IRS Provides New Rules on Accounting Method Used by Developers

The IRS has released new guidance for an accounting method real-estate developers can use to determine when common improvement costs can be included in the basis of a project’s individual units.

In Revenue Procedure 2023-9, released Friday, the IRS outlines new conditions for an alternative cost method that can be used instead of the requirements under tax code Section 461(h).

• The guidance makes Rev. Proc. 92-29 obsolete. The IRS said that the 1992 guidance is outdated in light of the Internal Revenue Service Restructuring and Reform Act of 1998 and the Bipartisan Budget Act of 2015, ...