explicit language banning deductions for demolition costs and sustaining losses. 03:03 Renovation vs. Demolition: The "Safe Harbor" test (Rev. Proc. 95-27). Why keeping 75% of external walls AND 75% of internal framework is the only way to claim a "Partial Disposition." 04:57 The Casualty Exception (IRC § 165): Why fire or flood damage is deductible, but the subsequent demolition cost is still trapped by 280B. 05:56 The "Zombie Asset" Solution (GAA): The General Asset Account explained. Treating the building as a single pool to bypass the disposition rules. 06:35 The 3-Step Protocol: Make the Election in Year 1 (Non-Negotiable). Demolish the Building (Basis becomes Zero). Continue Depreciating the "Ghost" Basis for decades. 07:27 The Case Study: How a shopping plaza saved $72,000 by checking the GAA box years before the wrecking ball arrived. DISCLAIMER: I am The Finance Observer. This content is for educational purposes only. Demolition losses are governed by IRC Section 280B. The General Asset Account election is found in Treasury Regulation 1.168(i)-1. Safe Harbor rules for renovations are defined in Revenue Procedure 95-27. Always consult a qualified Tax Strategist before demolishing real estate.