Marta, a lover of early twentieth-century American history and architecture, discovers a 1920s house in a...

Marta, a lover of early twentieth-century American history and architecture, discovers a 1920s house in a downtown district of Atlanta during a recent visit. She decides not only to purchase and renovate this particular home, but also to move the structure to her hometown of Manhattan, Kansas, so her community can enjoy its architectural features. She moves the entire house to Manhattan, renovates it, and reduces her tax liability by the rehabilitation expenditures credit. It takes her approximately a year to complete the project. Her rehabilitation expenditures include the costs associated with renovation ($30,000) and the moving expenses ($10,000) incurred to relocate the house. The IRS disallows the credit because she moved the building. Furthermore, the IRS contends the moving expenses are not qualified rehabilitation expenditures. Who will prevail in court?

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Rehabilitation Expenditures Credit

Rehabilitation Expenditures Credit is a tax credit allowable to tax payers for expenditure suffered for rehabilitating commercial and industrial buildings and qualified historic structures , It is given in order to prevent industries from moving from older sparingly distraught areas to newer places . it encourages preservation of historic constructions.

In the given problem , Marta wants not only to purchase and renovate the 1920s house in the country outside mobile but also wants to move the structure into mobile so that her community can enjoy its architectural features ,

Even though Marta wants to preserve the architectural features of the house , But by moving the house into mobile , she will not qualify for the tax credit for rehabilitation expenditures as she is moving the structure from original location into newer location .

Therefore , IRS will prevail in the court,

ekkarill92 answered 2 years ago

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