This manual is organized into seven sections each relating to accounting and taxation of commercial real estate:
- Section One addresses the different types of income and expenses reflected on financial statements and tax returns.
- Section Two discusses the passive activity rules found in Internal Revenue Service Publication 925 as they relate to real estate.
- Section Three reviews the basics of financial statements.
- Section Four presents the concept of depreciation and its impact on net income.
- Section Five introduces the depreciation method of cost segregation as it relates to real estate and the requirement of depreciation recapture when calculating gain on sale.
- Section Six illustrates the various components involved to derive gain on sale and how it is calculated
- Section Seven reviews the requirements of handling a tax-deferred exchange of a real estate property under Section 1031 of the United States Internal Revenue Code.