Land Tax question?

Tax question about purchase of land and building?

• If a partnership buys both a piece of property and a building, can they capitalize the cost of the land and deduct for the building? My guess is "no" because land does not have an ascertainable life, but my tax textbook is really confusing and I wanted to ask you guys. Any thoughts?

• Answer:

  Nonresedential real estate (commercial building) is depreciated on a 39 year recovery period. Land is never depreciated. A capitalized cost does not appear on the income statement, but instead appears as a debit on the long-term assets account and a credit on the cash account of the balance sheet. However, the depreciation expense related to the capitalized cost will appear as an expense on the income statement. Since the long-term assets account is larger due to the effect of capitalization, the depreciation costs are also proportionately larger. Thus, the timing of expense recognition is changed, but eventually all expenses do get recognized on the income statement.