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I don't know why anyone would make the election for rental properties that throw a loss. You have to take into account losses from the time you make the election and use them up before you get the benefit of the deduction. Plus what Sara just said above. There are situations that make sense to make this election, but for most small rental property landlords, there is more risk than benefit in my opinion. Tom Longview, TX

You are correct that if the properties are treated as one enterprise, actual and suspended losses on one stay suspended until all are sold. That's one reason I never make this election.

As cbslee said, we could come up with a variety of labels, but client and "partner" need to describe what their intentions were and provide available documentation.

Technically speaking, the sec 266 election is made by attaching a statement to the timely filed (including extension) tax return for that tax year. The election must be made each year the taxpayer desires to capitalize those costs. Also, sec 266 says that only those costs that would otherwise be deductible may be capitalized.