Should Flatirons capitalize or deduct the costs of cleaning up the environmental contamination to the groundwater

  • Use the §§351 and 1239 rules to compute the gain/loss recognized due to the capital contributions by Robert and Elizabeth. • How are Elizabeth’s services treated by Flatirons for federal income tax purposes? • Compute the corporation’s basis in the assets that it received from Robert. II • The deduction for expenses of an office in the home are found in §280H. • Robert might also be able to deduct some §162 travel expenses. • How would Flatirons and the employees be treated if an “accountable plan” were used for the expense reimbursements? A “nonaccountable plan”? III • Should Flatirons capitalize or deduct the costs of cleaning up the environmental contamination to the groundwater? • Does the Flatirons clean-up operation put the land to a new or different use, extend the property’s useful life, or increase its value?