Keeping CPAs Up to Date on Tax Matters

A site devoted to articles on current developments in federal taxes geared toward CPAs in tax practice.

Taxpayer Planting Almond Trees on Purchased Land Must Capitalize Interest on Land Debt and Property Taxes During Preproduction Period for Trees

December 13, 2016 by Ed Zollars, CPA

Three partnerships found that the Tax Court generally agreed with the IRS that the interest they paid to purchase land, as well as property taxes they paid on the land, had to be capitalized under IRC §263A as part of the cost of production for the almond trees they began growing on the land in the case of Wasco Real Properties I, LLC et al v. Commissioner, TC Memo 2016-224.

The three partnerships in this case had purchased land that they planned to use for growing almonds. After the land was purchased the entities began planting almond trees that would eventually produce a crop of almonds.

Image copyright prashantzi / 123RF Stock Photo

Uniform Capitalization Rules Do Not Apply to Sellers and Producers of Marijuana

January 23, 2015 by Ed Zollars, CPA

The IRS, in Chief Counsel Memorandum 201504011, decided that a class of taxpayers is effectively “exempt” from the provisions of IRC §263A. But it turns out not to be a win for these taxpayers.

Because the group of taxpayers who are found to not be subject to the rules of §263A are those who are growing marijuana under various state laws that make their business legal at the state law level, although the production and sale of the product remains illegal at the federal level.