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IRC Regulation 1.266-1 Capitalize Taxes & Carrying Charges Election in ProConnect Tax

A taxpayer who owns unimproved and unproductive real estate can elect to capitalize annual taxes, interest on a mortgage, and other carrying charges.

The election must be made annually.
The election requires a statement in the taxpayer's return describing the property and the expenses to which the election applies.
If the property produces income in a given year, the election isn't available.

To include this election in the Individual module

Go to Input Return ⮕ Other ⮕ Elections.
Select the Other tab.
Scroll down to Election to Capitalize Taxes & Carrying Charges section.
Check the box Capitalize taxes and carrying charges [266].
Complete the other 3 inputs in this section.
To create multiple elections, click the + at the top of the screen to add a tab.

To include this election in the Partnership module

Go to Input Return ⮕ Other ⮕ Election.
Select the Elections in the top right.
Select the Other tab.
Scroll down to Election to Capitalize Taxes & Carrying Charges section.
Check the box Capitalize taxes and carrying charges [266].
Complete the other 3 inputs in this section.
To create multiple elections, select the + at the top of the screen to add a tab.

To include this election in the S-Corp module

Go to Input Return ⮕ Other ⮕ Elections.
Select Election in the top right of the input screen.
Select the Other tab.
Scroll down to Election to Capitalize Taxes & Carrying Charges section.
Check the box Capitalize taxes and carrying charges [266].
Complete the other 3 inputs in this section.
To create multiple elections, click the + at the top of the screen to add a tab.

To include this election in the Corporate module

Go to Input Return ⮕ Other ⮕ Elections.
Select Election in the top right of the input screen.
Select the Other tab.
Scroll down to Election to Capitalize Taxes & Carrying Charges section.
Check the box Capitalize taxes and carrying charges [266].
Complete the other 3 inputs in this section.
To create multiple elections, click the + at the top of the screen to add a tab.

E-filing and viewing the election

In all modules, the election is included with the e-filed return and listed in the e-file summary for verification.

ProConnect Tax

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