All Forum Posts by: Mark Forest

Is Jonathan Wolter the creator of landlord Accounting still around?  I purchased his accounting package several years ago, and when I try to log into his forum to ask a question it does not recognize me.  Most of the posted questions are a few years old, and some are unanswered.  Does anyone know what is up?

@Basit Siddiqi  I don't even have an asset when I am done.  I paid to have a hole dug.  I agree with your logic. 

@Dave Toelkes  Its a rental property.  I like what you are saying, but according to the CPA in the thread above here this is a capitalized item I will have to depreciate.  I am not happy about it!

@Ashish Acharya  so are you saying it is or is not to be capitalized?

@Ashish Acharya  Yes Steve is right.  99.99% of cost is to dig a big hole.  Then a $6 boot was put in place.

@Nicholas Aiola  Thanks, and to think I voted for Trump thinking he would eliminate these kinds of traps for landlords!

@Nicholas Aiola  Thanks for your help. The total cost of the property is almost $23000. This includes cost of building and land, closing costs, and repairs to make it rent ready. I deduct $7500 for cost of land to get an original basis of $15500. I assume the $15500 is my unadjusted basis. Two percent of that is $310.

The $5000 obviously exceeds $310. So am I screwed here?

@Nicholas Aiola  Thanks for the quick answer.  If I had rented a machine and installed my own boot on this pipe I would probably have done it for less than $2500.  Does tax law hold that an expense must be capitalized after a certain dollar amount?  I see the de minimis criteria as something that may in fact qualify as a capital asset, but it costs so little, i.e.  $2500,  that the IRS lets you expense it.   Here 99.99% of the cost is digging a hole.  I don't own a capital asset.

Hello, I have asked this question before, but after doing research I must disagree with the original poster. I spent almost $5K to have a plumbing company dig a hole in my yard and put a $6 boot on a cracked sewer line. I see this as an expense even though it was quite costly. According to my research a capital asset is:

The IRS indicates what constitutes a real property capital improvement as follows:

Fixing a defect or design flaw

Creating an addition, physical enlargement or expansion

Creating an increase in capacity, productivity or efficiency

Rebuilding property after the end of its economic useful life

Replacing a major component or structural part of the property

Adapting property to a new or different use

A repair is as follows:

Improvements that "keep" property in efficient operating condition

Restores the property to its previous condition

Protects the underlying property through routine maintenance

Incidental Repair to property

Reference is http://www.dbbllc.com/newsletters/focus/mar2012/irs-clarifies-capital-improvement-vs-repair-expense

Next time I will rent a small excavator, dig my own hole, and put on a Fernco. Done! Isn't this very expensive repair restoring the property to its previous condition?

Hello, I have asked this question before, but after doing research I must disagree with the original poster. I spent almost $5K to have a plumbing company dig a hole in my yard and put a $6 boot on a cracked sewer line. I see this as an expense even though it was quite costly. According to my research a capital asset is:

The IRS indicates what constitutes a real property capital improvement as follows:

Fixing a defect or design flaw

Creating an addition, physical enlargement or expansion

Creating an increase in capacity, productivity or efficiency

Rebuilding property after the end of its economic useful life

Replacing a major component or structural part of the property

Adapting property to a new or different use

A repair is as follows:

Improvements that "keep" property in efficient operating condition

Restores the property to its previous condition

Protects the underlying property through routine maintenance

Incidental Repair to property

Reference is http://www.dbbllc.com/newsletters/focus/mar2012/irs-clarifies-capital-improvement-vs-repair-expense

Next time I will rent a small excavator, dig my own hole, and put on a Fernco. Done! Isn't this very expensive repair restoring the property to its previous condition?