Federal Tax Law
Real Estate Developer incurred $1,416,577 in development costs, ie: architectural fees, permiting, planning research, feasability studies etc all of which were capitalized. Developer has determined the project can never be started due to governmental restrictions and inability to recover property from wetland area. No improvements were made to the real estate targeted for the project. When adn how can the development costs be deducted as an expense?
1 Answer from Attorneys
Re: Federal Tax Law
It sounds like the project has been abandoned. If the developer does not actually own the land, the experation of the option to purchase would be a clear termination of the transaction ant the balance of the losses could be deducted at that time. If the developer owns the land, unfortunately, it will be difficult to take the losses until the land is sold ordeveloped for different purposes.
This can be tricky and you should retain an experienced tax lawyer to deal with your specific circumstances.
I hope this helps!
Ron Cappuccio
http://www.TaxEsq.com
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