Room for Interpretation in Tax Laws ?

[Paul C.]

I've been doing a lot of research on rental property tax accounting the past few days and am amazed (frustrated) at how many different answers I'm finding. For example:

1. Pre-rental expenses. On the one hand, some say nothing is deductible as an expense, but must be capitalized. But then I also read that fire insurance premiums should not be added to cost basis so what happens to pre-rental insurance expenses?

Others say you can consider the property as available for rent if you were willing to rent it "as is" on day 1, even if you are not actively advertising.

2. Should systems like HVAC be expensed or depreciated? Again, it depends on who you ask. Some say there are situations where you can claim it as an expense while others say you must always depreciate it.

So my question is, are these rules open to interpretation? Or should they be black and white and some guys are simply wrong?

And if you have an accountant that is shall we say "aggressive," what happens with IRS audits and the statute of limitations? Decisions on expensing vs depreciating will affect tax returns for many years to come. If the statute of limitations on audits is 3 years, what happens with incorrect decisions made more than 3 years ago but have had a carryforward effect?