Vacant land

[Tronathan]

@Anonymous_ 

@TomD8 

@Hal_Al 

Thank you for your responses. This is all great information but what I am looking for really is something more specific. I get the idea that what I would need to do is fill out a letter stating that I wish to add the property taxes to the cost basis for 2022 taxes and add it as some kind of additional page when I submit my Turbo Tax efile. This is what I am planning to do and what I hope will work. The greater unknown though is how to do this retroactively and if that will work. No one seems to know what to do or how this works specifically. My guess would be to use a previous version of Turbo Tax and do the same but with a tax amendment page 1040-X also included. Before doing all this though, it would be nice to know first if it will work and if so, how far back it will work, instead of just doing it and being hopeful. Thanks for any help in advance.

[Anonymous_]

See https://www.law.cornell.edu/cfr/text/26/1.266-1

§1.266-1(c)(3)

If the taxpayer elects to capitalize an item or items under this section, such election shall be exercised by filing with the original return for the year for which the election is made a statement indicating the item or items (whether with respect to the same project or to different projects) which the taxpayer elects to treat as chargeable to capital account.

[emphasis added]

@Tronathan 

[Tronathan]

Thanks @Anonymous_ for your reply. When it says "original return", you are saying that there is not a way to file an amendment for previous year taxes? Is this what you are suggesting? I have seen some people say it can be done and others saying it can't so any clarification or confidence in the answer is much appreciated. Thanks again.

[Anonymous_]

Although the language in the Regulation is fairly clear, exceptions can be made (and have been made).

A PLR (link below) allowed the taxpayers to make the election in a later tax year because they "relied on a qualified tax professional and the tax professional failed to make, or to advise the taxpayer to make, the election". 

https://www.irs.gov/pub/irs-wd/201607005.pdf

Note that an exception can be made where the "taxpayer failed to make the election because, after exercising reasonable diligence (taking into account the taxpayer's experience and the complexity of the return or issue), the taxpayer was unaware of the necessity for the election".

[Tronathan]

Thanks again @Anonymous_ 

I don't know how to file for exceptions or if it would be worth it in my situation. I used TurboTax Home and Business and did not see anywhere to add this to cost basis over the past 7 years or so. I happened upon this information from searching around on the web to find that it was an option. Would someone at TurboTax be able to help me figure out the best course of action for my situation? Do you know who to contact? Thanks

[Anonymous_]

You can try contacting Support.

What is the TurboTax phone number? (intuit.com)

However, I do not believe the program supports the election natively but, rather, you would have to make the election using a desktop version of TurboTax in Forms Mode (and then print and mail the return).