Oregon Tax Consultants Practice Exam 2026 – Complete Study Resource

Question: 1 / 400

What should you do with the cost of demolition of a building?

Add them to the basis of the land

Adding the cost of demolition of a building to the basis of the land is the correct approach because these costs are considered acquisition costs associated with preparing the property for its intended use. When a building is demolished, the land can be cleared for new development or improvement, which enhances its value.

By capitalizing these demolition expenses and including them in the basis of the land, you can appropriately reflect the total investment made in the property. This increases the basis of the land and, when sold, could potentially reduce the overall taxable gain, consequently benefiting your tax position in the future. Ignoring these costs or treating them as current expenses would not align with the principles of capitalizing costs associated with property improvements or acquisition.

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Deduct them as current year expenses

Record them as a capital loss

Ignore them in property valuation

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