IRC 266

This is IRC 266.

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Summarizing in plain English, for personal property they allow you to add the following to the cost basis for personal property (section iii):

(a) Taxes you pay an employee to fix up your home. (b) Mortgage interest (c) Property taxes (d) Other carrying charges

And for investment property, I think section (ii) applies:

(a) Mortgage interest (b) Taxes you pay an employee to fix up the home. (c) Taxes you pay on materials and storage (d) Expenses for the development of the property

I think it is strange that they don't allow you to capitalize the property tax paid.

So it looks like you can apply IRC 266 to your tax return by April/

  1. And it looks like you can choose what items you want to capitalize, such as property tax only.

Is there a way to eFile the election? If you already eFiled, can you file an amended return and make the election? Can you make the election for federal purposes but not state (that is, in state deduct the property tax)?

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