If two partners own a business and use cash from the business to build a building, how is that treated when its sold? And during that time, who should get the rent payments on it?

ANSWER

The BIDaWIZ Team's Answer:

The cash expended, to construct the building, is part the the basis, in the building,

that will be deducted, from the sales proceeds, when the building is subsequently sold,

to compute the capital gain, or loss, that is realized. The business will recoginze the

building rental income, and the two owners can divide the rental income, in accordance with

their percentage ownership, in the business.