close
Share with your friends

IRS practice unit: Identifying taxpayers electing partial disposition of building

IRS practice unit

The IRS Large Business and International (LB&I) division today released a “practice unit”—part of a series of IRS examiner “job aides” and training materials intended to describe for IRS agents leading practices about tax concepts in general and specific types of transactions.

1000

Related content

The title of the practice unit is: Identifying a taxpayer electing a partial disposition of a building.

The IRS practice unit focuses on identifying when taxpayers elect a partial disposition of a building or its structural components. Identifying that a taxpayer has elected to take a partial disposition of a building is the first step for IRS examiners to determine whether the taxpayer is compliant with the section 168 disposition regulations. Taxpayers may make an annual partial disposition election to recognize the disposition of a portion of a building, including its structural components, in tax years beginning on or after January 1, 2014. The election is made by reporting the gain or loss on a timely filed original tax return for the tax year in which the portion of the building is disposed. No specific form or election statement is required, and the election may be made by any taxpayer having a depreciable interest in a building or its structural components. Electing a partial disposition of a building generally results in a loss recognized on the tax return.

The practice unit also describes situations when taxpayers are required to recognize a partial disposition, including:

  • A casualty event under section 165
  • A disposition of a portion of an asset for which gain is not recognized in whole or in part under section 1031 or 1033
  • Transfers of a portion of an asset in a “step-in-the-shoes” transaction described in section 168(i)(7)(B)
  • Sales of a portion of an asset

 

Read text of the practice unit on the IRS practice unit webpage with a posting date of November 5, 2018.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal