MarkM Posted July 21, 2008 Report Share Posted July 21, 2008 My client owns a shopping center. One of the tenants is expanding and discovered some non-hazardous material in the soil that they wanted removed. They told my client that they would not proceed with their expansion unless they split the removal costs. My client conceded and paid for half of the removal. I am trying to decide if this should be deducted or capitalized? The material in the soil was not a hazardous material as defined by the EPA, so IRC Sec 198 doesn't apply. Since the material wasn't required to be removed (i.e. anyone could have built on it but this particular tenant didn't wan't to), I don't think that the removal of the fill increased the value of the land. Could the removal of this fill be treated as a deductible expense under IRS Sec 162? Quote Link to comment Share on other sites More sharing options...
joelgilb Posted July 23, 2008 Report Share Posted July 23, 2008 Sounds like it was still part of the construction costs of the shopping center and should therefore be capitalized as part of the construction and build out. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted July 23, 2008 Report Share Posted July 23, 2008 I'd expense it. It did not increase the value of the property, nor extend it's life. Quote Link to comment Share on other sites More sharing options...
jainen Posted July 23, 2008 Report Share Posted July 23, 2008 >>It did not increase the value of the property, nor extend it's life<< But it did make the property suitable for another use. I'd capitalize it as a leasehold improvement. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted July 24, 2008 Report Share Posted July 24, 2008 how much? how material is it? Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.