- 15 - explained that, because under section 461(h) economic performance was required in order for costs to be deducted, a real estate developer would no longer be allowed to allocate estimated future construction costs to the developer’s bases in lots sold. See Notice 91-4, 1991-1 C.B. 315. Thus, it appeared that the economic performance rules of 461(h) would effectively override the alternative cost method available to developers under Rev. Proc. 75-25. On January 11, 1991, however, respondent issued Notice 91-4, 1991-1 C.B. 315, in which respondent provided that, in spite of the economic performance rule of section 461(h), the alternative cost method under Rev. Proc. 75-25 would continue generally to be available to developers of real estate until additional guidance from respondent was provided. On April 9, 1992, the above regulations under section 461(h) were finalized, but the referenced language in the preamble to the proposed regulations was eliminated. See regulations under sec. 461. Also, on April 9, 1992, respondent issued Rev. Proc. 92-29, 1992-1 C.B. 748, in which a limited version of the alternative cost method was provided. Under the alternative cost method provided in Rev. Proc. 92-29, a real estate developer was permitted to continue to allocate to lots sold the estimated future construction costs relating to common improvements withoutPage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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