LLC: Many costs but construction not begun.

Okay, I'll start things off.

clearing and grading go into land value. (Press the EASY button now.)

Again, grading costs into the land. Any other direct costs associated with the bridge are land improvements and are capitalized. However remember that depreciation doesn't start until the business starts. So follow the secret of success in accounting: allocate and pro rate.

(nor???)

Again, capitalize. No depreciation until assets are begun to be used.

Let's see what others say about this one, however I'm inclined to capitalize ALL costs, depreciation on the grader and salaries.

(Grin) No contest. Capitalize. The client also probably things that if you write the checks out on Dec 31st and even though don't deliver till January, costs are still deductible. Right? (another grin) The best outcome is if client has no other significant income for 2006, and you can show that by capitalizing costs you're saving deductions for later when he needs them. ChEAr$, Harlan Lunsford, EA n LA

Again, grading costs into the land. Any other direct costs associated with the bridge are land improvements and are capitalized. However remember that depreciation doesn't start until the business starts. So follow the secret of success in accounting: allocate and pro rate."" Costs of special grading that is specific to the bridge being built, and that will necessarily be destroyed when the bridge itself is torn down or replaced are capitalized and depreciated over the same period as the bridge itself. However, grading that is necessary simply to make the site useable is generally capitalized into the cost of the land. As an example, general clearing and flattening costs are capitalized into the basis of the land and are nondepreciable and nonamortizable costs; by contrast, costs to dig a foundation trench for a building foundation are capitalized into the cost of the foundation and depreciated over the life of the building.

Thanks for the help. I think I need to file a return because they have applied for and received a FIN. Will the return contain all zero's? Based on the conversaions above, I can not think of anything that would be depreciated or expensed on the return. Is this correct? Do I file a return with all zero's? Marie L. Murrell

Depends on whether the LLC is a single-member LLC or not, and if so, whether it has filed an election to be treated as a corporation for federal tax purposes. If the LLC is a single member LLC that has not elected corporation status, then it is disregarded as an entity separate from its owner, and the owner reports all of the LLC's items of income, gain, deduction, loss or credit as the owner's own items. As a result, the LLC would generally not file its own federal income tax return. However, under Notice 99-6, it has the option of reporting its employment tax and payroll responsibilities on a separate return under its own EIN, in which case it would file separate employment tax returns. If the LLC is not a disregarded entity (either because it has multiple members or because it chose corporation status), the content of the required return should be determined by working through the return and reading the accompanying instructions. Without doing that step, it would be imprudent to file a return showing all zeros.