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Jim Gadwood Discusses Significance of New Tax Guidance for Real Estate Developers in Tax Notes

"Community Improvement Guidance Improves Life for Developers"

Tax Notes

Jim Gadwood discussed the significance of Rev. Proc. 2023-9, issued by the Internal Revenue Service (IRS) on January 27 to replace Rev. Proc. 92-29 as the authority granting real estate developers the ability to use the alternative cost method to account for the costs of common improvements. Gadwood noted that while most of the substance of the alternative cost method was unchanged in Rev. Proc. 2023-9, the new guidance helpfully provides more detail on what qualifies – and what does not qualify – as a common improvement cost eligible for the alternative cost method. Gadwood pointed out that the new tax accounting method also comes with fewer filings, annual statements, and supplements, thereby reducing taxpayers' administrative burden.