Save Some Tax on Lease Terminations

Did you know that not all lease related income has to be ordinary? One would always expect that a payment from a tenant to a landlord would be treated as ordinary income under the Internal Revenue Code. Until 1997, that would have been the IRS’ expectation as well.

In 1997, Congress added a very short section to the Code – 1234A. In plain English, this section states that a gain (or loss) attributable to the “cancellation, lapse, expiration, or other termination” of a lease for real property will “be treated as a gain or loss from the sale of a capital asset.”

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Since opening our doors in 1962, Aronson has been providing practical and innovative business advice to real estate developers, property managers and homebuilders. Our Real Estate Industry Services Group brings you the Real Estate Report, a timely and insightful blog that gives readers access to our decades of experience and knowledge. Read about new legislation, tax tips, financial information and other topics that will help you weather the cyclical nature of the real estate industry. Be sure to bookmark the Real Estate Report for quick access to important information! Visit www.AronsonLLC.com to learn more about Aronson’s specialized accounting and consulting services!

Save Some Tax on Lease Terminations

Aronson Contributors

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