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January 27, 2023

IRS issues guidance on optional safe harbor method of accounting for real estate developers

In Revenue Procedure 2023-09, the IRS provides new rules and conditions for implementing the "Alternative Cost Method," a safe harbor method of accounting that real estate developers may use to determine when common improvement costs may be included in the basis of individual units of real property in a development project to determine the gain or loss from sale of the units. This guidance obsoletes Revenue Procedure 92-29. A Tax Alert is forthcoming.

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor