During the current year,Ivan begins construction of an office building and a hotel.He incurs $10,000 in property taxes during the construction of the office building and $15,000 for the hotel.Which of the following statements is true of the property taxes during the construction period?
A)Ivan must capitalize the property taxes on both properties each year if an election is made.
B)Ivan must deduct the property taxes on both properties each year.
C)Ivan may elect to capitalize the property taxes on one of the properties while deducting the property taxes on the other for each year.
D)Ivan may elect to capitalize the property taxes for the properties in one year and then deduct the property taxes on the properties the next year.

Question

Quizplus · Accepted Answer

According to the regulations, a taxpayer may elect to capitalize the property taxes for one property while deducting the property taxes for the other property in the tax year. Therefore, Ivan may elect to capitalize the property taxes on the hotel while deducting the property taxes on the office building, or vice versa. This allows for some flexibility in how the property taxes are treated for tax purposes during the construction period.

During the Current Year,Ivan Begins Construction of an Office Building