2018 – 01/31

Court rules that real estate was held for investment. A custom home developer purchased undeveloped land through several single-member LLCs. He planned to develop the land, including making payments for permits. However, plans were stalled due to a lack of credit and other factors related to a real estate recession. The U.S. Tax Court ruled that, since development plans weren’t executed, the land was held for investment, not business purposes. Therefore, the expenses related to holding the land weren’t deductible as ordinary business deductions. (TC Memo 2018-6)

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