Washington (Feb. 18, 2002) --The Internal Revenue Service has issued guidance which concludes that impact fees paid by real property developers are indirect costs that should be capitalized and added to the basis of buildings constructed.
As such, these fees can be included by low-income housing developers and operators in the computation of the low-income housing credit.
Revenue Ruling 2002-9 contains the new impact fee guidance. It will be in Internal Revenue Bulletin 2002-10, dated Mar. 11, 2002, and is available at the IRS Web site: www.irs.gov.
The guidance marks the fifth issue resolved of the seven selected for the Industry Issue Resolution pilot program. The IRS expects to have resolution positions announced soon on the two remaining issues, which involve the determination of recoverable oil and gas reserves for cost depletion purposes, and the tax treatment of fees paid by employers to employees for rental of equipment owned by the employees.
--Electronic Accountant Newswire staff
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