TaxGuyBill
Level 15

First, confirm that it actually is a repair or maintenance, rather than a depreciable improvement.

Second, is it being treated as a capital expenses for their 'books'?  If not, it seems like it wouldn't qualify for the election.

 

If it is a repair, you are mentioning Bonus depreciation.  IF it were to qualify for Bonus (which might not be the case to the repairs to the building; that may need to be depreciated over 27.5/39 years), you would be taking the full deduction in the current year.  So for income tax purposes, why would you bother to make this election?  Yes, treating it as a capital expense would add to Basis, but then taking Bonus would just bring the Basis right back down again.  Net result would be a $0 change in Basis.

The Basis thing MIGHT POSSIBLY be factored in for QBI purposes.  But that would only be the case if (1) the rental qualifies for QBI, (2) the Basis is even a factor for the client's QBI calculation (it might not affect the calculation) AND (3) if that does affect the "Unadjusted Basis" for purposes of QBI (I would need to look up the details if an improvement would be added to "Unadjusted Basis").