Tax issues in real estate development and homebuilding have grown increasingly complex with the permanent provisions of the Tax Cuts and Jobs Act (TCJA) and the One Big Beautiful Bill Act (OBBBA) of 2025. This course offers a comprehensive and practical analysis of tax accounting methods and compliance requirements that impact developers and homebuilders, including the capitalization of costs under IRC Section 263A, timing rules under IRC Section 461, and revenue recognition considerations for unit sales. You’ll explore critical areas, including depreciation and expensing, business interest limitations, small business taxpayer exemptions, entity structuring, related-party transactions, compensation issues, and the economic performance test. Real-world examples and court cases are used to illustrate how the IRS scrutinizes costing practices, intercompany charges, and ordinary vs. capital gain classifications. By the end of the program, attendees will be equipped with strategies to comply with complex rules, avoid common audit pitfalls, and achieve the most favorable tax results for real estate developers and homebuilders.
Learning Objectives
• Apply revenue recognition, capitalization, and costing methods for real estate development and homebuilding activities, including compliance with IRC Sections 263A and 461.
• Evaluate accounting method options and small business taxpayer exemptions under the TCJA and OBBBA of 2025, with emphasis on depreciation, expensing, and interest limitations.
• Identify opportunities for tax deferral and planning strategies, while addressing IRS scrutiny of related-party transactions, compensation, and ordinary vs. capital gain classifications.
Major Topics
• Discussion of appropriate entity selection and small taxpayer status
• Walkthrough of costing methods and compliance issues under IRC 263A
• Analysis of IRC 461 related to economic performance
• Illustrative examples and analysis
• Sample computations for homebuilder unit costing
• Recent IRC 263A challenges by the IRS
• Update of related cases and issues
• including recent tax reform
