Daniel Reyes

Congratulations on the Fremont Avenue close. Send me the settlement statement when you have it — the allocation between land and building is set at purchase and it is expensive to revisit.

The county assessment puts land at 31%, which is high for that block and costs you depreciation for the next 27 and a half years.

A cost segregation study would also break out the fixtures, cabinetry and site work into 5- and 15-year lives. On a building this size I would expect it to accelerate $340,000–$400,000 of deductions into the first five years. The study costs about $6,500.

Study is back and it is better than I estimated: $418,600 reallocated to shorter lives, and land came down to 22% on a defensible basis.

The first-year effect is roughly $96,000 of additional depreciation. That flows to your K-1, so the benefit shows up on your personal return rather than here.

A full roof replacement is a betterment, so it capitalises — but not over 27.5 years. It is a building system, and the old roof can be partially disposed of, which lets us write off what is left of its basis in the year you tear it out.

Net effect is much closer to a repair than it looks. I am running the numbers.

Two things before year end.

The partial disposition election has to be made on a timely filed return — I have it on the checklist, but it is worth knowing it is not something we can fix later.

And the contractors: three of them are over $600 for the year, so they need 1099-NECs by 31 January. Can you get me W-9s for Corbett Glass and the roofer? I have one for the landscaper.