Election to Capitalize Carrying Charges

IRC §266

Taxpayers can elect to capitalize taxes and carrying charges (like interest) on property rather than deducting them currently.

Eligibility

Useful when a taxpayer has no current income to offset with deductions; adding these costs to the basis reduces future taxable gain upon sale.

Frequently Asked Questions

Who is eligible for the Election to Capitalize Carrying Charges?

Useful when a taxpayer has no current income to offset with deductions; adding these costs to the basis reduces future taxable gain upon sale.

How does the Election to Capitalize Carrying Charges work?

Taxpayers can elect to capitalize taxes and carrying charges (like interest) on property rather than deducting them currently.

What law authorizes the Election to Capitalize Carrying Charges?

The Election to Capitalize Carrying Charges is authorized under IRC §266 of the Internal Revenue Code (Title 26, United States Code).

Statutory Text — IRC §266

Source: Internal Revenue Code, Title 26, United States Code

§ 266. Carrying charges No deduction shall be allowed for amounts paid or accrued for such taxes and carrying charges as, under regulations prescribed by the Secretary, are chargeable to capital account with respect to property, if the taxpayer elects, in accordance with such regulations, to treat such taxes or charges as so chargeable. (Aug. 16, 1954, ch. 736, 68A Stat. 78; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Editorial Notes Amendments1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

Legal Sources

US Code (Official) — 26 USC §266 → Cornell Law Institute — 26 USC §266 → Search IRS.gov for IRC §266 → Treasury Regulations (26 CFR) →

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