Source: https://forum.thetaxbook.com/forum/discussion-forums/main-forum-tax-discussion/24905-interest-deduction
Timestamp: 2019-08-21 20:39:47
Document Index: 449895636

Matched Legal Cases: ['§195', '§1', '§1', '§1', '§1', '§1', '§1']

"The term "start-up expenditure" does not include any amount with respect to which a deduction is allowable under section 163(a), 164, or 174." Code §195(c)(1) (Section 163(a) deals with interest expense.)
Regs §1.266-1 allows a taxpayer to elect to capitalize certain expenses, and interest is one of them. The interest allocable to the portion of the loan used to improve the building is covered by Regs §1.266-1(b)(1)(ii), and the interest allocable to the portion of the loan used to acquire the equipment is covered by Regs §1.266-1(b)(1)(iii). The Regs also describe the date, for each type of property, up to which interest may be capitalized.
Keep in mind that Regs §1.266-1 are elective, so a written statement making the election must be attached to the original return for which it is made. There is no requirement that the election be made on a timely filed return, so your client is not too late. See Regs §1.266-1(c)(3) and §1-266-1(e) for the specific requirements of the election and how to allocate between two or more items.